Franchisor Not Liable For Criminal Attack On Employee of
Franchise Based On Either Negligence Or Vicarious Liability
Vademark v. McDonald's Corporation , No. 2005-412 (July 21, 2006) 

Facts: The defendant, McDonald's, was the franchisor and owner of the building in which Colley/McCoy Management Company, LLC, the franchisee, operated a McDonald's restaurant. The license agreement and the operator's lease agreement both provided that Colley/McCoy was an independent contractor responsible for all obligations and liabilities of the business. Colley/McCoy was a separate entity, independent of McDonald's, and was responsible for all day-to-day operations of the business.

In its role as franchisor, McDonald's published an operations and training (O&T) manual which addressed issues related to the operation of McDonald's restaurants, including safety and security procedures. The manual provided that restaurants owned and operated by McDonald's itself should treat the manual's rules and regulations as company policy, but stated that independent owner/operators "are encouraged to adopt appropriate policies for their restaurant."

In June of 2002, a field consultant hired by McDonald's to monitor McDonald's restaurants conducted a "restaurant systems review" of the restaurant operated by Colley/McCoy. The consultant recommended that Colley/McCoy rectify certain deficiencies relative to shift management, food safety and production. She also found several deficiencies in the restaurant's execution of the safety and security system, but did not request the development of any action plan to rectify these deficiencies.

On February 6, 2003 at approximately 3:00 a.m., the plaintiff was assaulted and severely beaten by intruders while working as a custodian for Colley/McCoy. After the attack, the plaintiff pressed the store panic button and then lost consciousness. However, the panic button was broken and the plaintiff remained unconscious on the store floor until found by another employee later that morning.

The plaintiff brought claims for negligence and vicarious liability against McDonald's. The trial court granted summary judgment in favor of McDonald's, ruling that McDonald's did not assume a duty to ensure that Colley/McCoy would follow its security measures designed to protect employees and did not retain sufficient control over Colley/McCoy's security policy so as to subject it to vicarious liability. The plaintiff appealed.

Held:   Affirmed.  The Court held that McDonald's did not assume a duty toward the plaintiff and, therefore, could not be held liable to him on a negligence theory. The Court also held that McDonald's was not vicariously liable for the negligence of Colley/McCoy due to the absence of an agency relationship.

Negligence: In order to prevail on a claim for negligence, the plaintiff must establish that the defendant owed him a duty, and that the defendant's breach of duty proximately caused the plaintiff's injuries. Liability can arise from the breach of a duty voluntarily assumed by the defendant if: 1) the failure to exercise reasonable care increases the risk of harm; 2) the defendant undertakes to perform a duty owed by another to the plaintiff; or 3) injury occurs because of reliance on the defendant's assumption of the duty.

The trial court correctly determined that McDonald's made no affirmative attempt to provide security at the franchise restaurant and, therefore, did not assume a duty to the plaintiff. The O&T manual and field consultant made recommendations, but did not mandate compliance with McDonald's policies and procedures regarding safety and security. Colley/McCoy remained responsible for the safety and security of its employees.

The court also rejected the claim that, as the landlord McDonald's "created the opportunity for criminal misconduct" by allowing the plaintiff to work alone at night. A landowner is not liable for criminal attacks based solely on the landlord-tenant relationship, but "special circumstances" may impose a duty if the landlord creates or is responsible for a known defective condition that increases the risk of a criminal attack. Liability could not be imposed on McDonald's since the plaintiff failed to establish that McDonald's knew or should have known of the risk of criminal misconduct.

Vicarious Liability: An agency relationship requires the following elements: 1) authorization from the principal that the agent shall act for him; 2) the agent's consent to act for the principal; 3) the understanding that the principal is to exert some control over the agent's actions.

The Court noted that most jurisdictions construe franchisor liability narrowly, and conclude that absent a showing of control over security measures employed by the franchisee, a franchisor cannot be held liable for a security breach. In this case, although McDonald's maintained authority to ensure that products and services offered by Colley/McCoy met its standards, this authority did not extend to control over security operations.

Regards,

Mike Wallenius

603-634-4300
mwallenius@getmanstacey.com