An International Model for Vicarious Liability in Franchising

Vicarious liability in the franchising context is a fundamental issue, both in the United States and foreign jurisdictions. With no all-encompassing, clear precedent in the United States, other nations’ approaches may provide lessons for American lawmakers and the U.S. franchising community. Together, the division between jurisdictions and the absence of uniform standards for imposing vicarious liability on franchisors demonstrate the need for more comprehensible and predictable case law. This need can be met through an examination of European regulations, model laws, and guidelines, as well as the laws in a number of nations worldwide, which indicate a pathway to better franchise agreements and possible governmental mandates (e.g., prominent, required notices about a franchise’s business ownership). Franchisors would have in hand the means to determine their risks and plan their behavior, even accounting for the more effective approaches to franchisor vicarious liability that are sometimes found elsewhere in the global franchising community.

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