Cortland, a former bartender, sued GECP-Sunrise, LLC, a Buffalo Wild Wings franchisee, and its franchisor, Buffalo Wild Wings, Inc., claiming that she had been demoted due to her pregnancy and was sexually harassed by a manager and assistant manager at the franchisee's restaurant during her employment. Although Cortland and the managers were employed by the franchisee and the franchise agreement clearly stated that the franchisor and the franchisee were independent contractors, Courtland alleged that the franchisor was liable for the managers' wrongful acts under the "joint employer" and "vicarious liability" legal theories.
The U.S. district court in Arizona rejected the joint employer claim, stating that "a franchisor is not a joint employer unless it has significant control over the employment relationship [between the franchisee and its employees]." In the court's mind, since the franchisor did not have the right to hire, supervise, or fire employees; deal with payroll, scheduling, or employee recordkeeping; or compensate employees, but merely had the right to terminate the franchise relationship, a joint employment relationship did not exist.
The court also rejected Cortland's vicarious liability claim, holding that the franchisor could not be held vicariously liable in this matter under an agency theory because the franchisor did not exercise control over the managers. Although the franchisor trained the franchisee's managerial staff, it did so only to promote system uniformity, protect its brand name and dictate product presentation. However, since the franchisor did not exert daily control over the hiring, firing, and supervision of the franchisee's employees, did not mandate employee-related policies, was not involved in the daily management of the staff or the business, and did not address employee grievances, the court concluded that Cortland failed to demonstrate that anything other than an independent contractor relationship existed between the franchisor and the franchisee. To read the full case, click here.