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Murphy v. Holiday Inns, Inc

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Brief Fact Summary. Plaintiff, Kyran Murphy, slipped and injured herself at a hotel operated that was franchised by Defendant, Holiday Inns, Inc., to a third party.

Synopsis of Rule of Law. When establishing an agency relationship through a contract, the nature and extent of the control agreed upon will determine whether the agency exists.

Points of Law - Legal Principles in this Case for Law Students.

Plaintiff and defendant also agree that, in determining whether a contract establishes an agency relationship, the critical test is the nature and extent of the control agreed upon.

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Facts. Plaintiff slipped and fell on a puddle of water that was dripping from an air conditioning unit at the hotel. Plaintiff wanted to hold Defendant accountable for her injuries. A third party owned the hotel, but they agreed to a franchise agreement with Defendant that dictated the name and look of the building and fixtures. The agreement also required the third party to submit reports and pay Defendant a certain amount per room per day.

Issue. The issue is whether the franchise contract established a master-servant relationship.

Held. The contract did not establish a master-servant relationship. Many of the provisions of the contract were in place to protect Defendant’s trademark. However, normal day-to-day operations, such as hiring, price structure and business expenditures were still controlled by the third party hotel owner.

The court allowed a summary judgment because the issue before the court was a question of law since it was interpreting terms of a contract.

The court noted that franchise agreements can still establish a master-servant relationship, but the agreement here did not meet the burden. However, the court seems to raise the bar for proving an agency relationship when the master-principal is obligated to exert further control to protect a trademark.

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