Citation. Murphy v. Holiday Inns, Inc., 216 Va. 490, 219 S.E.2d 874, 81 A.L.R.3d 756 (Va. 1975)
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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.
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.
The issue is whether the franchise contract established a master-servant relationship.
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.