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.
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.
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.View Full Point of Law
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.