Hotel & Motel Management - May 19, 2008 - (Page 14)

14 Franchise Law IN THE details Hotel industry often liable Franchisor held accountable Cases bring different results Courts shifting on issue H&MM May 19, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Vicarious liability creates franchising risk S By Mort Aronson H&MM Columnist imply stated, vicarious liability in franchising is when a franchisor is held liable for the acts of a franchisee that caused injury or damage to a third person. Nowhere are the negatives of vicarious liability more evident than in the hotel industry. Guests at hotels incurring injuries or damages will sue not only the fran- chisee but also the franchisor, based on the premise that the franchisor controls the franchisee and should have prevented the injury and damages. There are a number of factors that need to be considered in minimizing the effectiveness of vicarious liability claims, including control, actual agency, apparent agency, contractual pro- visions, notice and insurance. Franchisors exercise their best efforts in implementing terminology in their franchise agreements to demonstrate that the franchisee is in control of the day-to-day operations of the hotel and not the franchisor. Further, hotel franchisors in the main require franchisees to place notices in prominent places that “We work with many of the largest ATM deployers in the country and have found that in terms of service levels, operational controls, and integrity of the operators that ATM Systems is in the very upper echelon of all of the ATM companies in the country.” --Cash Connect, a division of WSFS Bank John Clatworthy, VP of Sales & Marketing “I am a loyal client as a result of your professionalism and reaction time to my needs. Your decision to replace the old ATM was much appreciated. The new ATM is perfect.” --Radisson Hotel Sacramento George LaPointe, Director of Operations “Our front desk employees continually share with me the positive feedback they have received from our guests. Based on these comments, it’s clear that the ATM is fulfilling a guest service need at our hotel and has proven to be a real convenience for our guests.” --Radisson Hotel Boston Jack Eagan, Controller the hotel is independently operated by the franchisee. Despite these precautions, claimants will attempt to hold the franchisor liable based on actual agency and apparent agency claims. Cases with similar facts have resulted in contradictory ﬁndings. In Sims v. Marriott International, 2001, the court denied Marriott’s motion for summary judgment relating to vicarious liability issues on injuries to a hotel guest at a franchisee hotel. The court indicated the plaintiff relied on the Marriott name in selecting the hotel and saw no notice that an entity other than Marriott operated the hotel. A contrary ﬁnding is the case of Anderson v. Turton Development, 1997. The court in Anderson denied vicarious liability against the franchisor on injuries to a guest on a handicapped ramp from the hotel sidewalk. The court noted that the franchise agreement wouldn’t support a ﬁnding that the franchisor had the right to exercise such control as to make it vicariously liable for the acts of the franchisee. Although the franchisee failed to notify the injured guest through signs or other written material that it was independently operated, this was not enough to result in vicarious liability to the franchisor. Most hotel franchise agreements today include indemnity provisions where the franchisee indemniﬁes the franchisor from claims and liability asserted against the franchisor. It further requires the franchisee to carry adequate insurance to cover such claims, insulating the franchisor against loss from successful vicarious liability actions. Most recent legal trends seem to indicate that courts are becoming more conservative in applying vicarious liability to franchisors for the torts of their franchisees. hmm@questex.com Mort Aronson is counsel with the international law ﬁrm of Kilpatrick Stockton LLP, which is based in Atlanta. He also is an adjunct professor at Emory Law School. He can be reached at (404) 745-2414 or MAronson@ KilpatrickStockton.com. ATM Systems CIRCLE NO. 101 http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.atmsystems.com http://www.atmsystems.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - May 19, 2008

Hotel & Motel Management - May 12, 2008 Contents Hotelier of the Year Leads Team to Victory Sheraton Builds on International Success Slower, Smaller Transactions in First Quarter Perspective Legal FAQ What Women Want Sales Clinic AAHOA Update Franchise Law Family Business Travel Trends Guest Column HotelWorld Update Trends & Stats Cleaning and Maintenance H&MM's 2008 Franchising Fees Guide FACs Evolve to Meet Brand, Owner Needs The Importance of Branding When Buying Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - May 19, 2008

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