While employers are liable for the actions of their employees (specifically speaking, they are “vicariously liable”), franchisors don’t have to be – that is, if they have the right provisions written out. Laws vary from state to state but if you are a franchisor it’s a very good idea to check-in with your contractual obligations regarding your relationship with the franchisees, specifically concerning hiring and firing.
When a franchisee displays poor conduct, like the current case McDonald’s is battling right now, the franchisors should not be liable. I say “should not” because oftentimes people looking to sue a franchisee want to take it one step further and sue the franchisor as well … and sometimes it works.
In the case of McDonald’s, the franchisor requires that all franchisees used a specific system for hiring employees. That very contractual statement connects the McDonald’s franchisor and franchisees as joint employers, so when the franchisee in New York allegedly fired employees for their involvement in union activities, the lawsuit went all the way back to the franchise. And technically, the franchisor was liable due to its hiring requirement.
You can avoid all of this by offering a hiring system instead of requiring one. Hiring systems are very common for franchises because it’s of the utmost importance to make sure employees are suited for the job and will perform in a consistent manner throughout the business, no matter their location. That’s where PredictiveProfiles can help you. We have a hiring system that costs you, the franchisor, nothing, and that each franchisee who is interested can utilize for just $25/month/location. Going about hiring this way still ensures an organized process but takes the liability off of the franchisors.
If you have any questions or comments about this, please write something in the comments below or even contact me directly at email@example.com or at 952-921-8813.