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Court Watch

By Zach Eyster
June 02, 2015

An important advantage of establishing a franchise system, as opposed simply to licensing one's intellectual property and know-how, is that it permits the franchisor to exercise significant commercial control over its franchisees while also being insulated from liability. Two recent cases demonstrate and help to clarify this advantage.

Domino's Pizza

In Domino's Pizza, LLC v. Reddy, Bus. Franchise Guide ' 15,501 (Tx. Ct. App. Mar. 19, 2015), one person was killed and another injured when a car driven by a Domino's Pizza delivery driver hydroplaned due to a bald tire and crashed into another vehicle. The guardian of the estates of the injured victim and deceased victim sued the driver, MAC Pizza Management, Inc., a Domino's franchisee, and Domino's itself for negligence. After a trial, the jury returned a verdict in favor of the crash victims, determining that the driver was 10% at fault, MAC was 30% at fault, and Domino's was 60% at fault.

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