Many franchise systems include operational control provisions akin to those relied on by the court in determining that Domino’s was vicariously liable for the negligence of a franchisee’s employee.

In its January 31, 2025, ruling in Coryell v. Morris, No. 1977 EDA 2021, the Pennsylvania Superior Court presented a standard for vicarious liability for franchise companies that could expose many, if not all, franchisors to liability for the acts of their franchisees and those franchisees’ employees.

In the ruling, the Superior Court affirmed a jury’s finding that multinational pizza chain Domino’s was vicariously liable for the negligence of its franchisee’s employee, a pizza delivery driver who hit and seriously injured the plaintiff in a traffic accident.

To reach its conclusion that Domino’s was vicariously liable for the franchisee’s employee’s negligence, the court examined whether Domino’s had day-to-day control over the franchisee’s operations and analyzed the features of an agency relationship that are sufficient to support a finding of such control. The court concluded that the level of control Domino’s retained over its franchisee “exceeded mere protection of its brand and trademark” and subjected the franchisee “to Domino’s will as to the minutia” of the store’s staffing and operations.

Examples of Domino’s control over the store operations of its franchisee that were noted by the court included:

• The intervals of store cleaning;
• The supplies permitted on location;
• Acceptable customer payment methods;
• The terms of store leases and store site plans;
• Hours of store operation;
• Computer processing programs and speeds thereof;
• The financial records to be maintained by the franchisee;
• Acceptable marketing promotions;
• The type of money safe used;
• The number of telephones in the store; and
• The number and location of digital clocks viewable in the store.

In addition, the court also highlighted the degree of control Domino’s exercised over the employees of the franchisee’s store, which included:

• The length of employees’ fingernails and facial hair;
• The size and amount of employees’ jewelry;
• Topics for employee training;
• The amount of cash, including personal cash, drivers were permitted to carry while making deliveries;
• The prohibition on drivers possessing self-defense items, like mace, in delivery vehicles;
• The permissible level of visible “wear and tear” on delivery vehicles;
• The prohibition on hiring employees with tattoos; and
• The scripting of employee responses to customer complaints.

In what the dissent argued was a departure from the court’s prior opinions, the majority found that these “mandates” left the franchisee “with practically no discretion [as to] how to conduct the day-to-day operations of its franchise store.” Based on the extent of control Domino’s was entitled to exercise over the franchisee’s store operations and the employees of the franchisee, the Superior Court held that the jury’s finding that an agency relationship existed between Domino’s and its franchisee was neither contradictory to the law nor to the evidence presented at trial.

Many franchise systems include operational control provisions akin to those relied on by the court in determining that Domino’s was vicariously liable for the negligence of a franchisee’s employee. As such, in the wake of Coryell (and assuming the decision is not reversed on appeal) franchisors may find themselves facing expanded vicarious liability under Pennsylvania law based on aspects of the franchisor-franchisee relationship that they may have thought to be innocuous. Franchisors could be facing difficult choices under Pennsylvania law between limiting their risk and exercising a sufficient degree of control over a system to ensure a consistent level of quality and customer experience.

The Superior Court’s decision in Coryell is also notable in that it marks yet another instance in recent years in which Pennsylvania courts have adopted standards that arguably expand vicarious liability under Pennsylvania law. For example, in Mortimer v. McCool, 255 A.3d 261 (Pa. 2021), the Pennsylvania Supreme Court adopted the enterprise theory of corporate veil piercing, thereby placing Pennsylvania among the minority of states that have adopted this theory of vicarious liability and expanding the scope of veil piercing under Pennsylvania law to “sister” or “affiliated” business entities.

For More Information

If you have any questions about this Alert, please contact J. Manly Parks, Jessica Priselac, Alessandra Mungioli, any of the attorneys our Franchise and Distribution Law Group, any of the attorneys in our Trial Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.