Legal Environment of Business 8th Edition by Henry Cheeseman

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Liability of a Franchisee The Southland Corporation (Southland) owns the 7-Eleven trademark and licenses franchisees to operate convenience stores using this trademark. Each franchise is independently owned and operated. The franchise agreement stipulates that the franchisee is an independent contractor who is authorized to make all inventory, employment, and operational decisions for the franchise.
Timothy Cislaw, 17 years old, died of respiratory failure. His parents filed a wrongful death action against the franchisee, a Costa Mesa, California, 7-Eleven franchise store, and Southland, alleging that Timothy's death resulted from his consumption of Djarum Specials (clove cigarettes) sold at the Costa Mesa, California, 7-Eleven franchise store. The Costa Mesa 7-Eleven was franchised to Charles Trujillo and Patricia Colwell-Tru-jillo. Southland defended, arguing that it was not liable for the alleged tortious conduct of its franchisee because the franchisee was an independent contractor. The plaintiffs alleged that the franchisee was Southland's agent and therefore Southland was liable for its agent's alleged negligence of selling the clove cigarettes to their son. Is the Costa Mesa franchisee an agent of Southland, thus making Southland liable for the alleged tortious conduct of its franchisee? Does the doctrine of apparent agency apply in this case? Who wins? Cislaw v. Southland Corporation, 4 Cal.App.4th 1284, 6 Cal.Rptr.2d 386, Web 1992 Cal.App. Lexis 375 (Court of Appeal of California)