Opinion ID: 1867072
Heading Depth: 2
Heading Rank: 3

Heading: The Arby's-DRI Relationship

Text: ¶44 Applying these principles here, we conclude that Arby's did not have control or the right to control the day-today operation of the specific aspect of DRI's business that is alleged to have caused the plaintiffs' harm, that is, DRI's supervision of its employees. We note first that the license agreement between Arby's and DRI contains a provision that disclaims any agency relationship. Section 11:1 provides: [DRI] shall at all times be deemed to be a separate and independent businessman, and neither [DRI] nor any of its employees, agents or representatives shall expressly or by implication be deemed to be an employee, agent, joint venturer, partner or representative of, or in a fiduciary relationship with, Arby's, or be authorized or empowered to create any claim, debt or obligation on behalf of Arby's or in any way bind Arby's thereto. The label the parties attach to their relationship is informative but not dispositive, however. ¶45 The license agreement contains a plethora of general controls on the operation of DRI's restaurant, the most sweeping of which is Article 4, which covers Operating Standards and Guidelines. The centerpiece of this clause in the agreement is a requirement that DRI must operate the business strictly in conformity with the Manual provided by Arby's. The agreement also provides that DRI must comply with all laws and regulations pertaining to the operation of the business. The agreement requires DRI to maintain records of its business operations in a manner satisfactory to Arby's. It requires that DRI's building and equipment must meet specifications designated and approved by Arby's. DRI must obtain its supplies from a list of approved suppliers provided by Arby's. The agreement specifies standards regarding containers, uniforms, paper goods, and other packaging supplies. ¶46 DRI is required under the agreement to carry at least $1 million of liability insurance, naming Arby's as an additional insured. Arby's retains the right under the agreement to inspect DRI's premises and to test the products. The agreement specifies that if DRI fails to comply with the agreement or fails to operate the business in accordance with the then-current operating manual, Arby's may demand that DRI cure its failure, and may unilaterally terminate the license if DRI has not done so within ten days. ¶47 These provisions in the license agreement are consistent with the quality and operational standards commonly contained in franchise agreements to achieve product and marketing uniformity and to protect the franchisor's trademark. They are insufficient to establish a master/servant relationship. More particularly, they do not establish that Arby's controlled or had the right to control DRI's hiring and supervision of employees, which is the aspect of DRI's business that is alleged to have caused the plaintiffs' harm. ¶48 The agreement's provisions regarding the specific issue of personnel are broad and general. Section 6:1 of the agreement provides that DRI is required to hire, train, maintain and properly supervise sufficient, qualified and courteous personnel for the efficient operation of the Licensed Business. Section 6:2 states that someone in charge at the restaurant is required to complete a management training seminar conducted by Arby's. The operating manual provides guidelines for hiring, training, and supervising employees in accordance with applicable labor laws and to achieve an efficient, courteous, and satisfied work force. ¶49 By the terms of this agreement, DRI has sole control over the hiring and supervision of its employees. Arby's could not step in and take over the management of DRI's employees. Arby's right to terminate the relationship because of an uncured violation of the agreement is not the equivalent of a right to control the daily operation of the restaurant or actively manage DRI's work force. Accordingly, we agree with the court of appeals and the circuit court that there is no genuine issue of material fact as to whether DRI is Arby's servant for purposes of the plaintiffs' respondeat superior claim against Arby's: clearly it is not. Arby's cannot be held vicariously liable for DRI's alleged negligent supervision of Pierce.