AGENCY ARTICLE The question that is answered by this article is that Can a franchisees mere display of trademarks and

resale of branded products constitute a representation on behalf of the franchisor give rise to an apparent agency claim against a franchisor, who is not possession of the premises and is not involved in its day to day dealings and has no control over the franchisees employees. The 2 claims that are taken by the plaintiff are that of vicarious liability and ostensible liability. Reasons why a customer goes to a franchisee store The article begins with talking about the reasons why customers visit the franchisee shops. It is explained through the example of a gasoline service station and an accompanying convenience store. The reasons that a customer could enter could be 1) To buy the trademarked products that is gasoline and motor oil 2) To buy products that are neither produced or bear the trademark of the franchisor such as magazines, cigarettes or coffee 3) Some may buy a combination of the above two 4) Others might come just to use the telephone, restroom facility or just to get change Types of franchisors The franchisor could either be the owner and possessor of the premises OR he could be the lessor OR he could be both the lessor and the owner. Before discussing the claims of the plaintiff through vicarious liability and ostensible liability, the article deals with The nature of relationship between the Franchisee and the Franchisor

When dealing with the nature of the relationship, there are two possibilities that shall give rise to two different types of claims. 1) If the relationship between the franchisor and the franchisee is that of principal and agent then the claim of vicarious liability shall be used 2) If the relationship of the franchisor and the franchisee is that of principal and independent contractor, then the franchisor can only be held ostensibly liable It should be noted that generally the franchisee is an independent businessman and if he is an independent businessman, then the franchisor cannot be held vicariously liable. Factors that help in deciding whether the franchisee is the agent of the franchisor So in order to decide whether the franchisee is the agent of the franchisor or not there are three techniques that are used by the courts 1) The Pre-existing relationship between the franchisee and franchisor- this gives evidence to the degree of independence of the franchisee. There are two possible relationships. 1) Franchisee is a independent businessman who has been independent of the franchisor. This means that the franchisee and its employees are not the agents of the franchisor 2) It is also possible that the franchisee or its employees could have been agents of the franchisor

2) Agreement between franchisor and franchisee- This is also an important factor. Generally the majority of the franchise agreements provide that the franchisee is an independent business person. Such an agreement may have any of the following conditions

1) The franchisor may not be given any right to directly control the franchisees business 2) The franchisee has complete control over his business and operations subject to the obligations and performance that have been set down in the agreement 3) The franchisee, or any person engaged in any work on the premises---article 3) Testimony of the franchisor and franchisee--- refer to article The article later talks about the 2 claims that are generally made. They are that of vicarious liability and that of ostensible liability. With respect to vicarious liability if the franchisee is independent then there is no vicarious liability Ostensible Liability is when the purported principal makes a representation or takes some action that leads a third party to reasonably believe that an agency relationship exists between the franchisor and the franchisee. With regard to ostensible liability there are three conditions that have to be proved. They are 1) The franchisor makes a representation to a third party that the franchisee is an agent of the franchisor 2) The third party reasonably believes the franchisee is an agent of the franchisor under the given circumstances 3) The third party reasonably relies on the existence of that relationship. The plaintiff has to prove three things ( given in article Pg 70 ) 1) Plaintiff must show that the franchisor represented that a particular service or safety level existed and that the plaintiff visited the premises of the franchisee in reliance on the franchisors representation 2) Plaintiff must show evidence that he reasonably believed that an agency relationship existed 3) He should show that he was injured because he relied on that perceived fact

If there is failure in any one of the above, then the claim of ostensible liability shall also fail. How in real life with example of cases the plaintiff has failed in each of the categories above is explained in the remaining article from Pg 71 to 79. READ CONCLUSION for summary