What liability does Extreme Art Studio have for employment-related actions at the franchised business?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
You expressly agree, and will never contend otherwise, that our authority under this Franchise Agreement to certify certain of your employees or independent contractors for qualification to perform certain functions for the Extreme Art Studio Business does not directly or indirectly vest in us the power to hire, fire, or control any such employee or independent contractor.
You agree that any direction you receive from us regarding employment policies should be considered as examples, that you alone are responsible for establishing and implementing your own policies, and that you understand that you should do so in consultation with local legal counsel well-versed in employment law.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, Extreme Art Studio aims to limit its liability regarding employment-related actions within a franchised business. The franchisee is responsible for establishing and implementing their own employment policies, and should do so in consultation with local legal counsel.
Extreme Art Studio's authority to certify franchisee employees or independent contractors does not give them the power to hire, fire, or control these workers. Any direction from Extreme Art Studio regarding employment policies is considered examples, and the franchisee is responsible for their own policies.
The franchisee is required to maintain liability insurance that covers claims for bodily and personal injury, death, and property damage caused by the operation of the franchised business or the activities of the franchisee's personnel. However, the FDD does not specify the extent to which this insurance protects Extreme Art Studio itself from vicarious liability for the franchisee's employment actions.
Prospective franchisees should consult with legal counsel to fully understand their responsibilities as employers and how to minimize potential liabilities. They should also inquire with Extreme Art Studio about specific insurance requirements and any additional protections offered to the franchisor.