Georgia Court of Appeals Examines Effect of Franchise Relationship in Premises Liability Suit

A key complication that arises in many personal injury suits, especially premises liability suits, is the existence of a franchise relationship. Although many consumers do not see the functional difference between a business that is directly run by the larger corporate entity and those that are run pursuant to a franchise agreement, the existence of a franchise relationship has significant implications for determining legal liability. In a recent premises liability case, Bright v. Sandstone Hospitality, LLC, the Georgia Court of Appeals addressed some of the commonplace liability limitations that are implicated when a franchise relationship exists.
The plaintiff in Bright was a guest at a Wingate Inn in August 2008. Although the inn carried Wingate’s name, the facility was actually owned and operated by Sandstone Hospitality, LLC and merely franchised by Wingate International Inns, Inc.. The plaintiff took a bath the morning after his arrival at the inn, and when he attempted to hoist himself from the tub with the aid of a grab bar, the bar detached from the wall and struck him in the head and injured his lower back. The resulting injuries required surgery, and the plaintiff brought suit against Wingate International Inns, Inc. and Sandstone Hospitality, LLC for recovery. Following some discovery, both defendants made separate motions for summary judgment, which the trial court granted in their favor. On appeal, the Georgia Court of Appeals reversed the grant of summary judgment with respect to Sandstone Hospitality but affirmed the grant of summary judgment with respect to Wingate. This division in judgment reflects the limitations that exist when one attempts to impose liability on a franchisor for injuries sustained at a site operated by a franchisee.
The plaintiff first argued that Wingate should be held liable because there was apparent agency relationship between Wingate (the principal) and Sandstone (the agent). In support of this argument, the plaintiff first relied on evidence of common signage at all Wingate sites, whether or not they are run by a franchisee. However, under Georgia law, merely displaying signs or trademarks symbols is insufficient to establish that an apparent agency relationship exists. While the plaintiff did cite one case that placed liability on a franchisor when common signage was used and the franchisee failed to provide notice it was independently owned and operated, the court distinguished that case from the one at hand because a sign at the front desk of this particular Wingate specifically noted that it was owned and operated by Sandstone Hospitality, LLC. Accordingly, as a matter of law, no apparent agency relationship could exist.

Alternatively, the plaintiff argued that he, as a hotel guest, was a third-party beneficiary under the franchisee agreement between Wingate and Sandstone, since Wingate pursuant to the agreement performed quality assurance inspections of franchisee properties. However, this argument was similarly unavailing because “an injured party may not sue a third-party beneficiary for failure to perform a duty imposed by a contract unless it is apparent from the language of the agreement that the contracting parties intended to confer a direct benefit upon the [injured party] to protect him from physical injury.” Anderson v. Atlanta Committee for the Olympic Games, Inc., 273 Ga. 113, 117 (4) (537 SE2d 345) (2000). The agreement between Wingate and Sandstone contained language in the section titled “Operating Obligations” that specifically disavowed Wingate’s liability for any injury arising from inspection of the facility. In addition, blanket provisions at the beginning of the agreement state that the agreement was made exclusively for the benefit of the parties and that there were no intended third-party beneficiaries. Accordingly, given the absence of intent to confer a benefit on guests, the injured plaintiff could not, as a matter of law, be a third-party beneficiary under the franchisee agreement. Accordingly, it was proper for the court to grant summary judgment to Wingate.
Although the Court of Appeals did overturn the trial court’s grant of summary judgment to Sandstone, an issue that persists for many litigants is that franchisees typically are not as capable of compensating an injured plaintiff for his or her injuries as the franchisor corporation. Given the ubiquity of franchise relationships, assuring full recovery for one’s injuries often requires that one successfully navigate the boundaries that exist for obtaining liability against a franchisor. Although obtaining recovery from a franchisor can be an involved undertaking, advice and representation of competent counsel can go a long way. If you’ve recently been injured at a business establishment, the Atlanta premises liability attorneys at the Law Office of Terrence R. Bethune are informed in all areas of Georgia premises liability law and are ready to hear your story. If you’d like a free case evaluation, click here or call 1-800-487-8669.