The Texas Supreme Court reversed a lower court’s decision against a franchisor based on a theory of negligence after a customer was assaulted by an employee of the franchisee. The court concluded that franchisor did not owe a duty of care to the customer.
Franchisor, Massage Heights Franchising, entered into a franchise agreement with MH Alden Bridge for a massage franchise. The franchise agreement provided that franchisee was an independent contractor with sole responsibility for all employment decisions subject to two conditions: all massage therapists had to (1) be licensed by the state and (2) undergo an oral interview, a practical interview and a background check by a third-party provider. Franchisee hired Rubio as a massage therapist after he obtained his massage therapy license and passed his interviews and a background check.
Plaintiff was a regular customer of franchisee. On the day of the assault, she requested Rubio as her massage therapist, unaware that another customer had complained to franchisee that Rubio had assaulted her during a massage. Rubio assaulted plaintiff during her massage. Plaintiff complained to franchisee about the assault and a report of the assault was put into Rubio’s file. Plaintiff sued franchisor, franchisee, Rubio and the individual owners of franchisee, alleging claims of assault and negligence.
The jury (i) found all defendants negligent, (ii) found a negligent undertaking by franchisor, (iii) attributed 15 percent responsibility to franchisor, and (iv) awarded exemplary damages. An appellate court upheld the lower court’s decision regarding the franchisor’s duty of care.
On appeal, the Texas Supreme Court analyzed whether franchisor exercised control over its franchisee. A duty of care for another party’s work is owed if there is a contractual right to control the means, methods, or details of that work.
In this case, the franchise agreement expressly designated franchisee as an “independent contractor” and the “sole operator” of its massage business. The franchise agreement made franchisee solely responsible for all employment decisions, including hiring, firing, training, supervising, disciplining, record keeping, and personnel policies. This responsibility remained with franchisee even if it received advice from franchisor on these matters. As such, the court determined that franchisor did not have a contractual right to control franchisee’s hiring of the massage therapist.
The court also analyzed whether franchisor exercised any actual control over Rubio’s hiring. Although franchisor provided certain safety guidelines such as requiring franchisees to conduct background checks, the court found that franchisor did not have actual control over hiring. The court held that the lower courts erred in concluding that franchisor owed plaintiff a duty of care concerning Rubio’s hiring because there was no evidence of right of control or actual control over franchisee’s hiring decisions.
To avoid potential liability for the hiring practices of franchisees, franchisors should consult with counsel to ensure the franchise agreement does not impute the right to control franchisees’ hiring practices. Additionally, franchisors should consult with counsel to ensure their conduct does not amount to having actual control over franchisees’ hiring practices.
Massage Heights Franchising, LLC v. Hagman, 68 Tex. Sup. Ct. J. 755 (Tex. May 2, 2025)
