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Independent Contractors Franchise Agreements

Independent contractors are individuals or entities that perform work for other individuals or entities, but are not employees of those individuals or entities. Whether a worker is an employee or an independent... more +
Independent contractors are individuals or entities that perform work for other individuals or entities, but are not employees of those individuals or entities. Whether a worker is an employee or an independent contractor is not always an easy determination. However, due to differences in tax and liability treatment, misclassifying an employee as an independent contractor can have serious consequences. Autonomy is the defining feature of independent contractor arrangements. Independent contractors control the manner and method of how work is performed while payers control the desired result. Control over schedule and number of hours worked, ownership of equipment or tools, permanency of relationship, and acceptance of jobs from multiple entities are all possible factors in determining whether a worker is an employee or independent contractor.   less -
Lewitt Hackman

Franchisor 101: Duty of Care

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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...more

Lathrop GPM

Massachusetts Supreme Judicial Court Rules that Franchisees Did Not Perform Services for Franchisor Within the Meaning of the...

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The Massachusetts Supreme Judicial Court answered “no” to a certified question from the First Circuit Court of Appeals asking whether plaintiff franchisees “‘perform any service’ for 7-Eleven within the meaning of [the...more

Fisher Phillips

7-Eleven Franchisees Are Not Employees Under Massachusetts Law: 5 Tips to Ensure Compliance After Latest Ruling

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The Massachusetts Supreme Judicial Court (SJC) just delivered a win for franchisor-franchisee relationships. Specifically, the court held that 7-Eleven franchisees are not performing a “service” for their franchisor, meaning...more

Constangy, Brooks, Smith & Prophete, LLP

Oh, thank heaven! 7-Eleven franchisees were not misclassified “employees,” MA high court rules

The Supreme Judicial Court of Massachusetts, answering a certified question, has ruled that five 7-Eleven franchisees were independent contractors, not misclassified “employees,” under the Massachusetts Independent Contractor...more

Seyfarth Shaw LLP

The Massachusetts Supreme Judicial Court Upholds 7-Eleven Franchise System in Denying Franchisees’ Challenge to Their Independent...

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On September 5, 2024, the Massachusetts Supreme Judicial Court (“SJC”) answered a second certified question in Patel, et al. v. 7-Eleven, Inc., et al. (“Patel II”), a long-running case where 7-Eleven franchisees claimed they...more

Troutman Pepper Locke

Some Individuals Acting as Franchisees Are Independent Contractors Under Massachusetts’ Strict Classification Test

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7-Eleven has been defending its position for years that individuals operating as franchisees of its retail stores in Massachusetts are not employees under that state’s strict Independent Contractor Law but rather are exempt...more

Lathrop GPM

First Circuit Certifies Second Employee Misclassification Question to Massachusetts Supreme Court in Ongoing 7-Eleven Case

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The First Circuit Court of Appeals recently certified to the Massachusetts Supreme Court the question of whether franchisee plaintiffs in an ongoing case pass the threshold inquiry under the state’s three-prong employee...more

Lathrop GPM

Maine Federal Court Grants Franchisor’s Motion to Dismiss Age Discrimination Claim Brought by Franchisee’s Independent Contractor

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A federal court in Maine granted a franchisor’s motion to dismiss claims asserting that a franchisor was liable for its franchisee’s alleged age discrimination in employment. Goodwill v. Anywhere Real Est., 2023 WL 4034372...more

Fisher Phillips

7-Eleven Franchise Owners Not Deemed Employees Under Massachusetts Law

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A federal court recently ruled that 7-Eleven franchise owners are not employees of the franchisor, the latest development in a long-running legal saga challenging their status as independent contractors. However, this...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Eleventh Circuit Serves a Whopper of a Ruling on Franchisor’s ‘No-Poach’/‘No-Hire’ Agreement With Franchisees

​​​​​​​Over the last several years, business-to-business “no-hire” and “no-poach” agreements have come under legal attack, including through enforcement actions by the Federal Trade Commission and criminal prosecutions by the...more

Partridge Snow & Hahn LLP

Massachusetts SJC Holds that Independent Contractor Statute Applies to Franchisees

On March 24, 2022, the Massachusetts Supreme Judicial Court (“SJC”) determined that the Massachusetts independent contractor statute (G. L. c. 149, § 148B) applies within the franchisor-franchisee context and does not...more

Fisher Phillips

Massachusetts Franchise Owner-Operators May Be Employees of Franchisors

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The Massachusetts Supreme Judicial Court just held that 7-Eleven franchisees may be employees of 7-Eleven under Massachusetts wage and hour law. The March 24 decision in Dhananjay Patel v. 7-Eleven, Inc. will have significant...more

Lewitt Hackman

Franchisee 101: Jani-King Franchisees Wear Many Crowns

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Past and present franchisees of commercial cleaning service franchisor, Jani-King, brought claims for violation of Connecticut minimum wage and anti-kickback laws, and unjust enrichment. They claimed Jani-King misclassified...more

Constangy, Brooks, Smith & Prophete, LLP

The Cons Of The PRO Act

The Protecting the Right to Organize Act of 2021 (also known as the “PRO Act”) is back with its laundry list of organized labor’s most-wanted government handouts. After decades of declining membership, unions see the PRO Act...more

Lathrop GPM

The Franchise Memorandum - Issue # 262

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California Supreme Court Applies Independent Contractor Standard Retroactively; Does Not Reach Applicability to Franchises - The California Supreme Court has held that its Dynamex decision applies retroactively, answering...more

Lewitt Hackman

Franchisor 101: California’s Dynamex/ABC Test is Retroactive

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In 2019, the U.S. Court of Appeals for the Ninth Circuit held that the ABC Test announced in a California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) could apply to franchise...more

Lewitt Hackman

Franchisor 101: The Wrong Tools to Avoid California Courts

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The Ninth Circuit ruled that a California Matco Tool franchisee, John Fleming, could bring a class action wage and hour suit in California, even though a forum selection clause in the distribution agreement specified Ohio...more

Littler

Highest Court in Canada Says Substance, not Form, will Determine Independent Contractor or Employee Status

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A recent Supreme Court of Canada (SCC) decision considered whether a franchisee who entered into a franchise agreement with a franchisor was an employee or an independent contractor. The fact-specific case, Modern Cleaning...more

Lewitt Hackman

Franchisee 101: Operation Philadelphia

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A 7-Eleven franchisee of more than 40 years brought claims that the convenience store franchisor engaged in a region-wide scheme, dubbed “Operation Philadelphia,” to force older franchisees to terminate their franchise...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

NLRB Decision Shines Spotlight on “Entrepreneurial Opportunity,” Returns to Prior Independent Contractor Analysis

On January 25, 2019, the National Labor Relations Board issued a decision friendly to businesses—particularly those operating in the gig economy—in SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019). The Board’s decision marks a...more

McAfee & Taft

Employers must still use caution when using independent contractors

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A new opinion from the Tenth Circuit Court of Appeals, Acosta v. Jani-King of Oklahoma, Inc., is a reminder that there are still significant risks when classifying workers and independent contractors....more

Seyfarth Shaw LLP

Oh Thank Heaven, Franchisees Not Employees of 7-Eleven!

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Seyfarth Synopsis: Earlier this month, a California federal court dismissed the misclassification claims of 7-Eleven franchisees on the pleadings, finding they did not and could not plead facts sufficient to show that they...more

Lewitt Hackman

FRANCHISOR 101: A Clean Sweep

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A federal court recently held that under California law, cleaning services franchisor Jan-Pro Franchising International (Jan-Pro) was not the employer of its unit franchisees. The franchisee plaintiffs failed to show that...more

Snell & Wilmer

Drafting Franchise Agreements After Patterson v. Domino’s : Avoiding the Minefield of Vicarious Liability and Joint Employment

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Lauded as one of the most important franchise cases in the recent past, Patterson v. Domino’s established a new standard for addressing vicarious liability issues in California. In reaching its decision that Domino’s was not...more

Troutman Pepper Locke

Your Own Agreements Can Be Your Worst Enemy in IC Misclassification Cases

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Companies that use independent contractors (ICs) typically require ICs to sign a contractor agreement prepared by the company. But, if it is drafted like the one reviewed in late September by the U.S. Court of Appeals for the...more

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