Question

William Roberts operated a McDonald's restaurant under a franchise agreement with McDonald's Corporation. Roberts hired 23-year-old David Mabin, who was just released from jail for robbery, drug use, and theft, as an hourly worker. Soon, Roberts promoted Mabin to assistant manager on the night shift at the restaurant. A 15-year-old girl began working at the McDonald's, and she quickly became involved with Mabin, who provided her with free food, alcohol, and drugs (including ecstasy) and kissed her openly in the workplace. Just before the girl's sixteenth birthday, Mabin took her to a motel where they spent the night and engaged in sexual intercourse. The girl and her family later brought suit against McDonald's Corporation, claiming that McDonald's Corporation was the principal to Roberts through apparent agency. McDonald's Corporation was supposed to be a business with a wholesome reputation and a safe workplace, but instead the minor was taken advantage of by her assistant manager. The girl argued for apparent agency with McDonald's as the principal because she claimed that as far as she was concerned, she worked for McDonald's Corporation, not just the franchise. She had a McDonald's logo on her uniform, her paycheck, and restaurant products. However, the application she filled out for employment stated, “I understand that my employer is an independent Owner/Operator of a McDonald's franchise and that I am not employed by McDonald's Corporation or any of its subsidiaries. The independent Owner/Operator of this restaurant is solely responsible for all terms, conditions and any other issues concerning my employment.” Was there an apparent agency relationship between McDonald's Corporation and the franchise? Why or why not? [D.L.S. et al. v. David Mabin et al., 130 Wn. App. 94, 121 P.3d 1210 (2005).]

Answer 1

Apparent Authority is the power of an agent to act on behalf of the principal, even though not expressly or impliedly granted by any contract. This power arises only if 3rd party believes from the conduct of the principal, that the principal granted such power to the agent. The idea behind apparent authority is to protect the third party from any frauds or misappropriation done by the agent by making the principal responsible for the acts done by the agent. Typically, if an Agent has apparent authority, the agent's principal will be held liable responsible if anything is done by the Agent.

Referring to the above it is very clear that any application signed by the employee at the time of accepting the employment will not be valid if it makes only the agent responsible for his acts and not the principal. Also, any franchise across the world of MCD Corporation will always be an apparent agency of MCD Corporation because it is doing all the acts on behalf of the principal ie. MCD Corporation and not on its own. As per general understanding, since MCD is a very big Restaurant all across the globe, it cannot have its principal office everywhere, it will have to open number of Branches to meet the requirement of its customers. Also, at the time of dispensing duties by these branches or Agencies, if any loss or harm is caused to the customer, then the entire MCD Corporation will be held responsible for it.

Concluding the above, there was an apparent agency relationship between the franchise and the MCD Corporation and it can be held responsible for any compliants received by the employees or customers on behalf of the franchise.