FAN 2020 Issue: Liability Protections
Franchises Need Liability Protections as They Reopen Across a Range of Sectors
OVERVIEW
As each state gradually re-opens its economy, small businesses face unprecedented challenges in cleaning their facilities and preparing their workforces for the post-COVID marketplace. But small businesses are already facing lawsuits that allege customers or employees were infected with COVID-19 because of an experience with the business. These lawsuits have claimed negligence, violation of safety and health requirements, denial of hazard pay, false advertising, wrongful death, emotional distress, and other injuries. The threat of expensive litigation will severely impair the small business recovery and has already meant that many businesses will not reopen, impacting both owners and employees alike.
Franchise owners need assurance that they will not face lawsuits if they have complied with relevant guidelines during the crisis and after reopening. Importantly, these liability protections should also preserve the franchise business format by making clear that franchisors should not be held jointly liable for negligence allegations against a franchisee.
More than 7,000 franchise owners, leaders and advocates have already sent a petition to Congress calling for these important protections.
ASKS & TALKING POINTS
During the coronavirus crisis, franchise businesses have been serving as modern-day “Good Samaritans;” feeding essential workers, sanitizing businesses, caring for the sick, elderly and vulnerable, and providing groceries, hardware, supplies and other critical products and services. Given the historic response by Congress and the Administration to keep the economy afloat, it would be devastating to have these same franchise employers face a series of unfair lawsuits as the economy is reviving. These lawsuits would ultimately hurt employees in the long run if business owners are caught up in litigation or forced to close, meaning further job loss and unemployment.
Congress should pass legislation to provide short-term, COVID-19-related, liability protections for small businesses that take all good-faith efforts to combat COVID-19, while ensuring that any individuals harmed by true bad actors retain appropriate legal recourse. Senator John Cornyn (R-TX), Congressman Garrett Graves (R-LA) and Congressman Henry Cuellar (D-TX) are spearheading legislation in each respective chamber of Congress to provide sensible, short-term liability protections.
These bills would protect franchise small businesses by:
- Protecting good faith actors from COVID-exposure liability
- Preempting state law
- Preventing claims against small businesses of contracting the virus, exposure to the virus and other COVID-19-related allegations
Importantly, these bills will not protect businesses from acts of gross negligence. Liability legislation should be targeted to ensure that only businesses who take appropriate precautions and follow applicable guidelines are shielded.
Additionally, Congress must ensure that “joint employer” style claims against franchisors and franchisees are included in this legislation. Franchisors are providing best practices and guidance to franchisees regarding health and safety standards. Substantially similar guidance being offered from franchisees to their direct employees should not be used as evidence of joint employment in COVID-related claims.
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