Amicus Briefs
An amicus brief (short for amicus curiae brief) is a legal document filed in a court case by someone who is not directly involved in the case but has a strong interest in the outcome. The term amicus curiae means “friend of the court.” Imagine two people are having a dispute in court, but the decision the court makes could affect others who aren’t part of the case—in our case, key stakeholders to franchising like franchisors, franchisees and/or suppliers, or the franchise model generally.
The IFA Law Center can submit an amicus brief to share their perspective, provide additional information, or explain why the court’s decision matters to those key stakeholders or the broader franchise community. The purpose of an amicus brief is to help the court make a more informed decision by providing expert opinions, additional facts, or arguments that the main parties in the case might not cover.
Explore recent Amicus Briefs filed by the IFA, including summaries, links to the full briefs and more.
Misclassification
What is misclassification? Misclassification of an independent contractor as an employee happens when a business treats a worker as if they are self-employed (an independent contractor) when, by law, they should be considered an employee. The test for determining whether a party is an independent contractor is defined at the federal level and the state level, and in many cases is referred to as an “ABC Test.”
Patel, et al. vs. 7-Eleven, Inc., et al. In a matter pending in the U.S. First Circuit Court involving 7-Eleven and several of its franchisees, the Massachusetts Supreme Judicial Court was asked whether the franchisees “perform services” for 7-Eleven under Massachusetts’ ABC Test because they perform various contractual obligations under their franchise agreements and 7-Eleven receives a percentage of the franchisees’ gross profits as royalties and other continuing fees, and therefore must satisfy the ABC Test for independent contractors or be deemed an employee of 7-Eleven.
The IFA Law Center filed an amicus brief in the matter on behalf of 7-Eleven, explaining that the question before the court threatens franchising in Massachusetts because the “services” performed for 7-Eleven are core principles of the franchise model: franchisees perform obligations under the franchise agreements they signed and pay a royalty based on a percentage of the franchised business’s revenue.
The Massachusetts Supreme Judicial Court ruled that 7-Eleven franchisees’ performance of contractual obligations under their franchise agreements does not constitute “performance of services” for an employer under Massachusetts law. The IFA Law Center applauds the court’s decision in preserving the franchise model for hundreds of thousands of small franchised businesses and the consumer they serve.
Related Resources
Franchisor Liability
There are several theories of liability for which a franchisor may be determined to be liable.
What is vicarious liability of a franchisor? Vicarious liability is a legal concept where one party can be held responsible for the actions of another party. When it comes to franchisors and franchisees, vicarious liability means the franchisor might be held legally responsible for something the franchisee does wrong—like negligence, discrimination, or harm to a customer. Whether a franchisor is vicariously liable for the conduct of a franchisee often depends on the control exercised by a franchisor over the operations of the franchisee’s business, like hiring and firing of employees and day-to-day operations, which are typically controlled by the franchisee.
What is direct liability of a franchisor? Direct liability of a franchisor means the franchisor can be held legally responsible for something that happens at a franchisee’s business if the franchisor directly caused or contributed to the problem through its own actions or decisions. Unlike vicarious liability (where the franchisor might be responsible because of its control over the franchisee), direct liability focuses on what the franchisor itself did or didn’t do.
Mills (as Receiver for Arthur Lamar Adams and Madison Timber Properties) v The UPS Store, et al. The receiver appointed to the distribution of assets in a fraud matter pending in Mississippi federal court alleged that The UPS Store, the franchisor, was liable for the conduct of its franchisees’ employees because the franchisees operate under The UPS Store’s trademarks and The UPS Store prescribes certain operational standards, specifically the requirement that all franchised The UPS Stores maintain on staff a notary. The Mississippi franchised The UPS Store at issue in the matter was used by a customer—the perpetrator of a Ponzi scheme defrauding investors of millions of dollars—to notarize fraudulent timber deeds. The notary employed by the franchised The UPS Store was unaware of the fraud. The receiver claims the franchisor is liable for damages incurred by the defrauded investors because of the controls exercised by the franchisor over the operations of the franchised The UPS Store, including the operation of The UPS Store under the franchisor’s registered trademark and requirement that the franchised The UPS Store make notary services available to customers.
In its amicus brief, the IFA Law Center explained that the operation of a franchised business under the franchisor’s registered trademark and in accordance with certain operational standards and methods prescribed by the franchisor are the core elements of a “franchise” under federal law, and that granting the receiver’s request for an award of damages against The UPS Store franchisor will threaten the franchise model and all franchises operating in Mississippi because all franchisors could be held liable for conduct that occurs at their franchisees businesses simply for operating as a “franchise.” IFA cautioned the court in reaching such an outcome given the more than 400 franchised brands operating in Mississippi that generate nearly $8 billion in revenue for the state whose future would be in jeopardy. The matter is currently pending.
Massage Heights Franchising v Hagman. In a matter pending before the Texas Supreme Court, franchisor Massage Heights seeks reversal of an appellate court decision that held Massage Heights directly liable for a portion of the damages awarded to a customer who was assaulted by a franchisee’s employee during an appointment at the franchised Massage Heights studio. The appellate court held that because the franchisor maintained standard operating hours for all Massage Heights studios and prescribed standards related to the services provided by masseuses for Massage Heights customers generally, then it is liable for a portion of the damages awarded to the customer related to the crimes committed by the franchisee’s employee.
In its amicus brief, the IFA Law Center cautioned the Texas Supreme Court of the consequences to the franchise model and nearly 80,000 franchised businesses operating in Texas if the appellate court’s decision regarding the direct liability of franchisor Massage Heights is permitted to stand. Establishing operating hours and standards of service for customers are core tenets of the hundreds of franchised brands operating in Texas, and a determination that such standards are evidence of a franchisor’s liability for the conduct of its franchisees’ employees threatens the future of all franchised businesses in Texas. The matter is currently pending.
Related Resources
Antitrust
What is the role of antitrust law in franchising? Franchisors often have contracts with franchisees that include rules about how they must run the business (e.g., pricing, sourcing supplies). Antitrust laws help ensure these rules don’t go too far. For example:
- Price-fixing: A franchisor can’t force franchisees to sell products at a specific price if it harms competition.
- Territorial restrictions: Franchisors might assign exclusive areas to franchisees, but these restrictions can’t unfairly limit competition
In antitrust law, there are two ways courts evaluate whether business practices or agreements violate the law: per se violations and the “rule of reason”. Think of it as two different lenses courts use to assess if a company or agreement is behaving unfairly in the marketplace.
Per se rule. Some business practices are so harmful to competition that they are automatically illegal, no matter the circumstances or intent behind them. Courts don’t need to dig into whether the behavior had good reasons or produced positive effects—if it fits a known harmful category, it’s unlawful.
“Rule of Reason.” Other business practices aren’t automatically illegal because they might have legitimate business reasons or benefits. For these, courts take a deeper dive, weighing the practice’s pros and cons to determine whether it hurts or helps competition on a case-by-case basis.
McDonald’s USA, et al. v. Deslandes, et al. McDonald’s filed a petition with the United States Supreme Court for review of the Seventh Circuit Court’s decision holding that the per se rule can apply to a franchise agreement despite the per se standard historically reserved for a narrow category of obviously harmful restraints like horizontal competitor price-fixing or bid-rigging.
The IFA Law Center filed an amicus brief in support of McDonald’s petition seeking a determination from the Supreme Court that franchise agreements should be reviewed under the “rule of reason” and not the per se standard. The rule of reason requires courts to carefully examine both the anticompetitive and procompetitive effects of a restraint before finding liability. The IFA Law Center encouraged the Court to consider that franchise agreements are complex, holistic collaborations that generate benefits up and down the distribution chain, and should never be considered unlawful without a full rule-of-reason assessment of the whole relationship. Further, the Seventh Circuit’s holding empowers future plaintiffs to isolate aspects of a franchise agreement to claim harm in artificially narrow alleged markets, increasing the risk in future antitrust claims against franchisors and chilling competition. The Supreme Court ultimately denied McDonald’s petition for review, but the matter remains pending at the lower court for further analysis as directed by the Seventh Circuit.
Related Resources
Legal Events & Webinars
2025 Legal Symposium
Meet Our Team
Sarah Davies
General Counsel & Executive Director, IFA Law Center
832.385.5628
sdavies@franchise.org