The Franchise Memorandum

A federal court in New York has dismissed a claim that Doctor’s Associates LLC, the franchisor of Subway restaurants, violated the Americans with Disabilities Act (ADA) because the plaintiff failed to allege that Doctor’s Associates operated the Subway restaurant at which the discrimination took place. Sullivan v. Doctor’s Assocs. LLC, 2020 WL 2319295 (S.D.N.Y. May 8, 2020). Sullivan, a “profoundly deaf individual,” attempted to order a steak sandwich from a Subway restaurant. He alleged that, while trying to order, a Subway employee became angry with him, using hostile hand gestures and aggressive body language, which ultimately resulted in Mr. Sullivan being unable to order his sandwich. Mr. Sullivan alleged that Doctor’s Associates, as the franchisor of Subway restaurants, had “actual control and responsibility over all Subway restaurants’ compliance, adherence to laws, franchise training, and the way the franchise owners conduct their business,” and, therefore, was ultimately responsible for any violations of the ADA and analogous state and city law provisions. Sullivan claimed that such laws required each and every Subway restaurant to install technology that would allow hearing-impaired individuals to place orders through a touch-screen interface.

The court concluded Sullivan had failed to plausibly allege that Doctor’s Associates owned, leased, or operated the Subway restaurant at issue. The court noted that supervisory authority, provision of an operating manual, and a training program for employees, without more, are insufficient to demonstrate that a franchisor “operates” a franchisee’s establishment. The court further noted that Doctor’s Associates’ authority to enforce and modify any Subway restaurant’s policies, practices and procedures under the franchise agreement was unpersuasive, and that the franchise agreement conferred only general supervisory authority to Doctor’s Associates. Therefore, since Sullivan failed to adequately plead that Doctor’s Associates operated the Subway restaurant at issue, the court dismissed Sullivan’s ADA claims and the related claims under New York state law. Even if Sullivan had adequately alleged that Doctor’s Associates operated its franchisees, the court noted that the ADA does not require Subway restaurants to install technology that would allow hearing-impaired individuals to place orders through a touch-screen interface. The requirement to offer auxiliary aid and services to individuals with disabilities is flexible, and can include notetakers, written materials, and exchange of written notes. The court held that Sullivan’s claim would ultimately fail because the ADA clearly did not require Doctor’s Associates to force its franchisees to adopt specific technological solutions, so long as the franchisees can ensure that their employees can communicate effectively with hearing-impaired individuals. Additionally, even though Sullivan alleged he was denied service because an employee failed to communicate effectively during his visit to a Subway restaurant, the court held that Doctor’s Associates is not responsible for the alleged discriminatory interaction, absent a sufficient allegation of specific control, over the Subway restaurant at issue. Therefore, while the franchisee may be held liable for its employee’s interaction with Sullivan, Doctor’s Associates may not. Sullivan was given an opportunity to amend his complaint.