The Franchise Memorandum

A federal court in Pennsylvania dismissed all claims against a franchisor because the plaintiff failed to plausibly allege that the franchisor and its franchisee were joint employers. Doe v. McDonald’s USA, LLC, 2020 WL 7133517 (E.D. Pa. Dec. 3, 2020). Sixteen-year-old Jane Doe brought claims for discrimination, hostile work environment, and intentional infliction of emotional distress against McDonald’s and its franchisee, alleging McDonald’s and the franchisee were joint employers and thus jointly liable for the franchisee’s manager’s misconduct. McDonald’s moved to dismiss for failure to state a claim. The district court agreed with McDonald’s and dismissed all claims against it.

The court analyzed three factors to determine whether McDonald’s maintained sufficient control over the manager such that it was a joint employer. The court concluded that all of the factors weighed against Doe. First, the court reasoned that although the franchise agreement mandated hours of operation, required specific uniforms, and provided other operational practices and policies, Doe failed to allege that McDonald’s had control to hire or fire the restaurant’s employees. Second, the court determined that Doe failed to allege that McDonald’s provided training to the manager at issue or that it participated in employee discipline at the restaurant where the misconduct occurred. Lastly, the court found that, although Doe alleged that McDonald’s maintained control of employee records, she failed to allege that it could access payroll, personnel files, or sales-related records. The court concluded that Doe failed to plead facts to support a joint employer relationship between McDonald’s and the franchisee and therefore, McDonald’s could not be held liable for the manager’s misconduct.