The Franchise Memorandum

An appellate court in Illinois upheld a trial court’s dismissal of a suit for emotional distress against a franchisor and a franchisee by two of the franchisee’s customers who were filmed in a franchised Planet Fitness gym’s tanning room without their knowledge or consent. C.H. v. Pla-Fit Franchise, LLC, 2017 IL App. 3d 160378 (Ill. App. Ct. Aug. 23, 2017). The court rejected the plaintiffs’ arguments that the franchisor, Pla-Fit, was liable for the tortious acts of the franchisee’s employee based on the special relationship between Pla-Fit and its franchisee and Pla-Fit’s alleged voluntary undertaking to ensure that the franchisee was protecting customers’ privacy.

The court found that, while the franchisee may have had a duty to protect the customers from the tortious acts of a third party, Illinois law does not recognize any such special relationship between a franchisor and a franchisee’s customers. With regard to the voluntary undertaking theory, the court found that under Illinois law, a franchisor is not liable if the franchisee retains control of the day-to-day operations of the business. Furthermore, the court noted that the Restatement (Second) of Torts limits liability under a voluntary undertaking theory to liability for physical harms, rather than purely emotional harms. Finally, the court held that the franchisor was not liable under a premises liability theory because the franchisor was not the possessor of the premises owing a duty of care. Therefore, the appellate court affirmed dismissal of the case.