MURPHY V. HOLIDAY INNS, INC.
219 S.E.2d 874 (1975)



FACTS: Murphy (P) alleged that he was injured when he slipped and fell on an area of walk wherein water from an air conditioner has been allowed to accumulate. P claimed that he was seriously injured from his fall. Holiday Inns (D) filed grounds of defense and a motion for summary judgment, it had no relationship with regards to the operator of the premises other than a license to allow that operator to use the name Holiday Inn. The licensee was Betsy-Len Motor Corporation (Dl). The court found that D did not own the premises and that there was no master servant relationship nor that of a principal agent. D got the summaiy judgment and P appealed.

ISSUE: Is the hall mark of an agency agreement the consensual control by one party over the other, and such a relationship cannot be disclaimed by a mere disclaimer clause in a contract?

RULE OF LAW: The hall mark of an agency agreement is the consensual control by one party over the other, and such a relationship cannot be disclaimed by a mere disclaimer clause in K.

HOLDING AND DECISION: (Judge Undisclosed). No. Although the license agreement contains a disclaimer requiring the operator to hold itself out as the owner and operator of the premises, if the license agreement itself supports an agency relationship, the disclaimer does not relieve the defendant of liability for the operator's negligence. In determining whether the agreement establishes an agency relationship, the nature and extent of the defendant's control over the premises is crucial. Here, the license agreement affords the operator access to a system the defendant developed for operating its motel under the defendant's trade name, trademarks, advertising style, and methods of operation. In exchange for the use of the defendant's system, the operator paid a monthly fee and a portion of its profits to be designated for advertising expenditures. The operator also agreed to conduct its motel according to the defendant's operating rules, which generally required the operator to operate its motel in a location approved by the defendant, to use the defendant's trade name and trade marks, to refrain from competitive businesses and to subject its managers and housekeepers to training provided by the defendant. In all material
respects, the license agreement is a franchise contract whereby the defendant supplied the standardized means and methods, but the franchisee bears the risk of loss and the reward of profits. If a franchise contract "so regulates the activities of the franchisee as to vest the franchiser with control within the definition of agency, the agency relationship arises even though the parties expressly deny it." Here, the license contract gave the defendant no managerial control over the motel's daily
operations. The defendant did not have the power to maintain the premises, establish customer rates, hire or fire employees, or establish work rates or conditions. Absent such powers, the license contract did not establish a principal-agent relationship. Affirmed.