November 18, 2025|Franchise Frontlines
November 18, 2025 | Superior Court of New Jersey, Appellate Division | Unpublished Opinion
Executive Summary
In an unpublished decision, the New Jersey Appellate Division affirmed the dismissal of all claims asserted against Dine Brands Global, Inc., Applebee’s Restaurants LLC, and Applebee’s Services, Inc. (the franchisors) arising from an alleged discriminatory incident involving a patron and a kitchen manager at a franchised Applebee’s location. According to the Court, the plaintiff alleged violations of the New Jersey Law Against Discrimination (LAD), aiding and abetting liability, negligence, fraud, breach of contract, and consumer fraud. The trial court dismissed the claims with prejudice after finding no factual allegations suggesting the franchisors owned, operated, leased, or controlled the restaurant, and no allegations establishing personal involvement by any corporate officers. On de novo review, the Appellate Division agreed that the complaint failed to allege conduct or control sufficient to impose liability on the franchisors under the LAD or common law, and that the conclusory allegations regarding corporate structure and branding could not overcome the franchisee’s exclusive operational authority. The Court affirmed the dismissal.
Relevant Background
According to the opinion, the plaintiff alleged that he was a frequent customer of an Applebee’s restaurant in Piscataway, New Jersey, operated by Doherty Enterprises, an independent franchisee. The plaintiff asserted that during one visit he was involved in an altercation with the restaurant’s kitchen manager and was later banned from the premises. After multiple amended pleadings, the plaintiff’s sixth amended complaint asserted claims against the franchisors and several individual officers for discrimination and retaliation under the LAD, assault, aiding and abetting, fraud, negligence, and breach of contract.
The trial court found that the plaintiff’s allegations did not demonstrate that the franchisors owned, operated, managed, or controlled the franchisee’s restaurant. The Court highlighted that the complaint did not allege that the franchisors employed the kitchen manager involved in the alleged incident or participated in any decision to ban the plaintiff. The trial court reasoned that the plaintiff attempted to hold franchisors liable solely by virtue of their corporate status and trademark licensing, without alleging facts demonstrating direct involvement or control. The court further noted the plaintiff’s claims were supported only by generalized assertions that all defendants “discriminated,” “retaliated,” or “aided” each other without providing factual allegations suggesting corporate knowledge or participation.
Decision
The Appellate Division affirmed the dismissal of the complaint with prejudice, adopting the trial court’s rationale and supplementing its reasoning. The Court explained that under N.J.S.A. 10:5-12(f)(1), liability for public accommodation discrimination applies to the operators, owners, lessors, lessees, or managers of the public accommodation. The franchisors did not fall within these categories because the complaint alleged only that they licensed trademarks and system rights to the franchisee. The Court emphasized that nothing in the LAD’s text suggests franchisors are liable absent direct ownership or operation of the location at issue.
The Court further explained that agency principles govern whether franchisors may be held vicariously liable. Citing J.M.L. ex rel. T.G. v. A.M.P., the Court stated that franchisor liability depends on the degree of control actually exercised over daily operations, particularly in the area connected to the alleged wrongdoing. The Court agreed with the trial court that the plaintiff’s complaint did not allege facts suggesting the franchisors controlled personnel decisions, supervised restaurant employees, managed customer interactions, or directed the conduct underlying the incident. Because the complaint offered no facts showing the franchisors exercised the type of control necessary to create an agency relationship, the Court held that the claims under the LAD and common law were properly dismissed.
In affirming the dismissal of the aiding and abetting claims, the Court noted that the LAD requires active and purposeful conduct, including knowledge of wrongdoing and substantial assistance to the principal actor. The complaint did not allege that the franchisors or their officers had knowledge of the incident, took part in the decision to ban the plaintiff, or contributed to the alleged discriminatory acts. The Court likewise affirmed dismissal of the fraud and CFA claims, stating that the plaintiff’s reliance on general Applebee’s marketing slogans was insufficient to plead actionable misrepresentation, and that the complaint failed to allege any ascertainable loss connected to a deceptive practice.
The Court upheld the dismissal of the negligence claims after finding no allegations showing that the franchisors or officers employed the kitchen manager or had any knowledge of unfitness or dangerous tendencies. Finally, the Court affirmed dismissal of the breach-of-contract claim, concluding that the plaintiff failed to allege the existence of any contract between himself and the franchisors or their officers, and thus failed to establish the elements of breach or resulting damages.
Looking Forward
This decision offers several instructive points for franchisors while remaining grounded in its specific factual context. The Appellate Division’s analysis underscores the importance of maintaining clear contractual and operational delineations between franchisors and franchisees. The Court reaffirmed that trademark licensing, brand standards, marketing oversight, and generalized corporate involvement do not, without more, establish franchisor responsibility for day-to-day operations or personnel decisions at franchised locations. Under different facts or in other jurisdictions, courts may evaluate allegations of control differently; however, this opinion reinforces the principle that franchisors are not liable for public accommodation claims absent demonstrable operational authority over the location in question.
The decision also highlights that aiding and abetting theories require factual allegations of knowledge and substantial assistance. The Court found no basis for such claims where franchisor officers were named only by title and without allegations of personal involvement. Franchisors may view this as reinforcing the value of clear governance structures that preserve franchisee independence and minimize the risk of claims based on corporate position alone.
Finally, the opinion illustrates that consumer fraud and contract theories will be dismissed where plaintiffs rely solely on brand marketing or implied agreements without alleging specific factual representations, reliance, or damages. For franchisors, this decision may offer additional reassurance that well-maintained franchise systems, coupled with clear separation of operational control, may reduce exposure to claims seeking to extend liability beyond the franchisee who owns and operates the business.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
