November 03, 2025|Franchise Frontlines
November 3, 2025 | California Court of Appeal, Second Appellate District, Division Four | Unpublished Opinion
Executive Summary
In an unpublished decision, the California Court of Appeal affirmed the dismissal of a professional negligence claim brought against Mr. Handyman International, LLC (MHI) by residential tenants who alleged that a Mr. Handyman franchisee performed substandard repair and remediation work at their home. The tenants alleged that MHI owed them a duty based on the franchise relationship and should be held vicariously liable for the franchisee’s actions. The Court explained that the tenants alleged no contractual relationship, no special circumstances creating a direct duty, and no basis for vicarious or ostensible agency under Patterson v. Domino’s Pizza, LLC. The Court found that the franchise agreement and the allegations did not show MHI exercised day-to-day control over the franchisee, and that expanding liability as proposed would improperly expose franchisors to potentially limitless claims by downstream third parties. The judgment in favor of MHI was affirmed.
Relevant Background
According to the opinion, the plaintiffs were tenants in a home owned by a landlord who hired Freshly Minted, Inc., a franchisee operating under the Mr. Handyman system, to investigate a leak and remediate mold. The plaintiffs alleged that the franchisee performed unpermitted work, failed to obtain required licenses or inspections, and worsened existing conditions. The dispute between the tenants and their landlord escalated, and the tenants filed a cross-complaint asserting eight claims against multiple parties, including a professional negligence claim against MHI.
The plaintiffs alleged that MHI operated the franchise system, that Freshly Minted used another franchisee’s contractor license, and that MHI should have ensured franchisee compliance with licensure and permitting requirements. They further alleged that MHI controlled Freshly Minted’s operations, pointing to the franchise agreement’s brand standards, marketing requirements, inspection rights, and the franchisor’s ability to terminate the franchise relationship. MHI responded with a motion for judgment on the pleadings and argued that the plaintiffs were not customers of the franchisee, had no privity or special relationship with MHI, and had not alleged facts showing MHI exercised operational control. The trial court granted MHI’s motion without leave to amend, and the plaintiffs appealed.
Decision
The Court of Appeal affirmed. The Court framed the issue as whether the plaintiffs alleged facts showing that MHI owed them a duty of care under a theory of direct liability, vicarious liability, or ostensible agency. The Court explained that the plaintiffs did not allege a contractual relationship with MHI and did not allege special circumstances that could create a duty under California’s third-party-beneficiary cases such as Biakanja v. Irving and J’Aire v. Gregory. The Court observed that the franchise agreement between MHI and Freshly Minted, executed in 2015, was not entered into for the plaintiffs’ benefit and was unrelated to the work the franchisee later performed for the landlord.
The Court stated that the plaintiffs’ attempt to impose a professional duty on MHI based on alleged failures to supervise franchisee licensing or to terminate the franchise was unsupported by authority. The Court explained that extending a franchisor’s duty in the manner the plaintiffs proposed would improperly expose franchisors to expansive liability for a franchisee’s work for downstream parties with whom the franchisor had no relationship. The Court concluded that the plaintiffs’ allegations did not establish a direct duty owed by MHI.
The Court then addressed vicarious liability. It reviewed the franchise agreement and the allegations under the framework established in Patterson v. Domino’s Pizza, LLC and concluded that the plaintiffs did not allege facts showing MHI retained or exercised a general right of control over Freshly Minted’s day-to-day operations, including supervision, hiring, discipline, jobsite oversight, or work performed for customers. The Court emphasized that trademark requirements, marketing standards, customer-service protocols, and systemwide expectations are not sufficient to establish an agency relationship under Patterson. The Court explained that the franchise agreement identified Freshly Minted as an independent contractor and that the alleged conduct was consistent with that designation.
The Court also rejected the ostensible agency theory, explaining that the plaintiffs did not allege reliance on any representation by MHI. The tenants did not hire the franchisee, and the alleged harm did not result from reliance on any statement or action by the franchisor. The Court concluded that neither the pleadings nor the attached franchise agreement supported ostensible agency.
Finally, the Court addressed alternative theories raised for the first time on appeal, including aiding and abetting and negligent hiring or retention. The Court explained that these theories were not alleged below and were unsupported by the allegations in the operative complaint. The Court noted that the plaintiffs did not allege that MHI knew of the work performed at their home or had any involvement in hiring or supervising the franchisee. The Court found no abuse of discretion in the trial court’s denial of further leave to amend.
Looking Forward
This opinion reaffirms longstanding California principles limiting franchisor liability for the acts of franchisees. Although unpublished, the Court’s analysis illustrates how allegations concerning brand standards, quality controls, marketing requirements, contractual termination rights, and system oversight do not establish day-to-day operational control under Patterson and related cases. The opinion also underscores how courts view attempts to impose duties on franchisors based on the franchisee’s interactions with third parties several steps removed from the franchisor.
For franchisors, the case highlights the importance of maintaining clear contractual language defining the franchisee as an independent contractor and structuring the franchise relationship to preserve the separation between brand protection and operational control. The Court’s discussion suggests that absent allegations showing franchisor involvement in hiring, supervision, or direct management of work performed by a franchisee, claims of vicarious liability remain unlikely to succeed. The opinion also illustrates that courts may be hesitant to expand tort duties to franchisors absent a clear indication that the relationship was intended to benefit or directly affect the plaintiff, which may provide additional reassurance in disputes involving customers of franchisees or other downstream parties.
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.
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