May 02, 2025|Articles/Op-eds
May 2, 2025 | Supreme Court of Texas | Published Opinion
Executive Summary
In a published decision, the Texas Supreme Court reversed judgments against Massage Heights Franchising, LLC (“Massage Heights”), holding that the franchisor owed no duty of care to a customer who was sexually assaulted by a massage therapist employed by a franchisee. The Court concluded that Massage Heights neither had a contractual right to control nor actually exercised control over the franchisee’s hiring decisions. Safety guidelines in the operations manual did not create a duty, nor did evidence of prior complaints against the therapist at the franchisee’s location. The Court further held that Massage Heights did not undertake a duty to protect customers under a negligent undertaking theory. The decision eliminates the $1.5 million negligence award and $1.8 million exemplary damages exposure, providing significant relief to franchisors facing claims predicated on franchisee employee misconduct.
Relevant Background
The case arose from allegations by Danette Hagman, a long-time customer of MH Alden Bridge, LLC, a Massage Heights franchise in The Woodlands, Texas. In 2017, Hagman alleged that she was assaulted during a massage by therapist Mario Rubio.
Rubio had passed Texas’s licensing process, which required a state background check. That review revealed multiple juvenile and misdemeanor convictions but no sexual or felony offenses that would bar licensure under Tex. Occ. Code §§ 53.021–.023. MH Alden Bridge also conducted a background check, interviewed Rubio, and verified his license before hiring him.
The franchise agreement expressly identified MH Alden Bridge as “an independent contractor” and the “sole operator” responsible for all employment decisions, including “hiring, firing, training, supervising, disciplining, record keeping, and personnel policies.” It also placed “sole responsibility” for customer safety and compliance with state law on the franchisee. Massage Heights’ role was limited to providing “guidance” and “advice” through an operations manual.
Evidence also showed that another customer had complained two months earlier that Rubio assaulted her, though the incident was not reported to police. After Hagman’s assault, Rubio fled the country, was later apprehended, and ultimately convicted.
Hagman sued Rubio, MH Alden Bridge, its ownership group, and Massage Heights, asserting negligence, negligent undertaking, and gross negligence. A jury found all defendants negligent, attributed 15% responsibility to Massage Heights, and awarded $1.5 million in actual damages plus $1.8 million in exemplary damages. The Houston Court of Appeals reversed the exemplary damages based on Tex. Civ. Prac. & Rem. Code § 41.005 (prohibiting exemplary damages for criminal acts of another) but otherwise affirmed, reasoning that Massage Heights’ control over franchise operations created a duty.
Decision
The Texas Supreme Court reversed. The Court reaffirmed that negligence requires proof of a duty owed by the defendant. Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006). A franchisor may owe a duty only when it has contractual or actual control over the “activity that actually caused the injury.” Exxon Corp. v. Tidwell, 867 S.W.2d 19, 23 (Tex. 1993); Gen. Elec. Co. v. Moritz, 257 S.W.3d 211, 214 (Tex. 2008).
The franchise agreement expressly disclaimed such control. As the Court noted: “The Franchise Agreement…made MH Alden Bridge ‘solely responsible for all employment decisions,’ including hiring… This responsibility remained with MH Alden Bridge even if it received advice from Massage Heights.” Massage Heights Franchising, LLC v. Hagman, 712 S.W.3d 615, 621 (Tex. 2025).
Safety guidelines in Massage Heights’ manual also did not create a duty. The Court explained that “merely exercising or retaining a general right to recommend a safe manner…is insufficient to impose a duty.” Koch Refin. Co. v. Chapa, 11 S.W.3d 153, 155 (Tex. 1999) (citing Restatement (Second) of Torts § 414 cmt. c). The Court rejected the argument that requiring background checks, setting draping standards, and implementing reporting protocols amounted to control over the hiring decision that caused the injury.
The Court distinguished Read v. Scott Fetzer Co., 990 S.W.2d 732 (Tex. 1998), which imposed liability on a vacuum manufacturer for sexual assaults by door-to-door salesmen. In Read, the franchisor mandated in-home sales presentations, directly controlling the injury-causing conduct. By contrast, Massage Heights “did not have either the right of control or actual control over the hiring of employees.” Hagman, 712 S.W.3d at 623.
Finally, the Court rejected negligent undertaking. Liability arises only when a defendant undertakes to render protective services and either increases risk or induces reliance. Elephant Ins. Co. v. Kenyon, 644 S.W.3d 137, 151 (Tex. 2022). The Court held: “All safety responsibilities were contractually assigned to MH Alden Bridge, so Massage Heights did not undertake to keep Hagman safe.” Hagman, 712 S.W.3d at 624.
Accordingly, the Court rendered judgment that Hagman take nothing from Massage Heights.
Looking Forward
The Hagman decision represents an important win for franchisors in Texas. The Court made clear that liability in negligence turns on control over the specific activity that caused harm, not on general brand oversight or system-wide guidance. Practically, what this means (and should mean elsewhere but doesn’t quite yet) is as follows:
- Employment responsibility should lie with franchisees. The Court emphasized that the franchise agreement made the franchisee “solely responsible for all employment decisions.” That clear allocation of responsibility weighed heavily in favor of the franchisor.
- Safety manuals should not create control. The Court rejected arguments that system-wide safety standards transformed brand guidance into legal duty. This provides franchisors some assurance that operational manuals can set standards without automatically creating liability.
- Negligent undertaking should be limited. The Court also confirmed that simply offering training or protocols does not create a duty unless those efforts increase risk or induce reliance.
Still, franchisors should be cautious. This is one state supreme court decision, and other courts have gone in the opposite direction on similar facts, treating brand standards or protocols as sufficient control to support liability. Hagman is a powerful precedent in favor of franchisors, but it does not settle the issue nationwide. Carefully drafted agreements, clear allocations of safety and employment responsibility, and awareness of jurisdictional differences remain critical.
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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