McDonald’s Found Likely Liable For Franchise Theft Under Obscure Theory

‘A federal judge just ruled that McDonald’s may be liable in a franchisee’s wage theft case. Judge Richard Seeborg, an Obama appointee to the bench, said that the lawsuit against McDonald’s corporation can proceed under the ‘ostensible agency theory.’
Under the ostensible agency theory, an entity can be responsible for third party activities if the third party conducted itself in a manner that would give the appearance that the third party is an agent of the entity (in this case, McDonald’s is the entity, and its franchisees are the third party). If any person dealing with that third party reasonably believes that the third party was an agent to the entity, the entity can be held liable for the actions of said third party, even if the third party is an independent contractor or franchisee, and not a direct employee of the entity.’
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