## Facts

- Kyran Murphy, a motel guest, alleged he suffered serious injuries after slipping on water that accumulated on a walkway due to air-conditioner drainage at a Danville, Virginia motel operating under the “Holiday Inn” name.
- Murphy sued Holiday Inns, Inc., alleging it “owned and operated” the motel and negligently maintained the premises through its agents and employees.
- The motel was owned and operated by Betsy-Len Motor Corporation under a franchise/license agreement with Holiday Inns.
- The agreement permitted use of Holiday Inns’ trade name and required compliance with system standards, including approved plans and location, advertising contributions, credit-card solicitation, protection of the mark, training of key employees, operational rules, and periodic inspections.
- Holiday Inns did not control the motel’s daily management, including business expenditures, room rates, profit sharing, hiring/firing, employee supervision, or routine maintenance practices.

## Issues

1. Whether the franchise/license agreement gave Holiday Inns a sufficient right of control over the motel’s operations to create a principal–agent or master–servant relationship, making Holiday Inns vicariously liable for alleged negligent maintenance.

## Decision

- The Supreme Court of Virginia affirmed summary judgment for Holiday Inns.
- On undisputed written contract terms, the existence of agency was a question of law suitable for summary judgment.
- The agreement’s brand and quality controls were insufficient to establish agency because Holiday Inns lacked the right to control the methods and details of day-to-day operations.
- An appellate theory based on apparent/ostensible agency was not considered because it was not pleaded or preserved in the trial court.

## Legal Principles

- Agency requires that one party act on another’s behalf and subject to the other’s control; the distinguishing feature is continuous subjection to the principal’s will.
- The legal relationship depends on actual rights and obligations, not the labels used by the parties.
- A franchise arrangement can create agency if the contract regulates the franchisee’s activities to the extent it gives the franchisor control consistent with agency, even if the contract disclaims agency.
- Controls aimed at protecting a trademark and standardizing the brand (e.g., use of marks, inspections, operational standards) do not alone establish the franchisor’s right to control daily operations.
- Vicarious liability in the franchise context turns on whether the franchisor has the right to control the details of the franchisee’s ongoing business operations.

## Conclusion

Because the franchise agreement left day-to-day management and operational control with the franchisee, Holiday Inns was not a principal or master of the motel operator and was not vicariously liable for the alleged negligent condition that caused Murphy’s injuries.


Murphy v. Holiday Inns, Inc., 216 Va. 490, 219 S.E.2d 874 (Va. 1975)