General Practice, Solo & Small Firm DivisionMagazine

 
Volume 17, Number 6
September 2000

FRANCHISE LAW

FRANCHISING COMPLIANCE WITH THE AMERICANS WITH DISABILITES ACT

Mark A. Kirsch

Compliance Drafting Issues. Under many circumstances franchisors must be concerned about liability under the Americans with Disabilities Act (ADA) at facilities owned, leased, leased to, or operated by franchisees. This article provides drafting tips designed to reduce potential franchisor liability for ADA violations at franchised outlets.

Franchisors should establish clearly the franchisor’s and the franchisee’s respective responsibilities for ADA compliance at a franchisee-owned and -operated facility, and describe clearly the nature and degree of their control (or lack thereof) over the operation of the franchisee’s facility and business. To the extent practicable, franchisors should reduce, in the contract and in practice, the indicia of "control" that they may exert over the design and construction process, particularly as it relates to ADA compliance. Franchisors should utilize ADA certification forms to shift the burden of determining compliance with the ADA to the franchisee and its architect and/or contractor. This also may reduce the likelihood that a franchisor will be deemed to have "actual knowledge" of ADA violations by franchisees.

Although one contract provision will not apply to all situations, franchisors should consider franchise agreement provisions that address various ADA compliance issues. The article presents a few suggestions.Limitations on Franchisor’s Assistance. The franchise agreement should describe accurately the limitations on the franchisor’s assistance with respect to developing and providing to franchisees plans, specifications, and prototypical designs. The agreement also should describe any limitation on the franchisor’s approval of the franchisee’s plans and drawings.

To the extent that a franchisor provides to its franchisees detailed design specifications and those specifications include features subject to the DOJ’s Standards for Accessible Design, the franchisor should try to provide ADA-compliant specifications—despite the contract disclaimer. The franchisor may wish to obtain a certification from its architects or design engineers that the prototypical designs and specifications comply with the standards.

DOJ settlements with Days Inn and several other companies involved in franchising include commitments that the franchisor will provide information to its franchisees regarding the franchisor’s compliance with the ADA, as well as advice to enable a franchisee to comply with the ADA. Consequently, although a franchisor may want to shift the compliance burden to its franchisees, that shifting of responsibility may be more palatable to the DOJ if the franchisor also educates its franchisees concerning ADA requirements.Establish the Franchisee’s Responsibility for ADA Compliance. The franchise agreement should make clear that ADA compliance is the franchisee’s responsibility. Below is an example of such a franchise agreement provision (in addition to, and not in lieu of, a general commitment by the franchisee to comply with all laws typically found in many, if not all, franchise agreements):

Franchisee shall comply with all federal, state and local laws, codes and regulations, including the applicable provisions of the ADA regarding the construction, design and operation of the Franchised Business. Prior to seeking Franchisor’s approval of Franchisee’s or Franchisee’s architects’ preliminary plans and designs for the Franchised Business, Franchisee shall certify to Franchisor, in accordance with the ADA certification in the form attached to this Franchise Agreement, as Exhibit [X], that the preliminary plans comply with the ADA. Franchisee shall provide a similar certification to Franchisor following the construction, build-out, and pre-opening operation of the Franchised Business, that the plans, specifications, construction, and build-out of the Franchised Business have complied and will comply with the ADA and all applicable federal, state, and local specifications. In the event Franchisee receives any complaint, claim, other notice alleging a failure to comply with the ADA, Franchisee shall provide Franchisor with a copy of such notice within five days after receipt thereof.

Create and Mandate the Use of ADA Certifications. Franchisors may wish to obtain certifications from the franchisee and its architect, design engineer, or contractor that the facility is ADA compliant. See exhibits for examples.

To the extent that specific ADA standards have been established for a particular industry or business, the franchisor may also wish to require that the franchisee or its licensed professional certify that the facility complies with a standardized "checklist" of applicable ADA standards.

Given the DOJ’s series of cases against Days Inn, as well as DOJ actions and private lawsuits against other franchisors, it is likely that franchisors will continue to be targets of claims arising out of their franchisees’ alleged failures to comply with the ADA. Franchisors can no longer deflect all attacks with the argument that any noncompliance at a franchisee’s outlet occurs at a facility that is not operated or controlled by the franchisor. Nor can most franchisors evade all scrutiny by claiming that they have no input over design and construction decisions, or knowledge of any violations. Therefore, to reduce the potential exposure to ADA claims, franchisors should: educate their franchisees regarding the need for ADA compliance and should provide franchisees with ADA compliance information; impose strict contractual obligations on the franchisees to comply with the ADA; limit the franchisor’s control over certain design and construction functions or decisions, in both the franchise agreement and in practice; and obtain certifications of ADA compliance from franchisees and their licensed professionals.

Exhibit 1:

Sample Franchisee

Certification Form

ADA Certification

 

Franchisor and Franchisee are parties to a franchise agreement dated ______ for the development and operation of a [brand] outlet at _________ (the "Franchised Business"). In accordance with Section [XX] of the Franchise Agreement, Franchisee certifies to Franchisor that the Franchised Business complies with all applicable federal, state, and local laws, statutes, codes, rules, regulations and standards, including but not limited to the Americans with Disabilities Act. Franchisee acknowledges that it is an independent contractor and the requirement of this certification by Franchisor does not constitute ownership, control, leasing or operation of the Franchised Business. Franchisee acknowledges that Franchisor has relied on the information contained in this certification.

Franchisee:

By:

Title:

Date:

Exhibit 2:

Sample Architect, Engineer, or Contractor Certification Form (for use following construction)

ADA Certification for Construction [of Facility]To: [Franchisor Name]

Re: [Franchised Business Name and Location]

The undersigned acknowledges that Franchisor requires that an ADA certification be provided for all new construction projects including the proposed plans and actual construction. This requirement states: [recite the requirement from the franchise agreement and/or any design manuals of the franchisor].

Further, the undersigned acknowledges that Franchisee is required to obtain execution of the following certification from its architect, design engineer or contractor. Franchisor will not begin the final review of or approve any plans, specifications or construction documents without an ADA certification.

Therefore, in connection with the project identified as follows: [include franchised outlet name and address],

I/we represent, warrant and certify to Franchisor that I/we have used professionally reasonable efforts to assure that the facility has been constructed in conformance to and in compliance with, and that the facility conforms to and complies with, the foregoing requirements and the ADA, the technical requirements of the ADA Accessibility Guidelines (ADAAG) and all other related or similar state or local laws, regulations and other requirements in effect at the time this representation is made.

[Architect, Engineer, or Contractor firm]

Signed:

Name:

Date:   

Mark A. Kirsch is a partner in the Washington, D.C., office of Piper Marbury Rudnick & Wolfe LLP.

This article is an abridged and edited version of one that originally appeared on page 142 of Franchise Law Journal, Spring 2000 (19:4).

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