On May 2, 2025, the Texas Supreme Court, in a per curiam opinion in Massage Heights Franchising, LLC v. Danette Hagman, reversed a Houston Fourteenth Court of Appeals decision in part, ruling that the massage facility's franchisor lacked sufficient control over the hiring of the franchisee's employee to hold the franchisor liable for an alleged sexual assault of a massage customer committed by the franchisee's employee. The Massage Heights opinion is instructive on the issue of when a franchisor can be held liable for the criminal/tortious conduct of a franchisee's employee.
In Massage Heights, a massage facility customer (Hagman) filed suit against the massage facility franchisor, the franchisee/operator, the massage therapist1 as well as a few other parties associated with the massage facility. Hagman asserted causes of action for negligence, negligent undertaking, and gross negligence, which the jury found against all defendants, including a 15% responsibility finding against the franchisor. The court of appeals reversed the exemplary damages/gross negligence finding against all defendants, but upheld the jury's verdict in all other aspects.
The Texas Supreme Court focused its inquiry in large part upon the franchising agreement between the massage facility franchisor and franchisee. While the agreement set forth that the franchisor would provide various guidance, policies, and procedures to the franchisee, it also expressly stated that the franchisee was an independent contractor, solely responsible for employee hiring, training, and supervision, among other responsibilities. After addressing – and dismissing – the possibility of potential contractual control the franchisor may have had over the franchisee, the Court next focused upon possible actual control. The Court determined that since the franchisor had nothing to do with the hiring of the subject massage therapist, it could not have exerted actual control over the event that was the proximate cause of the customer's sexual assault and resulting injuries.
The Court stated that had the franchisor provided a list to the franchisee of hiring-disqualifying past criminal conduct of potential massage therapists, or taken other activity/control over the hiring process of massage therapists, sufficient control may have been established to impose liability, but such evidence/facts were lacking in this case.
Footnote
1. The massage therapist was duly licensed in Texas, despite having a criminal record (none of which, however, involved crimes of an assaultive or sexual nature).
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