What legal responsibility does a franchise owner have for criminal activity at a business that bears its name?

At our law firm, we bring claims against businesses that negligently allow criminal activity to harm people they invite onto their premises. Sometimes the question is whether a national franchise bears any responsibility for what its franchisee allows to happen at the local level. Most people assume that the owners of a particular brand are in charge of the properties that bear their logos, and exercise control over what happens there. This gives them confidence to spend their money with these brands.

Usually the franchisor does not own the property where the crime takes place; however under NC law, the franchisor could bear responsibility, depending on the facts. Franchisors usually exercise tight control over their brands and have strict policies that their local businesses are supposed to follow. It could be a problem if the franchisor’s own policies foster the environment that leads to the crime.

For example, we wonder, how much did the owners of the national hotel brand know about the child sex trafficking at the Red Roof Inn near the Charlotte airport before they finally revoked its franchise about ten days ago?

The FBI recently moved to seize the property located at 3300 Queen City Drive on grounds that it was a center of drug crimes and sex trafficking of girls as young as 15, and called it a public nuisance in an 11-page affidavit filed with the court. After the seizure case was filed, the Red Roof Inn yanked the franchise from the owner, Chandresh Patel, and Mr. Patel says he has hired new management. Both Patel and Red Roof Inns stated that they had only recently become aware of the allegations. But seriously? It’s just too hard to believe.

Documents in the case filed by the FBI, reported on recently, show a history of criminal activity dating back to 2012. They chronicles a story of girls aged 16 and 17 working as prostitutes, and employees being paid extra to keep the crimes quiet. In September 2012 during the Democratic National Convention, Charlotte’s Child Exploitation task force led a prostitution sting at the hotel, and a man known as Shahid Muslim was later convicted of human trafficking from this location. Multiple drug arrests and drug stings have since occurred. Charlotte-Mecklenburg police received a complaint in 2013 from a 15-year-old that a pimp would pick her up at her Concord home and take her to the Red Roof Inn to prostitute herself.

And then there were the online reviews. Priceline.com had a review from a guest who said her grandson found a hypodermic needle under the bed, and a review in TripAdvisor warned that the hotel was full of prostitutes and drugs and needed to be shut down.

And finally, there are the folks on the ground. One worker told WSOC-TV that a particular room, located at the end near the dumpster, was reserved for special patrons. It was equipped with a big-screen TV and new carpeting. Apparently in order to make crimes against children more inviting.