According to the Franchise Times, “El Pollo Loco is set to be the first quick-service restaurant to test drone delivery in the U.S.” The publication reports that the “LA Mex” brand will begin testing at 10 locations in Southern California, and it will be working with the same third-party drone operator used by 7-Eleven. Undoubtedly, more brands both within and outside of the QSR sector will soon follow. So, what if your franchisor says you need to start offering drone delivery? Here are some important considerations from franchise lawyer Jeffrey M. Goldstein:
Most Franchisees Will Have No Choice But to Comply
If your franchisor wants you to start utilizing drone delivery, you will most likely have no choice but to comply. It is standard practice for franchisors to reserve broad rights to modify and update their system standards, and this will almost certainly extend to implementing drone delivery in the vast majority of cases.
This is one of the many double-edged swords of the franchise model: While franchisees get to benefit from their franchisors’ investments and innovations, they are also required to implement modifications regardless of how they feel about them personally.
What if your franchisor picks your franchise for a test program? Or, what if you want to offer drone delivery but your franchisor doesn’t make it available in your geographic area? Unfortunately, you probably don’t have many options in these situations, either. Although, it is possible that franchisees could have discrimination claims in some limited circumstances.
Most Franchisees Will Need to Comply at Their Expense
Not only will most franchisees need to comply with their franchisors’ efforts to implement drone delivery, but they will need to do so at their own expense. Franchise agreements almost universally require franchisees to bear the financial burden of implementing modifications and updates to system standards. While franchisors may offer advice and operational support, they will not assist financially—other than to offer in-house financing in some cases.
Franchisees Will Need to Consider the Liability Risks Involved
Due to its novelty, there are still many unknowns when it comes to drone delivery to customers’ homes and businesses. However, one fact that is fairly certain is that franchisors will not assume liability for drone-related accidents. Even though franchisees will be utilizing drone delivery at their franchisors’ behest, it is highly unlikely that franchisors will take on the liability risks involved. While franchisors may negotiate protections into their contracts with third-party drone operators, this is not a guarantee. Additionally, any such protections are still likely to put the franchisors’ interests ahead of those of their franchisees.
Contact Franchise Lawyer Jeffrey M. Goldstein
Is your franchisor requiring you to offer drone delivery? Do you have questions or concerns about any other mandatory system modification or update? If so, we encourage you to get in touch. To schedule a free and confidential consultation with national franchise lawyer Jeffrey M. Goldstein, please call 202-293-3947 or request an appointment online today.