Local Law Blogs

At Will Employment Alive and Well in the Franchise Context

In a recent unpublished decision by the New Jersey Appellate Division, known as Ashwall and Winograd v. Prestige Management Services, Inc., et als. (Decided October 16, 2007), the Court dealt with a claim by employees of a New Jersey automobile dealership franchise who claimed religious discrimination and “promissory estoppel” against their former employer.  The Plaintiffs, a manager and top-salesman, claimed discrimination based on their religious faith (Judaism) under the New Jersey Law Against Discrimination.  One of them had also claimed that, since he had been given the task of turning a non-profitable dealership “around,” that he was entitled to employment for at least a reasonable period of time. 

His argument was that he had been a very successful manager of another dealership, and by asking him to take on the management of a non-profitable dealership, the franchisee in effect “owed” him employment for a certain period of time.  This claim had been dismissed by the trial judge prior to the trial of the case, and was never heard by a jury.  While there appears to have been some factual merit to the Plaintiffs’ argument, the Appellate Division relied on traditional notions of “at-will” employment and determined that the Court had been correct in dismissing the claim for Promissory Estoppel as they did not find that there was enough evidence that the parties had intended to enter a long-term commitment.  Specifically, the Court was looking for “assurances of employment” that were “clear, specific and definite.”  The franchisee in this case avoided any liability on the “promissory estoppel” claim (though there was a jury verdict against it for discrimination). 

This case highlights the potential for confusion between the franchisee who owns several locations and employees who are “specially assigned” to trouble-shoot certain kinds of jobs.  To avoid this confusion, a franchisee should notify an employee clearly and in writing that their “at-will” employment relationship continues despite the new assignment and that there is no guarantee of continued employment.  Such a written assurance would have most likely avoided litigation in this case and would have saved the franchisee from having to defend such a claim.

Full post as published by New Jersey Law Blog on December 18, 2007 (boomark / email).