Southland Corporation (Southland) owns the 7 Eleven trademark and licenses franchisees throughout the country to operate 7 Eleven stores. The franchise agreement provides for fees to be paid to Southland by each franchisee based on a percentage of gross profits. In return, franchisees receive a lease of premises, a license to use the 7 Eleven trademark and trade secrets, advertising merchandise, and bookkeeping assistance. Vallerie Campbell purchased an existing 7 Eleven store in Fontana, California, and became a Southland franchisee. The franchise was designated number 13974 by Southland. As part of the purchase, she applied to the state of California for transfer of the beer and wine license from the prior owner. Southland also executed the application. California approved the transfer and issued the license to “Campbell Vallerie Southland number 13974.”

An employee of Campbell’s store sold beer to Jesse Lewis Cope, a minor who was allegedly intoxicated at the time. After drinking the beer, Cope drove his vehicle and struck another vehicle. Two occupants of the other vehicle, Denise Wickham and Tyrone Crosby, were severely injured, and a third occupant, Cedrick Johnson, was killed. Johnson (through his parents), Wickham, and Crosby sued Southland— but not Campbell— to recover damages. Is Southland legally liable for the tortious acts of its franchisee? Is it morally responsible? Wickham v. The Southland Corporation, 168 Cal. App. 3d 49, 213 Cal. Rptr. 825, 1985 Cal. App. Lexis 2070 (Court of Appeal of California)