Donald Salisbury, William Roberts, and others purchased property from Laurel Chapman, a partner of Chapman Realty, a franchisee of Realty World. The purchasers made payments directly to Laurel Chapman at the Realty World office, and Chapman was to make payments on the property’s mortgage. However, Chapman did not make the payments and absconded with the funds. Salisbury and Roberts sued the franchisor, Realty World, claiming that Realty World was liable for the wrongful acts of the apparent agent, Chapman. Realty World and Chapman Realty were parties to a franchise agreement stating that the parties were franchisor and franchisee. The agreement contained a clause that required Chapman to prominently display a certificate in the office setting forth her status as an independent franchisee. Chapman displayed such a sign, but the plaintiffs did not recall seeing it. Chapman Realty hires, supervises, and sets the compensation for all of its employees. The plaintiffs pointed out that Chapman Realty used the service mark Realty World on its signs, both outside and inside its offices. They pointed out that a Realty World manual sets forth the general standards by which franchisees must run their businesses and that this represents clear control over the franchise. They contended that, all things considered, Realty World held out Chapman Realty as having authority to bind Realty World. Realty World disagreed, stating that both were independent businesses. Decide.
[Salisbury v. Chapman and Realty World, Inc., 65 N.E.2d 127 (Ill. App.)]