Day 140 - 22 Jun 95 - Page 36


     
     1        would like you to look at page 5.  My pages are not
     2        numbered.
     3
     4   MR. MORRIS:  It is at the very bottom.
     5
     6   MR. JUSTICE BELL:  I can just see that, but some of the others
     7        I cannot.
     8
     9   THE WITNESS:   I have got a page that has 5 at the bottom.
    10
    11   MR. MORRIS:  Yes.
    12        A.  Is that the one?
    13
    14   Q.   The second paragraph, first full paragraph on that page,
    15        starts off:
    16
    17        "McDonald's shall have the right to inspect and/or audit
    18        franchisees' accounts, books, records and tax returns at
    19        all reasonable times to ensure that franchisees are
    20        complying with the terms of the franchise which would
    21        include their obligation to obey the laws of the land."
    22        A.  I think you need to read on.  Again, I am not an expert
    23        on licence agreements, but I will try to help you, because
    24        I know what the Company requires and what the Company does
    25        not require as far as employment records.  It talks about
    26        sales records and financial records.  That is what the
    27        import of that paragraph is.
    28
    29   Q.   So you are saying that the right -- are you saying that the
    30        McDonald's Corporation has no power to find out if a
    31        franchisee is obeying laws?
    32        A.  We are saying that we expect them to obey our laws.
    33
    34   Q.   But you do not have the right to find that out?
    35        A.  We do not have the power to force them to hand over
    36        records.
    37
    38   Q.   So any franchisee in the United States that wants to
    39        conceal breaches of the law from McDonald's Corporation, in
    40        fact, has the power to do that?
    41        A.  No, they do not.  I think I testified yesterday or the
    42        day before -- days are running together -- that we spot
    43        check records.  The government, federal, state, local
    44        agencies, are continuously in these stores as they are in
    45        other companies' locations.  There is a safeguard, a safety
    46        net, that if there are problems if it is going to get
    47        spotted by somebody.
    48
    49   MR. JUSTICE BELL:  I think we are going round in a circle.  All
    50        these disputes arose out of a misunderstanding between 
    51        Ms. Steel and the witness, because she asked him a question 
    52        directly which, in its express terms, asked Mr. Stein 
    53        whether he was saying that franchisees did not have to make
    54        payroll records available; and, no doubt being a lawyer, he
    55        said that was right.  There is a distinction in any
    56        lawyer's mind between what you are bound to do, as opposed
    57        to what you may willingly choose to do.  It has now turned
    58        out -- not to my surprise, anyway -- that what Mr. Stein is
    59        saying is, although they do not have to, they do as a
    60        matter of practice.  No doubt, if they refuse, McDonald's

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