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
