Day 086 - 09 Feb 95 - Page 78


     
     1        from the company", this is to start up, yes, the
     2        franchisee, "which is repaid from the net proceeds of the
     3        restaurant.  If follows that it is in their financial
     4        interest to ensure that standards in the restaurants are
     5        kept high".  Do you know about the repayments from their
     6        proceeds of franchisees?  Do you know they have to pay a
     7        certain amount per year back to repay the money they have
     8        borrowed?
     9        A.  I think that the sentence, "As such, they obtain the
    10        necessary finance from the company" refers specifically to
    11        McDonald's employees who have been employed for 10 years
    12        before they become franchisees and not to any franchisees
    13        that are not in the company.  A normal franchisee would
    14        have the financial backing when it came in.  It is just
    15        people that work for the company for 10 years.
    16
    17   MR. JUSTICE BELL:  That is how I had interpreted paragraph 68,
    18        that the finance for the company and repayment from net
    19        proceeds is a facility available to long-standing employees
    20        of McDonald's who have been employed for 10 years or more.
    21        A.  That is right, yes.
    22
    23   MR. MORRIS:  For those employees then, ex-employees, they would
    24        have to repay back the finance that they have been loaned,
    25        yes?
    26        A.  Yes.
    27
    28   Q.   From sales.  So how does that guarantee, how does that show
    29        "it is in their financial interest to ensure that
    30        standards in the restaurant are kept high"?
    31        A.  Quite simply, by conducting your business efficiently,
    32        looking after your customers, looking after your crew,
    33        delivering quality service, safe products, your sales will
    34        increase, but that the more your sales go up, the more
    35        profit you make.  So, it is just business sense that by
    36        operating a business where you keep your staff turnover
    37        down by good labour practices, that you make sure the
    38        environment that they work in is safe, that the food that
    39        is cooked is food safe, that surrounds are hygienic and
    40        that you look after your customers well, you know, your
    41        business will blossom, and then you will be able to pay the
    42        money back.  If you were to do the opposite and cut any
    43        corners, then you would not be taking as much money,
    44        thereby your profits would not be as high, therefore, you
    45        would not be able to pay your loan back.
    46
    47   Q.   But the No. 1 priority is that they must increase their
    48        sales?
    49        A.  I think that the No. 1 priority is to look after the
    50        customers and then second to that is your sales 
    51        increase  ----- 
    52 
    53   Q.   You are saying that the increase in sales mirrors, in your
    54        opinion, that the customers are being looked after, but the
    55        actual requirement, the reality, is that profits have to be
    56        there, the increase of sales has to be there, in order to
    57        pay back the finance?  For whatever reason that sales have
    58        gone up and the profits are being made, that is what is
    59        important, is it not?
    60        A.  It is always emphasised to licensees that they have to

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