Day 123 - 09 May 95 - Page 52


     
     1        that we have adopted.
     2
     3   Q.   If you found there were violations of the law going on,
     4        what would you do -- not you personally but what would the
     5        Company do?
     6        A.  I understand.  It depends upon the nature of those
     7        violations, and the seriousness of the violation and
     8        whether or not it was the first occurrence.  If it were a
     9        serious violation of law, or of the lease and licence
    10        agreement with the Company, we might move to have the
    11        licence revoked.
    12
    13        If the matter was less severe, then we would sit down and
    14        in either case we would sit down with the franchisees and
    15        try to address the violation, to implement or institute
    16        whatever procedures, practices, that were appropriate so
    17        that there would not be -- so they would not be in
    18        violation and that that would not occur again.  That would
    19        be first.  But if there were a serious, serious, violation
    20        of law, then we probably would move to revoke the licence
    21        or ask the franchisee to sell his business and do something
    22        else.
    23
    24   MR. JUSTICE BELL:  What is the system of supervision of
    25        franchisees' restaurants in the States?  The vast majority
    26        of McDonald's restaurants are run by franchisees.  At what
    27        level does someone actually employed by McDonald's carry
    28        out a supervisory role, if at all?
    29        A.  It is not a direct relationship and, looking at an
    30        organisational chart, you know, you have a solid line
    31        relationship.  For instance, people that would be employed
    32        by me would have a solid line relationship, but my
    33        relationship with franchisees would be more of an advisory
    34        one, a dotted line relationship.
    35
    36        So, if you were looking at an organisational chart and
    37        looked at the service that McDonald's Field Consultant or
    38        Bob Beavers or someone else in the Corporation would
    39        provide to the franchisee, it would be a dotted line
    40        relationship.  We could not tell them specifically what to
    41        do unless it pertained to the set provisions within the
    42        licence and lease agreement.  The individual -----
    43
    44   Q.   Regardless of whether it is advisory or one can give direct
    45        orders which the franchisee has to obey, is there a system
    46        whereby the operation of franchisees' restaurants is
    47        actually supervised by McDonald's personnel in America?
    48        A.  Yes, and the system is pretty similar here in England,
    49        as I understand.  We are set up with close to 40 regional
    50        or market offices around the country.  Each office is 
    51        manned by a coterie of field consultants who, on a regular 
    52        basis, consult with our franchisees and their employees. 
    53
    54   Q.   But that involves going into the restaurants?
    55        A.  That involves going into the restaurants.
    56
    57   Q.   Does it involve looking at the restaurants' paper work?
    58        A.  Yes, it does.  Now, in addition to the visitation by
    59        the Field Consultant (and that is really the first line of
    60        consultation that we have with our franchisees), his boss

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