Case 3:14-cv-02098-JD Document 271-11 Filed 08/17/15 …static.politico.com/6b/21/...materials-on-mcdonalds-exhibit-1.pdfMCDOCH907528 , 3. When will McDonald's begin applying the revised

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3. When will McDonald's begin applying the revised National Franchising Standards and the revised measurement tools and guidelines? The revised National Franchising Standards will be used for all Business Reviews taking place after April 1, 2014. This will allow ample time for the System to prepare for and understand the revisions to the Standards. If there are situations where the measurements and guidelines associated with the revised National Franchising Standards result in a determination of ineligibility where the Owner/Operator previously would have been considered eligible for growth and rewrite, there will be communication with the Owner/Operator prior to the Owner/Operator becoming ineligible for growth and rewrite regarding the expectations and timing of compliance.

4. Does an Owner/Operator's organization have to meet all six of the National Franchising Standards to be eligible for growth, rewrite and to be eligible to participate in certain programs and incentives? Yes. Each Standard is critically important to the success of the McDonald's System. Owner/Operators must meet each Standard and be in compliance with the Franchise Agreement to be considered eligible for growth and rewrite and to be eligible to participate in certain programs and incentives. Do we need to be specific about programs like MRP? Rebuild?

S. How will McDonald's communicate an Owner/Operator's status relative to the National Franchising Standards? Generally, each Owner/Operator organization will receive a Business Review at least every 18 months. Generally, any Owner/Operator organization that is ineligible for growth and rewrite will receive a Business Review every 12 months. The Region will evaluate the Owner/Operator's performance relative to the measurements and guidelines of each Standard. During the Business Review, Regional Management will communicate the Owner/Operator's eligibility status for growth and rewrite.

In addition, an Owner/Operator may receive an Interim Business Review updating their eligibility status if it becomes apparent that the organization is not meeting or now meets a Standard.

6. If an Owner/Operator disagrees with the QSC VP on whether the organization meets a Standard, what are his/her options? As with all issues and disputes within McDonald's, our "open door" policy (e.g., appealing to the Ombudsman or higher levels of McDonald's management) would apply.

7. Under what circumstances could an Owner/Operator not be offered a new term franchise (rewrite) even though the Owner/Operator is eligible for growth and rewrite? Typically, this would only occur if the restaurant was closing due to a lack of real estate tenure or changes in the trading area.

Operations

1. Previously, the Operations Standard only measured graded ROIP visits at an individual restaurant level. Why has a new measurement been added for graded ROIP visits at the Owner/Operator organization level as well?

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3. When will McDonald’s begin applying the revised National Franchising Standards and therevised measurement tools and guidelines?The revised National Franchising Standards will be used for all Business Reviews taking placeafter April 1, 2014. This will allow ample time for the System to prepare for and understandthe revisions to the Standards. If there are situations where the measurements andguidelines associated with the revised National Franchising Standards result in adetermination of ineligibility where the Owner/Operator previously would have beenconsidered eligible for growth and rewrite, there will be communication with theOwner/Operator prior to the Owner/Operator becoming ineligible for growth and rewriteregarding the expectations and timing of compliance.

4. Does an Owner/Operator’s organization have to meet all six of the National FranchisingStandards to be eligible for growth, rewrite and to be eligible to participate in certainprograms and incentives?Yes. Each Standard is critically important to the success of the McDonald’s System.Owner/Operators must meet each Standard and be in compliance with the FranchiseAgreement to be considered eligible for growth and rewrite and to be eligible to participatein certain programs and incentives. Do we need to be specific about programs like MRP?Rebuild?

5. How will McDonald’s communicate an Owner/Operator’s status relative to the NationalFranchising Standards?Generally, each Owner/Operator organization will receive a Business Review at least every18 months. Generally, any Owner/Operator organization that is ineligible for growth andrewrite will receive a Business Review every 12 months. The Region will evaluate theOwner/Operator’s performance relative to the measurements and guidelines of eachStandard. During the Business Review, Regional Management will communicate theOwner/Operator’s eligibility status for growth and rewrite.

In addition, an Owner/Operator may receive an Interim Business Review updating theireligibility status if it becomes apparent that the organization is not meeting or now meets aStandard.

6. if an Owner/Operator disagrees with the Q.SC VP on whether the organization meets aStandard, what are his/her options?As with all issues and disputes within McDonald’s, our “open door” policy (e.g., appealing tothe Ombudsman or higher levels of McDonald’s management) would apply.

7. Under what circumstances could an Owner/Operator not be offered a new term franchise(rewrite) even though the Owner/Operator is eligible for growth and rewrite?Typically, this would only occur if the restaurant was closing due to a lack of real estatetenure or changes in the trading area.

Oneratlons

1. Previously, the Operations Standard only measured graded ROIP visits at an Individualrestaurant level. Why has a new measurement been added for graded ROIP visits at theOwner/Operator organization level as well?

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The changes to the Operations Standard are intended to demonstrate our commitment to our guests by delivering the highest levels of QS&C and Food Safety, while not deviating from the ROIP process. We believe that this Standard, when measured only at the individual restaurant level, does not adequately assess an Owner/Operator's overall operational performance. Previously, an organization could fail as many as 67% of their graded visits in an ROIP cycle, and yet still meet the Operations Standard.

We will continue to use existing resources, including FORs, SORs and Food Safety Procedure Verifications to determine whether a restaurant and an Owner/Operator's organization meet the Operations Standard. Please refer to the updated Operations Standard for details on the Organization measurement as applied to Owner/Operator organizations with one, two, three, four and five or more restaurants.

2. Does a restaurant that fails only one food safety audit meet the Operations Standard? In most cases, yes. However the severity of the food safety issues may require a different answer.

3. An Owner/Operator acquires a restaurant that does not meet McDonald's operational standards. During the first few months after the acquisition, the restaurant receives graded visits that do not meet the Operations Standard. How will this impact the Owner/Operator's eligibility for growth and rewrite? This situation will not impact the Owner/Operator's status as he/she will be given a reasonable period of time to raise that restaurant's operations to an acceptable level. The appropriate time frame should be discussed with the QSC VP at the time of the acquisition. Please refer to the QSC playbook for more information on graded visits occurring after a change of ownership takes place.

4. If an Owner/Operator sells a restaurant that does not meet the Operations Standard and all of the other restaurants in the organization do meet the National Franchising Standards, is the Owner/Operator now eligible for growth and rewrite? Assuming the Owner/Operator's organization has consistently met all the National Franchising Standards at their remaining restaurants, the Owner/Operator organization would likely become eligible for growth and rewrite upon selling its only restaurant in the Improvement Process for Underperforming Restaurants (IPUR). However, the QSC VP may not immediately support the Owner/Operator's growth based on the circumstances that caused the sold restaurant to not meet the Operations standard in the first place.

S. Is an Owner/Operator eligible for growth and rewrite once a restaurant is removed from IPUR and placed back into the normal ROIP process? Depending on the facts and circumstances, some Owner/Operators will be eligible for growth and rewrite immediately after coming out of IPUR. However, some Owner/Operators may not immediately become eligible for growth and rewrite once the restaurant is removed from IPUR and placed back into the normal ROIP process. Rather, the organization must demonstrate that it can operate all restaurants at a level that meets McDonald's QSC standards consistently over a period of time.

If an Owner/Operator is not eligible for growth and rewrite upon coming out of IPUR, the QSC VP will communicate the time period, up to twelve months, that the organization will remain ineligible for growth and rewrite. If during that time period, the Owner/Operator consistently meets all of the National Franchising Standards, the organization will regain its

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The changes to the Operations Standard are intended to demonstrate our commitment toour guests by delivering the highest levels of QS&C and Food Safety, while not deviatingfrom the ROIP process. We believe that this Standard, when measured only at theindividual restaurant level, does not adequately assess an Owner/Operator’s overalloperational performance. Previously, an organization could fail as many as 67% of theirgraded visits in an ROIP cycle, and yet still meet the Operations Standard.

We will continue to use existing resources, including FORs, SORs and Food Safety ProcedureVerifications to determine whether a restaurant and an Owner/Operator’s organizationmeet the Operations Standard. Please refer to the updated Operations Standard for detailson the Organization measurement as applied to Owner/Operator organizations with one,two, three, four and five or more restaurants.

2. Does a restaurant that fails only one food safety audit meet the Operations Standard?In most cases, yes. However the severity of the food safety issues may require a differentanswer.

3. An Owner/Operator acquires a restaurant that does not meet McDonald’s operationalstandards. During the first few months after the acquisition, the restaurant receivesgraded visits that do not meet the Operations Standard. How will this impact theOwner/Operator’s eligibility for growth and rewrite?This situation will not impact the Owner/Operator’s status as he/she will be given areasonable period of time to raise that restaurant’s operations to an acceptable level. Theappropriate time frame should be discussed with the USC VP at the time of the acquisition.Please refer to the USC playbook for more information on graded visits occurring after achange of ownership takes place.

4. If an Owner/Operator sells a restaurant that does not meet the Operations Standard andall of the other restaurants in the organization do meet the National FranchisingStandards, is the Owner/Operator now eligible for growth and rewrite?Assuming the Owner/Operator’s organization has consistently met all the NationalFranchising Standards at their remaining restaurants, the Owner/Operator organizationwould likely become eligible for growth and rewrite upon selling its only restaurant in theImprovement Process for Underperforming Restaurants (IPUR). However, the USC VP maynot immediately support the Owner/Operator’s growth based on the circumstances thatcaused the sold restaurant to not meet the Operations standard in the first place.

5. Is an Owner/Operator eligible for growth and rewrite once a restaurant is removed fromIPLIR and placed back into the normal ROIP process?Depending on the facts and circumstances, some Owner/Operators will be eligible forgrowth and rewrite immediately after coming out of IPUR. However, someOwner/Operators may not immediately become eligible for growth and rewrite once therestaurant is removed from IPUR and placed back into the normal ROIP process. Rather, theorganization must demonstrate that it can operate all restaurants at a level that meetsMcDonald’s USC standards consistently over a period of time.

If an Owner/Operator is not eligible for growth and rewrite upon coming out of IPUR, theUSC VP will communicate the time period, up to twelve months, that the organization willremain ineligible for growth and rewrite. If during that time period, the Owner/Operatorconsistently meets all of the National Franchising Standards, the organization will regain its

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eligibility for growth and rewrite at the end of this time period. Periodic updates regarding the organization's status and the restaurant's performance against McDonald's operational standards should be communicated to the Owner/Operator while the organization remains ineligible.

Reinvestment

1. Why is Reinvestment, which was previously reviewed as a part of the Financial Standard, now an Independent Standard? With Reinvestment as an independent standard, we will be able to better identify Owner/Operator organizations that are not financially viable, rather than those that just fail to reinvest.

2. Does every restaurant in an Owner/Operator's organization have to meet the National Restaurant Building and Equipment Standards ("NRBES") to meet the Reinvestment Standard? Yes. However, if one or more of an Owner/Operator's restaurants do not meet the NRBES requirements, but the Owner/Operator and the Q.SC VP mutually agree upon a written plan (not to exceed 18 months) to bring the restaurants up to NRBES requirements, then the organization will be considered as meeting the Standard.

Financial

1. The Financial Standard requires that an Owner/Operator must pay McDonald's and others on time. What if an Owner/Operator has not paid because he/she is disputing an amount due? Legitimate disputes regarding payment will not cause an Owner/Operator to fail to meet this Standard. However, if a dispute arises with McDonald's or other vendors, it remains the responsibility of the Owner/Operator to resolve these issues as soon as possible.

2. Does an Owner/Operator fail to meet the Financial Standard if he/she occasionally submits financial statements a few days late? Occasionally submitting financial statements a few days late will not cause an Owner/Operator to fail to meet the Financial Standard. However, it is the responsibility of the Owner/Operator to insure they meet all deadlines required by the Franchise Agreement.

. Does the failure to meet any one of the financial viability measurements (equity percentage, cash flow coverage ratio and liability turnover) mean the Owner/Operator fails to meet the Financial Standard? An overall point system is now applied to the individual viability measurements in determining the financial viability of the restaurant business. An organization must achieve an overall score of 6 or greater to meet the financial viability measurement. Please refer to the National Franchising Standards to see a breakdown of the overall point system. The financial statements are reviewed for accuracy at the time of the business review. As with all of the Standards, the Region will use their judgment in the assessment and evaluation of the measurements and guidelines.

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eligibility for growth and rewrite at the end of this time period. Periodic updates regardingthe organization’s status and the restaurant’s performance against McDonald’s operationalstandards should be communicated to the Owner/Operator while the organization remainsineligible.

Reinvestment

i. why is Reinvestment, which was previously reviewed as a part of the Financial Standard,now an Independent Standard?With Reinvestment as an independent standard, we will be able to better identifyOwner/Operator organizations that are not financially viable, rather than those that just failto reinvest.

2. Does every restaurant in an Owner/Operator’s organization have to meet the NationalRestaurant Building and Equipment Standards (“NRBES”) to meet the ReinvestmentStandard?Yes. However, if one or more of an Owner/Operator’s restaurants do not meet the NRBESrequirements, but the Owner/Operator and the QSC VP mutually agree upon a written plan(not to exceed 18 months) to bring the restaurants up to NRBES requirements, then theorganization will be considered as meeting the Standard.

Financial

1. The Financial Standard requires that an Owner/Operator must pay McDonald’s and otherson time. what If an Owner/Operator has not paid because he/she is disputing an amountdue?Legitimate disputes regarding payment will not cause an Owner/Operator to fail to meetthis Standard. However, if a dispute arises with McDonald’s or other vendors, it remains theresponsibility of the Owner/Operator to resolve these issues as soon as possible.

2. Does an Owner/operator fall to meet the Financial Standard If he/she occasionallysubmits financial statements a few days late?Occasionally submitting financial statements a few days late will not cause anOwner/Operator to fail to meet the Financial Standard. However, it is the responsibility ofthe Owner/Operator to insure they meet all deadlines required by the Franchise Agreement.

3. Does the failure to meet any one of the financial viability measurements (equitypercentage, cash flow coverage ratio and liability turnover) mean the Owner/Operatorfails to meet the Financial Standard?An overall point system is now applied to the individual viability measurements indetermining the financial viability of the restaurant business. An organization must achievean overall score of 6 or greater to meet the financial viability measurement. Please refer tothe National Franchising Standards to see a breakdown of the overall point system. Thefinancial statements are reviewed for accuracy at the time of the business review. As withall of the Standards, the Region will use their judgment in the assessment and evaluation ofthe measurements and guidelines.

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4. Do I meet the Financial Standard if my organization achieves an overall score of 6 or greater? The point system is used to determine financial viability only. The Financial Standard criteria also require that an organization submit accurate financial statements timely and pay McDonald's and others on time. Also, if debt on the financial statements does not meet McDonald's borrowing standards, the Region will restate the debt terms, which may affect the overall score.

5. If my organization's financing arrangements fall outside of McDonald's borrowing standards, how is this treated? In determining the financial viability of an organization, the Region will restate any debt that falls outside of McDonald's borrowing standards.

6. How does a non-operating and/or non-recurring event affect my financial ratios? All business transactions should be recorded in accordance with GAAP and reflected on the financial statements appropriately. Any transactions or non-recurring events will be evaluated by the Region as part of the financial viability assessment where the transaction alters the overall financial condition of the organization. For example, in situations such as a sale of restaurant(s) where a significant amount of cash may come into the business and then be subsequently drawn out, the draw may be exduded from the ratio calculations for purposes of reviewing financial viability.

7. Do I get the maximum 4 points, under the cash flow coverage ratio, if I have no debt regardless of what my net cash flow is? No. Owner/Operators who have no debt service can only achieve the highest level points when positive net cash flow is maintained after G&A and Draw.

8. How is equity percentage calculated? Value of the Business minus Net Debt on the Business divided by the Value of the Business

(Value of Business) — (Net Debt) = Equity Percentage (Value of Business)

• Value of the Business: Cash Flow before Debt Service, G&A and Draw less standard G&A ($35,000 for traditional restaurants and $10,000 for satellites) multiplied by Cash Flow multiple of 4.5. If the equity percentage is calculated to be less than 25% using this formula, then the financial director will use a discounted cash flow method (with actual reinvestment) to determine the value of the business.

• Debt on the Business (Net Debt): Total Current Liabilities plus total Long-Term Liabilities minus any Notes Payable to Stockholders minus Current Assets.

Both debt and cash flow will be appropriately adjusted for all NEP restaurants.

9. How is mei liability turnover calculated? The liability turnover is calculated over a TTM period. It represents TTM Average Positive or Negative Working Capital divided by Average Daily Sales

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4. Do I meet the Financial Standard if my organization achieves an overall score of 6 orgreater?The point system is used to determine financial viability only. The Financial Standard criteriaalso require that an organization submit accurate financial statements timely and payMcDonald’s and others on time. Also, if debt on the financial statements does not meetMcDonald’s borrowing standards, the Region will restate the debt terms, which may affectthe overall score.

5. If my organization’s financing arrangements fall outside of McDonald’s borrowingstandards, how is this treated?In determining the financial viability of an organization, the Region will restate any debt thatfalls outside of McDonald’s borrowing standards.

6. How does a non-operating and/or non-recurring event affect my financial ratios?All business transactions should be recorded in accordance with GAAP and reflected on thefinancial statements appropriately. Any transactions or non-recurring events will beevaluated by the Region as part of the financial viability assessment where the transactionalters the overall financial condition of the organization. For example, in situations such as asale of restaurant(s) where a significant amount of cash may come into the business andthen be subsequently drawn out, the draw may be exduded from the ratio calculations forpurposes of reviewing financial viability.

7. Do I get the maximum 4 points, under the cash flow coverage ratio, if I have no debtregardless of what my net cash flow is?No. Owner/Operators who have no debt service can only achieve the highest level pointswhen positive net cash flow is maintained after G&A and Draw.

8. How is equity percentage calculated?Value of the Business minus Net Debt on the Business divided by the Value of the Business

(Value of Business) — (Net Debt) = Equity Percentage(Value of Business)

• Value of the Business:Cash Flow before Debt Service, G&A and Draw less standard G&A ($35,000 fortraditional restaurants and $10,000 for satellites) multiplied by Cash Flow multipleof 4.5. If the equity percentage is calculated to be less than 25% using this formula,then the financial director will use a discounted cash flow method (with actualreinvestment) to determine the value of the business.

• Debt on the Business (Net Debt):Total Current Liabilities plus total Long-Term Liabilities minus any Notes Payable toStockholders minus Current Assets.


9. How is TrM liability turnover calculated?The liability turnover is calculated over a TTM period. It represents TTM Average Positive orNegative Working Capital divided by Average Daily Sales

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(Positive or Negative Working Capital) = Liability Turnover Ratio (Average Daily Sales)

• Working Capital equals: Current Assets less Current Liabilities

• Current Liabilities equals: Total Current Liabilities Minus: Current Portion of Long-Term Debt Plus: 1/12 of Current Portion of Long-Term Debt

• Average Daily Sales equals: Total Annualized Sales divided by 363

• Under the point system, points are assigned for a positive or negative Liability Turnover. Negative Liability Turnover is calculated if Working Capital is a negative amount (i.e., current liabilities exceed current assets). Positive Liability Turnover is calculated if Working Capital is a positive amount (i.e., current assets exceed current liabilities).

10. How is cash flow coverage ratio calculated? Cash Flow after G&A and Draw divided by Annual Debt Service (note: actual G&A is used in this calculation)

(Cash Flow after G&A and Draw) = Cash Flow Coverage Ratio (Annual Debt Service)

11. Does the Financial Standard require a minimum amount of cash be kept in the business? No. Overall financial viability as part of the Financial Standard must be met.

People

1. What does "having an adequate number of shift-certified or shift verified managers" mean? An adequate number of shift-certified managers is the number required so that each shift is run by a shift-certified manager and will vary based on hours of operation.

2. What is required for an employee to be Shift Certified with BSM being phased out with the transition to Restaurant Department Management (RDM) classes? A Shift Certified Manager must be Serve Safe certified, be Shift Verified in the restaurant and have successfully completed Introduction to Management (ITM) or the previous equivalent (i.e., BOC, BSM).

3. If an Owner/Operator has a shift manager that is ready and able to attend Introduction to Management (ITM), but the manager is waiting on class availability to open or a class has been cancelled, will this be held against the Owner/Operator? No. McDonald's acknowledges that it may take some time to schedule shift running managers to ITM class. Any Owner/Operators in this situation should work with their Region to develop a plan to get their shift running managers certified as soon as is practical.

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(Positive or Negative Working Capital) = Liability Turnover Ratio(Average Daily Sales)

• Working Capital equals:Current Assets less Current Liabilities

• Current Liabilities equals:Total Current LiabilitiesMinus: Current Portion of Long-Term DebtPlus: 1/12 of Current Portion of Long-Term Debt

• Average Daily Sales equals:Total Annualized Sales divided by 363

• Under the point system, points are assigned for a positive or negative LiabilityTurnover. Negative Liability Turnover is calculated if Working Capital is a negativeamount (I.e., current liabilities exceed current assets). Positive Liability Turnover iscalculated if Working Capital is a positive amount (i.e., current assets exceed currentliabilities).

10. How is cash flow coverage ratio calculated?Cash Flow after G&A and Draw divided by Annual Debt Service (note: actual G&A Is used inthis calculation)

(Cash Flow after G&A and Draw) = Cash Flow Coverage Ratio(Annual Debt Service)

11.. Does the Financial Standard require a minimum amount of cash be kept in the business?No. Overall financial viability as part of the Financial Standard must be met.

People

1. What does “having an adequate number of shift-certified or shift verified managers”mean?An adequate number of shift-certified managers is the number required so that each shift isrun by a shift-certified manager and will vary based on hours of operation.

2. What is required for an employee to be Shift Certified with BSM being phased out withthe transition to Restaurant Department Management (RDM) classes?A Shift Certified Manager must be Serve Safe certified, be Shift Verified in the restaurantand have successfully completed Introduction to Management (ITM) or the previousequivalent (i.e., BOC, BSM).

3. If an Owner/Operator has a shift manager that is ready and able to attend Introduction toManagement (ITM), but the manager is waiting on class availability to open or a class hasbeen cancelled, will this be held against the Owner/Operator?No. McDonald’s acknowledges that it may take some time to schedule shift runningmanagers to ITM class. Any Owner/Operators in this situation should work with theirRegion to develop a plan to get their shift running managers certified as soon as is practical.

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4. Are satellites required to have HU/ROLP/GM Capstone trained managers? No, typically satellite restaurants are not required to have HU/ROLP/GM Capstone trained managers. However, the satellite restaurant's franchising documents may require an HU/ROLP/GM Capstone trained manager.

5. An Owner/Operator organization conducts an employee commitment survey. The survey scores are much lower than the Owner/Operator would like. As a result, the organization creates and implements an action plan to address the deficiencies. Will the low commitment score cause this organization to not meet the People Standard? No. This Standard requires conducting the survey and reviewing the feedback.

6. Does the Owner/Operator have to use the McDonald's approved Manager and Crew Commitment Survey?

No. However, the Owner/Operator must have an effective employee feedback process in place. As part of this process, the Owner/Operator must gather and review anonymous feedback from the management and crew at each restaurant at least annually.

7. Can you please provide more details on our People Migration Strategy? The People Migration Strategy is a three-tiered approach including BHOT'r, Shift Management Excellence and Restaurant Department Management. Consistent use of the migration tactics supports crew benefits, hiring, orientation, training and retention with extended focus on Shift Managers with Shift Management Excellence. Restaurant Department Management serves as the capstone of the strategy with a management structure, curriculum and management support tools. Consistent use of these tactics helps to provide a foundation of highly skilled and motivated restaurant employees.

8. What are some examples of McDonald's training/meetings that would demonstrate a General Manager has remained current with restaurant operations each year? Some examples include, but are not limited to, participation at Regional, Division and National meetings such as Seed Stores, Plan-to-Win Road Shows, Manager Rallies, Operations Summits, COMR., Business Alignment meetings, etc. It is important that General Managers stay current with restaurant operations because the continued success of our System is founded on having highly skilled and motivated restaurant employees. The ongoing training and development of our General Managers is essential to retaining qualified personnel to operate and build the McDonald's business.

9. How will the 10 hours of continuing education for General Managers be tracked? The Owner/Operator will have the responsibility and flexibility to track the 10 hours of continuing education for their General Managers in a manner best suited for their organization.

Building the Business through Guest Satisfaction

1. What does it mean to have all shifts adequately staffed with trained crew and management to maximize sales? Adequately staffed for a shift means having enough trained employees on the floor to meet the projected sales and satisfy guests. Restaurants that have shifts adequately staffed to

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4. Are satellites required to have HU/ROLP/GM Capstone trained managers?No, typically satellite restaurants are not required to have HU/ROLP/GM Capstone trainedmanagers. However, the satellite restaurant’s franchising documents may require anHU/ROLP/GM Capstone trained manager.

5. An Owner/Operator organization conducts an employee commitment survey. The surveyscores are much lower than the Owner/Operator would like. As a result the organizationcreates and implements an action plan to address the deficiencies. Will the lowcommitment score cause this organization to not meet the People Standard?No. This Standard requires conducting the survey and reviewing the feedback.

6. Does the Owner/Operator have to use the McDonald’s approved Manager and CrewCommitment Survey?No. However, the Owner/Operator must have an effective employee feedback process inplace. As part of this process, the Owner/Operator must gather and review anonymousfeedback from the management and crew at each restaurant at least annually.

7. Can you please provide more details on our People Migration Strategy?The People Migration Strategy Is a three-tiered approach including BHOT’r, ShiftManagement Excellence and Restaurant Department Management. Consistent use of themigration tactics supports crew benefits, hiring, orientation, training and retention withextended focus on Shift Managers with Shift Management Excellence. RestaurantDepartment Management serves as the capstone of the strategy with a managementstructure, curriculum and management support tools. Consistent use of these tactics helpsto provide a foundation of highly skilled and motivated restaurant employees.

8. What are some examples of McDonald’s training/meetings that would demonstrate aGeneral Manager has remained current with restaurant operations each year?Some examples include, but are not limited to, participation at Regional, Division andNational meetings such as Seed Stores, Plan-to-Win Road Shows, Manager Rallies,Operations Summits, COMR., Business Alignment meetings, etc. It Is important that GeneralManagers stay current with restaurant operations because the continued success of ourSystem is founded on having highly skilled and motivated restaurant employees. Theongoing training and development of our General Managers is essential to retainingqualified personnel to operate and build the McDonald’s business.

9. How will the 10 hours of continuing education for General Managers be tracked?The Owner/Operator will have the responsibility and flexibility to track the 10 hours ofcontinuing education for their General Managers in a manner best suited for theirorganization.

Building the Business throueh Guest Satisfaction

1. What does it mean to have all shifts adequately staffed with trained crew andmanagement to maximize sales?Adequately staffed for a shift means having enough trained employees on the floor to meetthe projected sales and satisfy guests. Restaurants that have shifts adequately staffed to

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maximize sales are able to meet or exceed the guest expectations, respond quickly to any guest concerns, and maximize sales potential.

2. What are some examples of an Owner/Operator showing support for System promotions, recommendations and initiatives? System promotions, recommendations and initiatives should be consistently supported in each restaurant of an Owner/Operator organization. We work collaboratively together with Owner/Operators to ensure our Plan to Win is designed to drive the business forward. Examples include, but are not limited to, new product launches, promotional activities, extended hours of operation and value offerings. Any concerns an Owner/Operator may have regarding the support of a System promotion, recommendation or initiative (such as extended hours) for a specific restaurant of the Owner/Operator organization should be discussed with the QSC VP or Field Service Team.

3. Are "special venue" restaurants required to participate in all System promotions? No, there will be situations when the OPNAD and Co-Op endorsed promotions cannot be implemented. Before a new promotion is rolled out, the Owner/Operator and the Region should discuss whether there are circumstances that would prevent the owner/operator from selling certain products or participating in certain promotions at these locations.

4. How will mystery shop results be used when assessing this Standard? Mystery Shop scores are not a measurement tool in this Standard and will not cause an Owner/Operator organization to fail to meet this Standard. However, the results will be discussed as they provide an additional source of information and can help to develop insightful commentary within Owner/Operator business reviews. See Mystery Shop memo issued October 3, 2011 for further details. (Marion wants to attach memo or list key points or leave it off-she doesn't think they can find the memo)

5. How will the number of guest complaints be used when assessing this Standard? The number of guest complaints is no longer used as a measurement in this Standard and will not cause an Owner/Operator to fail to meet this Standard. Rather, the organization should focus on call back responsiveness. See Customer Complaint memo dated August 30, 2011 for further details.

6. Does the "All shifts adequately staffed to maximize sales" guideline contained in the Building the Business through Guest Satisfaction Standard requires a restaurant to adopt extended hours? No. The reference in this guideline to "maximizing sales" refers to adequately staffing existing shifts. 24 hours or extended hours and the decision to implement them should be a discussion between the Owner/Operator and the Region.

7. What does it mean to maximize sales "by providing reliable, competitive value to the guest"? Our guests expect a menu that offers compelling value every time they visit a McDonald's restaurant. Accordingly, in order to remain competitive and relevant to our guests, McDonald's restaurants must offer a value platform which is consistent with these expectations. Reliable, competitive value will evolve over time and vary from market to market.

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maximize sales are able to meet or exceed the guest expectations, respond quickly to anyguest concerns, and maximize sales potential.

2. What are some examples of an Owner/Operator showing support for System promotions,recommendations and initiatives?System promotions, recommendations and initiatives should be consistently supported ineach restaurant of an Owner/Operator organization. We work collaboratively together withOwner/Operators to ensure our Plan to Win is designed to drive the business forward.Examples include, but are not limited to, new product launches, promotional activities,extended hours of operation and value offerings. Any concerns an Owner/Operator mayhave regarding the support of a System promotion, recommendation or initiative (such asextended hours) for a specific restaurant of the Owner/Operator organization should bediscussed with the QSC VP or Field Service Team.

3. Are “special venue” restaurants required to participate in all System promotions?No, there will be situations when the OPNAD and Co-Op endorsed promotions cannot beimplemented. Before a new promotion is rolled out, the Owner/Operator and the Regionshould discuss whether there are circumstances that would prevent the owner/operatorfrom selling certain products or participating in certain promotions at these locations.

4. How will mystery shop results be used when assessing this Standard?Mystery Shop scores are not a measurement tool in this Standard and will not cause anOwner/Operator organization to fail to meet this Standard. However, the results will bediscussed as they provide an additional source of information and can help to developinsightful commentary within Owner/Operator business reviews. See Mystery Shop memoissued October 3, 2011 for further details. (Marion wants to attach memo or list key pointsor leave it off-she doesn’t think they can find the memo)

5. How will the number of guest complaints be used when assessing this Standard?The number of guest complaints is no longer used as a measurement in this Standard andwill not cause an Owner/Operator to fail to meet this Standard. Rather, the organizationshould focus on call back responsiveness. See Customer Complaint memo dated August 30,2011 for further details.~

6. Does the “All shifts adequately staffed to maximize sales” guideline contained In theBuilding the Business through Guest Satisfaction Standard requires a restaurant to adoptextended hours?No. The reference in this guideline to “maximizing sales” refers to adequately staffingexisting shifts. 24 hours or extended hours and the decision to implement them should be adiscussion between the Owner/Operator and the Region.

7. What does It mean to maximize sales “by providing reliable, competitive value to theguest”?Our guests expect a menu that offers compelling value every time they visit a McDonald’srestaurant Accordingly, in order to remain competitive and relevant to our guests,McDonald’s restaurants must offer a value platform which is consistent with theseexpectations. Reliable, competitive value will evolve over time and vary from market tomarket.

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8. The Owner/Operator is unable to reach a guest that called the 800# with a complaint. Will this impact whether the Owner/Operator meets the Building the Business through Guest Satisfaction Standard? If the Owner/Operator has made reasonable attempts to contact the guest and has a guest recovery process in place, failure to reach that guest will not be held against the Owner/Operator.

Owner/Onerator Involvement

1. Is it acceptable for an Owner/Operator to disagree or challenge the Company on issues and policies? Yes, as long as it is done in a professional and constructive manner. McDonald's encourages spirited debate or individual initiative that is done in the best interest of the System.

2. Participation in OPNAD and the Co-Op is voluntary under the Franchise Agreement. If an Owner/Operator is not a member of OPNAD or the local Co-Op, will this Owner/Operator meet the Owner/Operator Involvement Standard? No. The National Franchising Standards require an Owner/Operator to be a member of both OPNAD and the appropriate local Co-Op even though the Franchise Agreement does not.

3. A requirement that Owner/Operators remain current with the business has been added to the Owner/Operator Involvement Standard. How will this be measured? An Owner/Operator must be a student of the business through ongoing education. Remaining current with the business can be achieved by completing one of the following:

• Participating in McDonald's meetings, conventions, and events each year. OR • Attending an Owner/Operator based HU training class within the past 10 years.

OR • Attending the GM Capstone class within the past 10 years. OR • Participating on a McDonald's system team within the past 18 months

(Examples include, but are not limited to, NLC, DLC, RLC, OPNAD, regional, teams, divisional teams or sub teams) OR

• Sponsoring a McDonald's training class within the past 18 months.

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8. The Owner/Operator Is unable to reach a guest that called the 800# with a complaint.Will this impact whether the Owner/Operator meets the Building the Business throughGuest Satisfaction Standard?If the Owner/Operator has made reasonable attempts to contact the guest and has a guestrecovery process in place) failure to reach that guest will not be held against theOwner/Operator.

OwnerlOnerator Involvement

1. Is It acceptable for an Owner/Operator to disagree or challenge the Company on issuesand policies?Yes) as long as it is done in a professional and constructive manner. McDonald’s encouragesspirited debate or individual initiative that is done in the best interest of the System.

2. Participation in OPNAD and the Co-Op is voluntary under the Franchise Agreement If anOwner/operator Is not a member of OPNAD or the local Co-Op. will this Owner/Operatormeet the Owner/Operator Involvement Standard?No. The National Franchising Standards require an Owner/Operator to be a member of bothOPNAD and the appropriate local Co-Op even though the FranchIse Agreement does not.

3. A requirement that Owner/Operators remain current with the business has been added tothe Owner/Operator Involvement Standard. How will this be measured?An Owner/Operator must be a student of the business through ongoing education.Remaining current with the business can be achieved by completing one of the following:

• Participating In McDonald’s meetings, conventions, and events each year. OR• Attending an Owner/Operator based HU training class within the past 10 years.

OR• Attending the GM Capstone class within the past 10 years. OR• Participating on a McDonald’s system team within the past 18 months

(Examples include, but are not limited to, NLC, DLC, RLC, OPNAD, regional,teams, divisional teams or sub teams) OR

• Sponsoring a McDonald’s training class within the past 18 months.

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National Franchising Standards FAQs as of 12/1/13 (Effective 04/01/14)

The following FAQ's are intended to add texture to the National Franchising Standards and the Measurements and Guidelines. The Measurements and Guidelines are used to assess whether the performance and results of the Owner/Operator and his/her organization meet the Standards.

General Questions

1. Have the National Franchising Standards changed? Yes, the National Franchising Standards (the "Standards") have evolved to meet the needs of our business. The enhancements provide an opportunity to elevate the Brand, communicate what it takes to be successful in our business and further distance ourselves from the competition.

Each of the six Standards now includes an aspirational Vision statement (What are we trying to accomplish?) and a Purpose statement (Why are we doing it?), which help to incorporate the McDonald's values into the National Franchising Standards. The addition of the Vision and Purpose statements provides additional clarity to the Standards and reminds all of us what we are trying to accomplish.

The Standard statement (What needs to be done?) has also been revised while additional measurements and guidelines (Is it being done?) have been added to each of the six Standards.

Other significant changes to the National Franchising Standards include: o Reinvestment is a new Standard, independent of the Financial Standard. o The Operations Standard now has an organizational measurement, in addition to a

restaurant measurement. o The Financial Standard has a point system to determine Financial Viability o In the People Standard, General Managers must remain current with the business

by demonstrating one of the following each year: ■ Participated in 10 hours of McDonald's training/meetings on restaurant

operations. OR ■ Passed the current GM Capstone proficiency test.

o Customer Satisfaction is now the Building the Business through Guest Satisfaction Standard and includes supporting the Plan to Win.

o The Owner/Operator Involvement Standard now includes a requirement to stay current with the business through continuous learning activities.

2. What is the purpose of the National Franchising Standards? The National Franchising Standards form the basis for all franchising decisions including growth, rewrite and eligibility for participation in certain programs and incentives. Each of the six Standards is critically important to the success of the McDonald's System. The National Franchising Standards are intended to be applied consistently across the U.S. business and do not change or supplement the Franchise Agreement.

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National Franchising StandardsFAQ~ as of 12/1/13(Effective 04/01/14)

The following FAQ’s are intended to add texture to the National Franchising Standards and theMeasurements and Guidelines. The Measurements and Guidelines are used to assess whetherthe performance and resufts of the Owner/Operator and his/her organization meet theStandards.

General Questions

1. Have the National Franchising Standards changed?Yes, the National Franchising Standards (the ~Standards”) have evolved to meet the needsof our business. The enhancements provide an opportunity to elevate the Brand,communicate what it takes to be successful in our business and further distance ourselvesfrom the competition.

Each of the six Standards now Includes an aspirational Vision statement (What are we tryingto accomplish?) and a Purpose statement (Why are we doing it?), which help to incorporatethe McDonald’s values into the National Franchising Standards. The addition of the Visionand Purpose statements provides additional clarity to the Standards and reminds all of uswhat we are trying to accomplish.

The Standard statement (What needs to be done?) has also been revised while additionalmeasurements and guidelines (Is it being done?) have been added to each of the sixStandards.

Other significant changes to the National Franchising Standards include:o Reinvestment is a new Standard, independent of the Financial Standard.o The Operations Standard now has an organizational measurement in addition to a

restaurant measurement.o The Financial Standard has a point system to determine Financial Viabilityo In the People Standard, General Managers must remain current with the business

by demonstrating one of the following each year• Participated in 10 hours of McDonald’s training/meetings on restaurant

operations. OR• Passed the current GM Capstone proficiency test.

o Customer Satisfaction is now the Building the Business through Guest SatisfactionStandard and includes supporting the Plan to Win.

o The Owner/Operator Involvement Standard now includes a requirement to staycurrent with the business through continuous learning activities.

2. What is the purpose of the National Franchising Standards?The National Franchising Standards form the basis for all franchising decisions includinggrowth, rewrite and eligibility for participation in certain programs and incentives. Each ofthe six Standards is critically important to the success of the McDonald’s System. TheNational Franchising Standards are intended to be applied consistently across the U.S.business and do not change or supplement the Franchise Agreement.

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5. How will McDonald's communicate an Owner/Operator's status relative to the National Franchising Standards? Generally, each Owner/Operator organization will receive a Business Review at least every 18 months. Generally, any Owner/Operator organization that is ineligible for growth and rewrite will receive a Business Review every 12 months. The Region will evaluate the Owner/Operator's performance relative to the measurements and guidelines of each Standard. During the Business Review, Regional Management will communicate the Owner/Operator's eligibility status for growth and rewrite.

In addition, an Owner/Operator may receive an Interim Business Review updating their eligibility status if it becomes apparent that the organization is not meeting or now meets a Sta nda rd.

6. If an Owner/Operator disagrees with the QJSC VP on whether the organization meets a Standard, what are his/her options? As with all issues and disputes within McDonald's, our "open door" policy (e.g., appealing to the Ombudsman or higher levels of McDonald's management) would apply.


Operations


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6. If an Owner/Operator disagrees with the ~1SC VP on whether the organization meets aStandard, what are his/her options?As with all issues and disputes within McDonald’s, our “open door” policy (e.g., appealing tothe Ombudsman or higher levels of McDonald’s management) would apply.


ODerations

1. PrevIously, the Operations Standard only measured graded ROIP visits at an individualrestaurant level. Why has a new measurement been added for graded ROIP visits at theOwner/Operator organization level as well?

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4. If an Owner/Operator sells a restaurant that does not meet the Operations Standard and all of the other restaurants in the organization do meet the National Franchising Standards, is the Owner/Operator now eligible for growth and rewrite? Assuming the Owner/Operator's organization has consistently met all the National Franchising Standards at their remaining restaurants, the Owner/Operator organization would likely become eligible for growth and rewrite upon selling its only restaurant in the Improvement Process for Underperforming Restaurants (IPUR). However, the QSC VP may not immediately support the Owner/Operator's growth based on the circumstances that caused the sold restaurant to not meet the Operations standard in the first place.

5. Is an Owner/Operator eligible for growth and rewrite once a restaurant is removed from IPUR and placed back into the normal ROW process? Depending on the facts and circumstances, some Owner/Operators will be eligible for growth and rewrite immediately after coming out of IPUR. However, some Owner/Operators may not immediately become eligible for growth and rewrite once the restaurant is removed from IPUR and placed back into the normal ROIP process. Rather, the organization must demonstrate that it can operate all restaurants at a level that meets McDonald's QSC standards consistently over a period of time.


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The changes to the Operations Standard are intended to demonstrate our commitment toour guests by delivering the highest levels of QS&C and Food Safety, while not deviatingfrom the ROIP process. We believe that this Standard) when measured only at theindividual restaurant level, does not adequately assess an Owner/Operator’s overalloperational performance. Previously, an organization could fail as many as 67% of theirgraded visits in an ROIP cycle, and yet still meet the Operations Standard.



3. An Owner/Operator acquires a restaurant that does not meet McDonald’s operationalstandards. During the first few months after the acquisition, the restaurant receivesgraded visits that do not meet the Operations Standard. How will this impact theOwner/Operators eligibility for growth and rewrite?This situation will not impact the Owner/Operator’s status as he/she will be given areasonable period of time to raise that restaurant’s operations to an acceptable level. Theappropriate time frame should be discussed with the USC VP at the time of the acquisition.Please refer to the USC playbook for more information on graded visits occurring after achange of ownership takes place.


5. Is an Owner/Operator eligible for growth and rewrite once a restaurant is removed fromIPUR and placed back into the normal ROIP process?Depending on the facts and circumstances, some Owner/Operators will be eligible forgrowth and rewrite immediately after coming out of IPUR. However, someOwner/Operators may not immediately become eligible for growth and rewrite once therestaurant is removed from IPUR and placed back into the normal ROIP process. Rather, theorganization must demonstrate that it can operate all restaurants at a level that meetsMcDonald’s USC standards consistently over a period of time.


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Reinvestment

1. Why is Reinvestment, which was previously reviewed as a part of the Financial Standard, now an independent Standard? With Reinvestment as an independent standard, we will be able to better identify Owner/Operator organizations that are not financially viable, rather than those that just fail to reinvest.

2. Does every restaurant in an Owner/Operator's organization have to meet the National Restaurant Building and Equipment Standards ("NRBES") to meet the Reinvestment Standard? Yes. However, if one or more of an Owner/Operator's restaurants do not meet the NRBES requirements, but the Owner/Operator and the Q.SC VP mutually agree upon a written plan (not to exceed 18 months) to bring the restaurants up to NRBES requirements, then the organization will be considered as meeting the Standard.

Financial



3. Does the failure to meet any one of the financial viability measurements (equity percentage, cash flow coverage ratio and liability turnover) mean the Owner/Operator fails to meet the Financial Standard? An overall point system is now applied to the individual viability measurements in determining the financial viability of the restaurant business. An organization must achieve an overall score of 6 or greater to meet the financial viability measurement. Please refer to the National Franchising Standards to see a breakdown of the overall point system. The financial statements are reviewed for accuracy at the time of the business review. As with all of the Standards, the Region will use their judgment in the assessment and evaluation of the measurements and guidelines.

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Reinvestment

i. why is Reinvestment, which was previously reviewed as a part of the Financial Standard,now an independent Standard?With Reinvestment as an independent standard, we will be able to better identifyOwner/Operator organizations that are not financially viable, rather than those that just failto reinvest

2. Does every restaurant in an Owner/Operator’s organization have to meet the NationalRestaurant Building and Equipment Standards (“NRBES”) to meet the ReinvestmentStandard?Yes. However, if one or more of an Owner/Operator’s restaurants do not meet the NRBESrequirements, but the Owner/Operator and the USC VP mutually agree upon a written plan(not to exceed 18 months) to bring the restaurants up to NRBES requirements, then theorganization will be considered as meeting the Standard.

Financial

1. The Financial Standard requires that an Owner/Operator must pay McDonald’s and otherson time. What if an Owner/Operator has not paid because he/she is disputing an amountdue?Legitimate disputes regarding payment will not cause an Owner/Operator to fail to meetthis Standard. However, if a dispute arises with McDonald’s or other vendors, it remains theresponsibility of the Owner/Operator to resolve these issues as soon as possible.

2. Does an Owner/Operator fall to meet the Financial Standard If he/she occasionallysubmits financial statements a few days late?Occasionally submitting financial statements a few days late will not cause anOwner/Operator to fail to meet the Financial Standard. However, it is the responsibility ofthe Owner/Operator to insure they meet all deadlines required by the Franchise Agreement.


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4. Do I meet the Financial Standard if my organization achieves an overall score of 6 or greater? The point system is used to determine financial viability only. The Financial Standard criteria also require that an organization submit accurate financial statements timely and pay McDonald's and others on time. Also, if debt on the financial statements does not meet McDonald's borrowing standards, the Region will restate the debt terms, which may affect the overall score.


6. How does a non-operating and/or non-recurring event affect my financial ratios? All business transactions should be recorded in accordance with GAAP and reflected on the financial statements appropriately. Any transactions or non-recurring events will be evaluated by the Region as part of the financial viability assessment where the transaction alters the overall financial condition of the organization. For example, in situations such as a sale of restaurant(s) where a significant amount of cash may come into the business and then be subsequently drawn out, the draw may be excluded from the ratio calculations for purposes of reviewing financial viability.







9. How is TTM liability turnover calculated? The liability turnover is calculated over a TIM period. It represents TIM Average Positive or Negative Working Capital divided by Average Daily Sales

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5. If my organization’s financing arrangements fall outside of McDonald’s borrowingstandards, how Is this treated?In determining the financial viability of an organization, the Region will restate any debt thatfalls outside of McDonald’s borrowing standards.

6. How does a non-operating and/or non-recurring event affect my financial ratios?All business transactions should be recorded in accordance with GAAP and reflected on thefinancial statements appropriately. Any transactions or non-recurring events will beevaluated by the Region as part of the financial viability assessment where the transactionalters the overall financial condition of the organization. For example, in situations such as asale of restaurant(s) where a significant amount of cash may come into the business andthen be subsequently drawn out, the draw may be exduded from the ratio calculations forpurposes of reviewing financial viability.

7. Do I get the maximum 4 poInts, under the cash flow coverage ratio, if I have no debtregardless of what my net cash flow is?No. Owner/Operators who have no debt service can only achieve the highest level pointswhen positive net cash flow is maintained after G&A and Draw.



• Value of the Business:Cash Flow before Debt Service, G&A and Draw less standard G&A ($35,000 fortraditional restaurants and $10,000 for satellites) multiplied by Cash Flow multipleof 4.5. If the equity percentage is calculated to be less than 25% using this formula,then the financial director will use a discounted cash flow method (with actualreinvestment) to determine the value of the business.



9. How Is ITM liability turnover calculated?The liability turnover is calculated over a TrM period. It represents TTM Average Positive orNegative Working Capital divided by Average Daily Sales

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People



3. If an Owner/Operator has a shift manager that is ready and able to attend Introduction to Management (ITM), but the manager is waiting on class availability to open or a class has been cancelled, will this be held against the Owner/Operator? No. McDonald's acknowledges that it may take some time to schedule shift running managers to ITM class. Any Owner/Operators in this situation should work with their Region to develop a plan to get their shift running managers certified as soon as is practical.

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• Working Capital equals:Current Assets less Current Liabilities



• Under the point system, points are assigned for a positive or negative LiabilityTurnover. Negative Liability Turnover is calculated if Working Capital is a negativeamount (i.e., current liabilities exceed current assets). Positive Liability Turnover iscalculated if Working Capital is a positive amount (i.e.. current assets exceed currentliabilities).



11. Does the Financial Standard require a minimum amount of cash be kept in the business?No. Overall financial viability as part of the Financial Standard must be met.

Peoole


2. What Is required for an employee to be Shift Certified with BSM being phased out withthe transition to Restaurant Department Management (RDM) classes?A Shift Certified Manager must be Serve Safe certified, be Shift Verified in the restaurantand have successfully completed Introduction to Management (ITM) or the previousequivalent (i.e., BOC, BSM).

3. If an Owner/Operator has a shift manager that Is ready and able to attend Introduction toManagement (ITM), but the manager is waiting on class availability to open or a class hasbeen cancelled, will this be held against the Owner/Operator?No. McDonald’s acknowledges that it may take some time to schedule shift runningmanagers to ITM class. Any Owner/Operators in this situation should work with theirRegion to develop a plan to get their shift running managers certified as soon as is practical.

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8. What are some examples of McDonald's training/meetings that would demonstrate a General Manager has remained current with restaurant operations each year? Some examples include, but are not limited to, participation at Regional, Division and National meetings such as Seed Stores, Plan-to-Win Road Shows, Manager Rallies, Operations Summits, COMR., Business Alignment meetings, etc. It is important that General Managers stay current with restaurant operations because the continued success of our System is founded on having highly skilled and motivated restaurant employees. The ongoing training and development of our General Managers is essential to retaining qualified personnel to operate and build the McDonald's business.




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4. Are satellites required to have FlU/ROLP/GM Capstone trained managers?No, typically satellite restaurants are not required to have HU/ROLP/GM Capstone trainedmanagers. However, the satellite restaurant’s franchising documents may require anHIJ/ROLP/GM Capstone trained manager.



7. Can you please provide more details on our People Migration Strategy?The People Migration Strategy Is a three-tiered approach including BHOT’r, ShiftManagement Excellence and Restaurant Department Management. Consistent use of themigration tactics supports crew benefits, hiring, orientation, training and retention withextended focus on Shift Managers with Shift Management Excellence. RestaurantDepartment Management serves as the capstone of the strategy with a managementstructure, curriculum and management support tools. Consistent use of these tactics helpsto provide a foundation of highly skilled and motivated restaurant employees.

8. What are some examples of McDonald’s training/meetings that would demonstrate aGeneral Manager has remained current with restaurant operations each year?Some examples include, but are not limited to, participation at Regional, Division andNational meetings such as Seed Stores, Plan-to-Win Road Shows, Manager Rallies,Operations Summits, COMR., Business Alignment meetings, etc. It is important that GeneralManagers stay current with restaurant operations because the continued success of ourSystem is founded on having highly skilled and motivated restaurant employees. Theongoing training and development of our General Managers is essential to retainingqualified personnel to operate and build the McDonald’s business.


Buildina the Business throueh Guest Satisfaction

1. What does it mean to have all shifts adequately staffed with trained crew andmanagement to maximize sales?Adequately staffed for a shift means having enough trained employees on the floor to meetthe projected sales and satisfy guests. Restaurants that have shifts adequately staffed to

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2. What are some examples of an Owner/Operator showing support for System promotions,recommendations and initiatives?System promotions, recommendations and initiatives should be consistently supported ineach restaurant of an Owner/Operator organization. We work collaboratively together withOwner/Operators to ensure our Plan to Win is designed to drive the business forward.Examples include, but are not limited to, new product launches, promotional activities,extended hours of operation and value offerings. Any concerns an Owner/Operator mayhave regarding the support of a System promotion, recommendation or initiative (such asextended hours) for a specific restaurant of the Owner/Operator organization should bediscussed with the QSC VP or Field Service Team.

3. Are “special venue” restaurants required to participate in all System promotions?No, there will be situations when the OPNAD and Co-Op endorsed promotions cannot beimplemented. Before a new promotion is rolled out, the Owner/Operator and the Regionshould discuss whether there are circumstances that would prevent the owner/operatorfrom selling certain products or participating in certain promotions at these locations.


S. How will the number of guest complaints be used when assessing this Standard?The number of guest complaints is no longer used as a measurement in this Standard andwill not cause an Owner/Operator to fail to meet this Standard. Rather, the organizationshould focus on call back responsiveness. See Customer Complaint memo dated August 30,2011 for further details.

6. Does the “All shifts adequately staffed to maximize sales” guideline contained in theBuilding the Business through Guest Satisfaction Standard requires a restaurant to adoptextended hours?No. The reference in this guideline to “maximizing sales” refers to adequately staffingexisting shifts. 24 hours or extended hours and the decision to implement them should be adiscussion between the Owner/Operator and the Region.

7. What does it mean to maximize sales “by providing reliable, competitive value to theguest”?Our guests expect a menu that offers compelling value every time they visit a McDonald’srestaurant Accordingly, in order to remain competitive and relevant to our guests,McDonald’s restaurants must offer a value platform which is consistent with theseexpectations. Reliable, competitive value will evolve over time and vary from market tomarket.

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Owner/Operator Involvement

1. Is it acceptable for an Owner/Operator to disagree or challenge the Company on issues and policies?

Yes, as long as it is done in a professional and constructive manner. McDonald's encourages spirited debate or individual initiative that is done in the best interest of the System.



• Participating in McDonald's meetings, conventions, and events each year. OR • Attending an Owner/Operator based HU training class within the past 10 years.

OR • Attending the GM Capstone class within the past 10 years. OR • Participating on a McDonald's system team within the past 18 months



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8. The Owner/Operator is unable to reach a guest that called the 800# with a complaint.Will this impact whether the Owner/Operator meets the BuildIng the Business throughGuest Satisfaction Standard?If the Owner/Operator has made reasonable attempts to contact the guest and has a guestrecovery process in place, failure to reach that guest will not be held against theOwner/Operator.

OwnerlOnerator Involvement

1. Is it acceptable for an Owner/Operator to disagree or challenge the Company on issuesand policies?Yes, as long as it is done in a professional and constructive manner. McDonald’s encouragesspirited debate or individual initiative that is done in the best interest of the System.

2. Participation in OPNAD and the Co-Op is voluntary under the Franchise Agreement If anOwner/Operator Is not a member of OPNAD or the local Co-Op, will this Owner/Operatormeet the Owner/Operator Involvement Standard?No. The National Franchising Standards require an Owner/Operator to be a member of bothOPNAD and the appropriate local Co-Op even though the Franchise Agreement does not.


• Participating in McDonald’s meetings, conventions, and events each year. OR• Attending an Owner/Operator based HU training class within the past 10 years.

OR• Attending the GM capstone class within the past 10 years. OR• Participating on a McDonald’s system team within the past 18 months

(Examples include, but are not limited to, NIC, DLC, RIC, OPNAD, regional,teams, divisional teams or sub teams) OR


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National Franchising Standards FAQs as of 12/1/13 (Effective 04/01/14)

The following FAQ's are intended to add texture to the National Franchising Standards and the Measurements and Guidelines. The Measurements and Guidelines are used to assess whether the performance and results of the Owner/Operator and his/her organization meet the Standards.

General Questions

1. Have the National Franchising Standards changed? Yes, the National Franchising Standards (the "Standards") have evolved to meet the needs of our business. The enhancements provide an opportunity to elevate the Brand, communicate what it takes to be successful in our business and further distance ourselves from the competition.

Each of the six Standards now includes an aspirational Vision statement (What are we trying to accomplish?) and a Purpose statement (Why are we doing it?), which help to incorporate the McDonald's values into the National Franchising Standards. The addition of the Vision and Purpose statements provides additional clarity to the Standards and reminds all of us what we are trying to accomplish.

The Standard statement (What needs to be done?) has also been revised while additional measurements and guidelines (Is it being done?) have been added to each of the six Standards.

Other significant changes to the National Franchising Standards include: o Reinvestment is a new Standard, independent of the Financial Standard. o The Operations Standard now has an organizational measurement, in addition to a

restaurant measurement. o The Financial Standard has a point system to determine Financial Viability o In the People Standard, General Managers must remain current with the business

by demonstrating one of the following each year: ■ Participated in 10 hours of McDonald's training/meetings on restaurant

operations. OR ■ Passed the current GM Capstone proficiency test.

o Customer Satisfaction is now the Building the Business through Guest Satisfaction Standard and includes supporting the Plan to Win.

o The Owner/Operator Involvement Standard now includes a requirement to stay current with the business through continuous learning activities.

2. What is the purpose of the National Franchising Standards? The National Franchising Standards form the basis for all franchising decisions including growth, rewrite and eligibility for participation in certain programs and incentives. Each of the six Standards is critically important to the success of the McDonald's System. The National Franchising Standards are intended to be applied consistently across the U.S. business and do not change or supplement the Franchise Agreement.

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National Franchising StandardsFAQs as of 12/1/13(Effective 04/01/14)

The following FAQ’s are intended to add texture to the National Franchising Standards and theMeasurements and Guidelines. The Measurements and Guidelines are used to assess whetherthe performance and results of the Owner/Operator and his/her organization meet theStandards.

General Questions

1. Have the National Franchising Standards changed?Yes, the National Franchising Standards (the “Standards”) have evolved to meet the needsof our business. The enhancements provide an opportunity to elevate the Brand,communicate what it takes to be successful in our business and further distance ourselvesfrom the competition.

Each of the six Standards now includes an aspirational Vision statement (What are we tryingto accomplish?) and a Purpose statement (Why are we doing it?), which help to incorporatethe McDonald’s values into the National Franchising Standards. The addition of the Visionand Purpose statements provides additional clarity to the Standards and reminds all of uswhat we are trying to accomplish.

The Standard statement (What needs to be done?) has also been revised while additionalmeasurements and guidelines (Is it being done?) have been added to each of the sixStandards.

Other significant changes to the National Franchising Standards include:o Reinvestment is a new Standard, independent of the Financial Standard.o The Operations Standard now has an organizational measurement in addition to a

restaurant measurement.o The Financial Standard has a point system to determine Financial Viabilityo In the People Standard, General Managers must remain current with the business

by demonstrating one of the following each year:• Participated in 10 hours of McDonald’s training/meetings on restaurant

operations. OR• Passed the current GM Capstone proficiency test.

o Customer Satisfaction is now the Building the Business through Guest SatisfactionStandard and includes supporting the Plan to Win.

o The Owner/Operator Involvement Standard now includes a requirement to staycurrent with the business through continuous-learning activities.

2. What is the purpose of the National Franchising Standards?The National Franchising Standards form the basis for all franchising decisions indudinggrowth, rewrite and eligibility for participation in certain programs and incentives. Each ofthe six Standards is critically important to the success of the McDonald’s System. TheNational Franchising Standards are intended to be applied consistently across the U.S.business and do not change or supplement the Franchise Agreement.

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5. How will McDonald's communicate an Owner/Operator's status relative to the National Franchising Standards? Generally, each Owner/Operator organization will receive a Business Review at least every 18 months. Generally, any Owner/Operator organization that is ineligible for growth and rewrite will receive a Business Review every 12 months. The Region will evaluate the Owner/Operator's performance relative to the measurements and guidelines of each Standard. During the Business Review,• Regional Management will communicate the Owner/Operator's eligibility status for growth and rewrite.

In addition, an Owner/Operator may receive an Interim Business Review updating their eligibility status if it becomes apparent that the organization is not meeting or now meets a Standard.

6. If an Owner/Operator disagrees with the QSC VP on whether the organization meets a Standard, what are his/her options? As with all issues and disputes within McDonald's, our "open door" policy (e.g., appealing to the Ombudsman or higher levels of McDonald's management) would apply.


Operations


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6. If an Owner/Operator disagrees with the Q$C VP on whether the organization meets aStandard, what are his/her options?As with all issues and disputes within McDonald’s, our “open door” policy (e.g., appealing tothe Ombudsman or higher levels of McDonald’s management) would apply.


ODerations

1. Previously, the Operations Standard only measured graded ROIP visits at an individualrestaurant level. Why has a new measurement been added for graded ROIP visits at theOwner/Operator organization level as well?

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4. If an Owner/Operator sells a restaurant that does not meet the Operations Standard and all of the other restaurants in the organization do meet the National Franchising Standards, is the Owner/Operator now eligible for growth and rewrite? Assuming the Owner/Operator's organization has consistently met all the National Franchising Standards at their remaining restaurants, the Owner/Operator organization would likely become eligible for growth and rewrite upon selling its only restaurant in the Improvement Process for Underperforming Restaurants (IPUR). However, the Q5C VP may not immediately support the Owner/Operator's growth based on the circumstances that caused the sold restaurant to not meet the Operations standard in the first place.

5. Is an Owner/Operator eligible for growth and rewrite once a restaurant is removed from IPUR and placed back into the normal ROIP process? Depending on the facts and circumstances, some Owner/Operators will be eligible for growth and rewrite immediately after coming out of IPUR. However, some Owner/Operators may not immediately become eligible for growth and rewrite once the restaurant is removed from IPUR and placed back into the normal ROIP process. Rather, the organization must demonstrate that it can operate all restaurants at a level that meets McDonald's QSC standards consistently over a period of time.


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The changes to the Operations Standard are intended to demonstrate our commitment toour guests by delivering the highest levels of QS&C and Food Safety, while not deviatingfrom the ROIP process. We believe that this Standard, when measured only at theindividual restaurant level, does not adequately assess an Owner/Operator’s overalloperational performance. Previously, an organization could fail as many as 67% of theirgraded visits in an ROIP cycle, and yet still meet the Operations Standard.



3. An Owner/Operator acquires a restaurant that does not meet McDonald’s operationalstandards. During the first few months after the acquisition, the restaurant receivesgraded visits that do not meet the Operations Standard. How will this impact theOwner/Operator’s eligibility for growth and rewrite?This situation will not impact the Owner/Operator’s status as he/she will be given areasonable period of time to raise that restaurant’s operations to an acceptable level. Theappropriate time frame should be discussed with the USC VP at the time of the acquisition.Please refer to the USC playbook for more information on graded visits occurring after achange of ownership takes place.


5. Is an Owner/Operator eligible for growth and rewrite once a restaurant Is removed fromIPUR and placed back into the normal ROIP process?Depending on the fads and circumstances, some Owner/Operators will be eligible forgrowth and rewrite immediately after coming out of IPUR. However, someOwner/Operators may not immediately become eligible for growth and rewrite once therestaurant is removed from IPUR and placed back into the normal ROIP process. Rather, theorganization must demonstrate that it can operate all restaurants at a level that meetsMcDonald’s USC standards consistently over a period of time.


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Reinvestment

1. Why is Reinvestment, which was previously reviewed as a part of the Financial Standard, now an independent Standard? With Reinvestment as an independent standard, we will be able to better identify Owner/Operator organizations that are not financially viable, rather than those that just fail to reinvest.

2. Does every restaurant in an Owner/Operator's organization have to meet the National Restaurant Building and Equipment Standards ("NRBES") to meet the Reinvestment Standard? Yes. However, if one or more of an Owner/Operator's restaurants do not meet the NRBES requirements, but the Owner/Operator and the QSC VP mutually agree upon a written plan (not to exceed 18 months) to bring the restaurants up to NRBES requirements, then the organization will be considered as meeting the Standard.

Financial



3. Does the failure to meet any one of the financial viability measurements (equity percentage, cash flow coverage ratio and liability turnover) mean the Owner/Operator fails to meet the Financial Standard? An overall point system is now applied to the individual viability measurements in determining the financial viability of the restaurant business. An organization must achieve an overall score of 6 or greater to meet the financial viability measurement. Please refer to the National Franchising Standards to see a breakdown of the overall point system. The financial statements are reviewed for accuracy at the time of the business review. As with all of the Standards, the Region will use their judgment in the assessment and evaluation of the measurements and guidelines.

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M000CHOO7S2S


Reinvestment

1. Why is Reinvestment, which was previously reviewed as a part of the Financial Standard,now an Independent Standard?With Reinvestment as an independent standard, we will be able to better identifyOwner/Operator organizations that are not financially viable, rather than those that just failto reinvest

2. Does every restaurant in an Owner/Operator’s organization have to meet the NationalRestaurant Building and Equipment Standards (“NRBES”) to meet the ReinvestmentStandard?Yes. However, if one or more of an Owner/Operator’s restaurants do not meet the NRBESrequirements, but the Owner/Operator and the QSC VP mutually agree upon a written plan(not to exceed 13 months) to bring the restaurants up to NRBES requirements, then theorganization will be considered as meeting the Standard.

Financial

1. The Financial Standard requires that an Owner/Operator must pay McDonald’s and otherson time. What if an Owner/Operator has not paid because he/she is disputing an amountdue?Legitimate disputes regarding payment will not cause an Owner/Operator to fail to meetthis Standard. However, if a dispute arises with McDonald’s or other vendors, it remains theresponsibility of the Owner/Operator to resolve these issues as soon as possible.

2. Does an Owner/Operator fall to meet the Financial Standard If he/she occasionallysubmits financial statements a few days late?Occasionally submitting financial statements a few days late will not cause anOwner/Operator to fail to meet the Financial Standard. However, it is the responsibility ofthe Owner/Operator to insure they meet all deadlines required by the Franchise Agreement.


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4. Do I meet the Financial Standard if my organization achieves an overall score of 6 or greater?

The point system is used to determine financial viability only. The Financial Standard criteria also require that an organization submit accurate financial statements timely and pay McDonald's and others on time. Also, if debt on the financial statements does not meet McDonald's borrowing standards, the Region will restate the debt terms, which may affect the overall score.


6. How does a non-operating and/or non-recurring event affect my financial ratios? All business transactions should be recorded in accordance with GAAP and reflected on the financial statements appropriately. Any transactions or non-recurring events will be evaluated by the Region as part of the financial viability assessment where the transaction alters the overall financial condition of the organization. For example, in situations such as a sale of restaurant(s) where a significant amount of cash may come into the business and then be subsequently drawn out, the draw may be excluded from the ratio calculations for purposes of reviewing financial viability.







9. How is 'TTM liability turnover calculated? The liability turnover is calculated over a TTM period. It represents TTM Average Positive or Negative Working Capital divided by Average Daily Sales

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5. If my organization’s financing arrangements fall outside of McDonald’s borrowingstandards, how is this treated?In determining the financial viability of an organization, the Region will restate any debt thatfalls outside of McDonald’s borrowing standards.

6. How does a non-operating and/or non-recurring event affect my financial ratios?All business transactions should be recorded in accordance with GAAP and reflected on thefinancial statements appropriately. Any transactions or non-recurring events will beevaluated by the Region as part of the financial viability assessment where the transactionalters the overall financial condition of the organization. For example, in situations such as asale of restaurant(s) where a significant amount of cash may come into the business andthen be subsequently drawn out, the draw may be excluded from the ratio calculations forpurposes of reviewing financial viability.

7. Do I get the maximum 4 points, under the cash flow coverage ratio, if I have no debtregardless of what my net cash flow is?No. Owner/Operators who have no debt service can only achieve the highest level pointswhen positive net cash flow is maintained after G&A and Draw.



• Value of the Business:Cash Flow before Debt Service, G&A and Draw less standard G&A ($35,000 fortraditional restaurants and $io,ooo for satellites) multiplied by Cash Flow multipleof 4.5. If the equity percentage is calculated to be less than 25% using this formula,then the financial director will use a discounted cash flow method (with actualreinvestment) to determine the value of the business.



9. How is ITM liability turnover calculated?The liability turnover is calculated over a TTM period. It represents TTM Average Positive orNegative Working Capital divided by Average Daily Sales

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People



3. if an Owner/Operator has a shift manager that is ready and able to attend Introduction to Management (ITM), but the manager is waiting on class availability to open or a class has been cancelled, will this be held against the Owner/Operator? No. McDonald's acknowledges that it may take some time to schedule shift running managers to ITM class. Any Owner/Operators in this situation should work with their Region to develop a plan to get their shift running managers certified as soon as is practical.

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• Working Capital equals:Current Assets less Current Uabilities



• Under the point system, points are assigned for a positive or negative LiabilityTurnover. Negative Liability Turnover is calculated if Working Capital is a negativeamount (I.e., current liabilities exceed current assets). Positive Liability Turnover Iscalculated if Working Capital is a positive amount (i.e., current assets exceed currentliabilities).



11. Does the Financial Standard require a minimum amount of cash be kept In the business?No. Overall financial viability as part of the Financial Standard must be met.

People


2. What is required for an employee to be Shift Certified with BSM being phased out withthe transition to Restaurant Department Management (RDM) classes?A Shift Certified Manéger must be Serve Safe certified, be Shift Verified in the restaurantand have successfully completed Introduction to Management (ITM) or the previousequivalent (i.e., BOC, BSM).

3. If an Owner/Operator has a shift manager that is ready and able to attend Introduction toManagement (ITM), but the manager is waiting on class availability to open or a class hasbeen cancelled, will this be held against the Owner/Operator?No. McDonald’s acknowledges that it may take some time to schedule shift runningmanagers to ITM class. Any Owner/Operators in this situation should work with theirRegion to develop a plan to get their shift running managers certified as soon as is practical.

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8. What are some examples of McDonald's training/meetings that would demonstrate a General Manager has remained current with restaurant operations each year? Some examples include, but are not limited to, participation at Regional, Division and National meetings such as Seed Stores, Plan-to-Win Road Shows, Manager Rallies, Operations Summits, COMR., Business Alignment meetings, etc. It is Important that General Managers stay current with restaurant operations because the continued success of our System is founded on having highly skilled and motivated restaurant employees. The ongoing training and development of our General Managers is essential to retaining qualified personnel to operate and build the McDonald's business.




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4. Are satellites required to have HU/ROLP/GM Capstone trained managers?No, typically satellite restaurants are not required to have HU/ROLP/GM Capstone trainedmanagers. However, the satellite restaurant’s franchising documents may require anHU/ROLPfGM Capstone trained manager.



7. Can you please provide more details on our People Migration Strategy?The People Migration Strategy is a three-tiered approach inàluding BHOT’r, ShiftManagement Excellence and Restaurant Department Management. Consistent use of themigration tactics supports crew benefits, hiring, orientation, training and retention withextended focus on Shift Managers with Shift Management Excellence. RestaurantDepartment Management serves as the capstone of the strategy with a managementstructure, curriculum and management support tools. Consistent use of these tactics helpsto provide a foundation of highly skilled and motivated restaurant employees.

8. What are some examples of McDonald’s training/meetings that would demonstrate aGeneral Manager has remained current with restaurant operations each year?Some examples include, but are not limited to, participation at Regional, Division andNational meetings such as Seed Stores, Plan-to-Win Road Shows, Manager Rallies,Operations Summits, COMR., Business Alignment meetings, etc. It Is Important that GeneralManagers stay current with restaurant operations because the continued success of ourSystem is founded on having highly skilled and motivated restaurant employees. Theongoing training and development of our General Managers is essential to retainingqualified personnel to operate and build the McDonald’s business.



1. What does It mean to have all shifts adequately staffed with trained crew andmanagement to maximize sales?Adequately staffed for a shift means having enough trained employees on the floor to meetthe projected sales and satisfy guests. Restaurants that have shifts adequately staffed to

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2. What are some examples of an Owner/Operator showing support for System promotions,recommendations and initiatives?System promotions, recommendations and initiatives should be consistently supported ineach restaurant of an Owner/Operator organization. We work collaboratively together withOwner/Operators to ensure our Plan to Win is designed to drive the business forward.Examples include, but are not limited to, new product launches, promotional activities,extended hours of operation and value offerings. Any concerns an Owner/Operator mayhave regarding the support of a System promotion, recommendation or initiative (such asextended hours) for a specific restaurant of the Owner/Operator organization should bediscussed with the QSC VP or Field ServJce Team.

3. Are “special venue” restaurants required to participate in all System promotions?No, there will be situations when the OPNAD and Cc-Op endorsed promotions cannot beimplemented. Before a new promotion is rolled out, the Owner/Operator and the Regionshould discuss whether there are circumstances that would prevent the owner/operatorfrom selling certain products or participating in certain promotions at these locations.


5. How will the number of guest complaints be used when assessing this Standard?The number of guest complaints is no longer used as a measurement in this Standard andwill not cause an Owner/Operator to fail to meet this Standard. Rather, the organizationshould focus on call back responsiveness. See Customer Complaint memo dated August 30,2011 for further details.

6. Does the “All shifts adequately staffed to maximize sales” guideline contained In theBuilding the Business through Guest Satisfaction Standard requires a restaurant to adoptextended hours?No. The reference in this guideline to “maximizing sales” refers to adequately staffingexisting shifts. 24 hours or extended hours and the decision to implement them should be adiscussion between the Owner/Operator and the Region.

7. What does it mean to maximize sales “by providing reliable, competitive value to theguest”?Our guests expect a menu that offers compelling value every time they visit a McDonald’srestaurant Accordingly, in order to remain competitive and relevant to our guests,McDonald’s restaurants must offer a value platform which is consistent with theseexpectations. Reliable, competitive value will evolve over time and vary from market tomarket.

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Owner/Operator Involvement

1. Is it acceptable for an Owner/Operator to disagree or challenge the Company on issues and policies? Yes, as long as it is done in a professional and constructive manner. McDonald's encourages spirited debate or individual initiative that is done in the best interest of the System.



• Participating in McDonald's meetings, conventions, and events each year. OR

• Attending an Owner/Operator based HU training class within the past 10 years. OR

• Attending the GM Capstone class within the past 10 years. OR • Participating on a McDonald's system team within the past 18 months



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8. The Owner/Operator is unable to reach a guest that called the 800#with a complaint.Will this impact whether the Owner/Operator meets the Building the Business throughGuest Satisfaction Standard?If the Owner/Operator has made reasonable attempts to contact the guest and has a guestrecovery process in place, failure to reach that guest will not be held against theOwner/Operator.

Owner/Ocerator Involvement

1. Is it acceptable for an Owner/Operator to disagree or challenge the Company on issuesand policies?Yes, as long as it is done in a professional and constructive manner. McDonald’s encouragesspirited debate or individual initiative that is done in the best interest of the System.

2. Participation in OPNAD and the Co-Op is voluntary under the Franchise Agreement. If anOwner/Operator Is not a member of OPNAD or the local Co-Op. will this Owner/Operatormeet the Owner/Operator Involvement Standard?No. The National Franchising Standards require an Owner/Operator to be a member of bothOPNAD and the appropriate local Co-Op even though the Franchise Agreement does not.


• Participating In McDonald’s meetings, conventions, and events each year. OR• Attending an Owner/Operator based HU training class within the past 10 years.

OR• Attending the GM capstone class within the past 10 years. OR• Participating on a McDonald’s system team within the past 18 months

(Examples include, but are not limited to, NLC, DLC, RLC, OPNAD, regional,teams, divisional teams or sub teams) OR


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Exhibit 7

1CDOCH007150

National Restaurant Building and Equipment Standards for Traditional Restaurants

JANUARY 2012

The most recently updated National Restaurants Building and Equipment Standards establishes a set of consistent national standards that reflect today's business needs and helps grow our business by being able to deliver an outstanding restaurant experience.

The Field, Owner/Operators and Division Management have provided their input in the development of the NRBES tool for Store Sales, Relocations/Rebuilds, Rewrites and Business Reviews. Universal application and consistent execution are key components of the NRBES tool.

VISION

The National Restaurant Building and Equipment Standards are designed to identify a consistent set of standards to ensure every restaurant can be positioned to deliver an exceptional restaurant experience and support our vision to be our customers' favorite place and way to eat. The NRBES enable our ability to execute our best-in-class operating system, ensuring brand image, food safety and quality, crew/customer safety and comfort.

PURPOSE

The NRBES are intended to be easy to understand, consistent and uniformly applied. They are also intended to clarify expectations, reduce conflicts, eliminate time-wasting discussions on which standard applies and most importantly, help our customers' experience the same outstanding QSC &V on every visit to McDonald's.

APPLICATION

As in the past, the NRBES will be used in all Regions as a means to measure an existing restaurant for purposes of Store Sales, Relocations, Rebuilds and Rewrites as needed. To ensure consistent application of the NRBES in all regions, no additions to the NRBES will be allowed on a regional and divisional level. The NRBES also will be used in the Business Review process to encourage discussion of common sense steps the restaurant needs to take to meet the standards. The goal is to remove surprise, develop long-term reinvestment plans from a business perspective, and insure that all our restaurants are delivering the optimum McDonald's experience to our customers.

Owner/operators who have questions regarding the application of NRBES can contact their REAL team representative.

1


4 4CDOCH007150


JANUARY 2012

The most recently updated National Restaurants Building and Equipment Standards establishes a set of consistent national standards that reflect today's business needs and helps grow our business by being able to deliver an outstanding restaurant experience.

The Field, Owner/Operators and Division Management have provided their input in the development of the NRBES tool for Store Sales, Relocations/Rebuilds, Rewrites and Business Reviews. Universal application and consistent execution are key components of the NRBES tool.

VISION

The National Restaurant Building and Equipment Standards are designed to identify a consistent set of standards to ensure every restaurant can be positioned to deliver an exceptional restaurant experience and support our vision to be our customers' favorite place and way to eat. The NRBES enable our ability to execute our best-in-class operating system, ensuring brand image, food safety and quality, crew/customer safety and comfort.

PURPOSE

The NRBES are intended to be easy to understand, consistent and uniformly applied. They are also intended to clarify expectations, reduce conflicts, eliminate time-wasting discussions on which standard applies and most importantly, help our customers' experience the same outstanding QSC &V on every visit to McDonald's.

APPLICATION

As in the past, the NRBES will be used in all Regions as a means to measure an existing restaurant for purposes of Store Sales, Relocations, Rebuilds and Rewrites as needed. To ensure consistent application of the NRBES in all regions, no additions to the NRBES will be allowed on a regional and divisional level. The NRBES also will be used in the Business Review process to encourage discussion of common sense steps the restaurant needs to take to meet the standards. The goal is to remove surprise, develop long-term reinvestment plans from a business perspective, and insure that all our restaurants are delivering the optimum McDonald's experience to our customers.

Owner/operators who have questions regarding the application of NRBES can contact their REAL team representative.

1


ICDOCHOO715O

National Restaurant Building and Equipment Standardsfor Traditional Restaurants

JANUARY 2012

The most recently updated National Restaurants Building and Equipment Standards establishesa set of consistent national standards that reflect today’s business needs and helps grow ourbusiness by being able to deliver an outstanding restaurant experience.

The Field, Owner/Operators and Division Management have provided their input in thedevelopment of the NRBES tool for Store Sales, Relocations/Rebuilds, Rewrites and BusinessReviews. Universal application and consistent execution are key components of the NRBES tool.

VISION

The National Restaurant Building and Equipment Standards are designed to identify aconsistent set of standards to ensure every restaurant can be positioned to deliver anexceptional restaurant experience and support our vision to be our customers’ favorite placeand way to eat. The NRBES enable our ability to execute our best-in-class operating system,ensuring brand image, food safety and quality, crew/customer safety and comfort.

PURPOSE

The NRBES are intended to be easy to understand, consistent and uniformly applied. They arealso intended to clarify expectations, reduce conflicts, eliminate time-wasting discussions onwhich standard applies and most importantly, help our customers’ experience the sameoutstanding QSC &V on every visit to McDonald’s.

APPLICA11ON

As in the past, the NRBES will be used in all Regions as a means to measure an existingrestaurant for purposes of Store Sales, Relocations, Rebuilds and Rewrites as needed. Toensure consistent application of the NRBES in all regions, no additions to the NRBES will beallowed on a regional and divisional level. The NRBES also will be used in the Business Reviewprocess to encourage discussion of common sense steps the restaurant needs to take to meetthe standards. The goal is to remove surprise, develop long-term reinvestment plans from abusiness perspective, and insure that all our restaurants are delivering the optimum McDonald’sexperience to our customers.

Owner/operators who have questions regarding the application of NRBES can contact theirREAL team representative.

AJ(EXHIBIT

~RptL~w~wDEpoDOOLcOM

HIGHLY CONFIDENTIAL MCDOCHOO7I5O


MCDOCH007150


NRBES REVIEW PROCESS

For your reference, please find below an overview of the review process the team followed to develop the revisions that will become effective in.January 2012. The overall process was managed by U.S. Operations in close.collaboration with the NLC NRBES Review Team. • In October 2010, the tools were open for review and the U.S. Operations team solicited

feedback from regional, divisional and home office staff. • The NLC NRBES Review Team members were identified in January 2011 (see list below). • The NLC NRBES Review Team held an initial phone call in March 2011 to review the

process and solicit feedback. • We also reached out to various NLC teams to solicit their input. • The NLC NRBES Review Team met face to face in April and June to discuss the proposed

changes. The meetings were followed by a conference call during which the team reached a final agreement on proposed revisions.

• The proposed revisions were presented to the full NLC body on August 22. • The NLC NRBES Review Team called for a vote to endorse the revisions during the

September 26 NLC Conference Call. On September 26, the NLC endorsed the proposed revisions.


The process for reviewing the NRBES tools involves a team of Home Office, Field and NLC representatives. The NLC NRBES Review Team representatives included:

• Co-lead: Kevin Hem • Conny Kramer, WON Chair • Ebrahim Maghsoud , AMOA Chair • Roland Parrish, NBMOA Chair • Leo Lopez, MHOA Chair • Divisions DLC Chair: Mark Salebra (East Division), John Valuzzo (Central Division), Jo

Crenshaw (West Division) • Elected Officers of the NLC: Lee Heriaud, Susan Singleton, Luis Hernandez, Sandy Phillips

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MCDOCH007150



For your reference, please find below an overview of the review process the team followed to develop the revisions that will become effective in.January 2012. The overall process was managed by U.S. Operations in close.collaboration with the NLC NRBES Review Team. • In October 2010, the tools were open for review and the U.S. Operations team solicited

feedback from regional, divisional and home office staff. • The NLC NRBES Review Team members were identified in January 2011 (see list below). • The NLC NRBES Review Team held an initial phone call in March 2011 to review the

process and solicit feedback. • We also reached out to various NLC teams to solicit their input. • The NLC NRBES Review Team met face to face in April and June to discuss the proposed

changes. The meetings were followed by a conference call during which the team reached a final agreement on proposed revisions.

• The proposed revisions were presented to the full NLC body on August 22. • The NLC NRBES Review Team called for a vote to endorse the revisions during the

September 26 NLC Conference Call. On September 26, the NLC endorsed the proposed revisions.


The process for reviewing the NRBES tools involves a team of Home Office, Field and NLC representatives. The NLC NRBES Review Team representatives included:

• Co-lead: Kevin Hem • Conny Kramer, WON Chair • Ebrahim Maghsoud , AMOA Chair • Roland Parrish, NBMOA Chair • Leo Lopez, MHOA Chair • Divisions DLC Chair: Mark Salebra (East Division), John Valuzzo (Central Division), Jo

Crenshaw (West Division) • Elected Officers of the NLC: Lee Heriaud, Susan Singleton, Luis Hernandez, Sandy Phillips

2


MCOOCHOO7I5O



For your reference, please find below an overview of the review process the team followed todevelop the revisions that will become effective in January 2012. The overall process wasmanaged by U.S. Operations in close~collaboration with the NLC NRBES Review Team.• In October 2010, the tools were open for review and the U.S. Operations team solicited

feedback from regional, divisional and home office staff.• The NLC NRBES Review Team members were identified in January2011 (see list below).• The NLC NRBES Review Team held an initial phone call in March 2011 to review the

process and solicit feedback.• We also reached out to various NLC teams to solicit their input.• The NLC NRBES Review Team met face to face in April and June to discuss the proposed

changes. The meetings were followed by a conference call during which the team reached afinal agreement on proposed revisions.

• The proposed revisions were presented to the full NLC body on August 22.• The NLC NRBES Review Team called for a vote to endorse the revisions during the

September 26 NLC Conference Call. On September 26, the NLC endorsed the proposedrevisions.


The process for reviewing the NRBES tools involves a team of Home Office, Field and NLCrepresentatives. The NLC NRGES Review Team representatives included:

• Co-lead: Kevin Hem• Conny Kramer, WON Chair• Ebrahim Magflsoud , AMOA Chair• Roland Parrish, NBMOA Chair• Leo Lopez, MHOA Chair• Divisions DLC Chair: Mark Salebra (East Division), John Valuzzo (Central Division), Jo

Crenshaw (West Division)• Elected Officers of the NLC: Lee Heriaud, Susan Singleton, Luis Hernandez, Sandy Phillips

2

HIGHLY CONFIDENTIAL MCDOCHOO7I5I


MCDOCH0071 50


FREQUENTLY ASKED QUESTIONS

General Questions

What is the purpose of the National Restaurant Building and Equipment Standards? • The NRBES are designed to ensure every McDonald's restaurant can deliver an exceptional

restaurant experience for our customers. They help support McDonald's brand image, food safety and quality, crew/custorner safety and comfort, accessibility, restaurant profitability, and ensure compliance with federal, state and local regulations.

• The standards can also be used to help determine if a McDonald's restaurant has the necessary equipment and physical plant resources to:

o Support the current operating system o Execute the menu o Serve safe/quality products o Provide an exceptional restaurant experience o Enable the business to grow in a safe and profitable environment

• The NRBES tool provides for nationally consistent standards to be used in all Regions as a means to measure a restaurant's ability to deliver an exceptional McDonald's experience.

• The intent is that the NRBES become a vehicle to promote meaningful dialogue between McDonald's and the owner/operator.

When should the National Restaurant Building and Equipment Standards tool be used? The NRBES is used as a means to measure existing restaurants for the purpose of restaurant sales, relocations, rebuilds, rewrites and for developing restaurant reinvestment plans.

As a part of the Business Review, the NRBES tool will be completed by the owner/operator and Field Service. This creates the opportunity to create meaningful dialogue to discuss a reinvestment plan, how best to serve the customer and grow the business, and to help identify and prioritize the "need to have" versus the "nice to have" restaurant reinvestment items.

Are the National Restaurant Building and Equipment Standards new? No. This tool was created in 1989 as part of the "Dentise Task Force Report and McDonald's Economic Package". In 1999, a team consisting of representatives from the owner/operator community, regions, divisions and Home Office updated the NRBES to reflect the Americans with Disabilities Act and the implementation of the Made for You operating system.

The NRBES was further modified in 2001, 2003, 2005, 2007 and 2011 to reflect the feedback from the U.S. Leadership Team, owner/operators and the divisions/field.

How often will the NRBES tool be updated? The current NRBES reflect our business needs as of 2012 and will continue to evolve with our business. The NRBES tool will be reviewed /updated as needed by a team consisting of owner/operators as well as division, region and Home Office representatives. System-wide changes will be incorporated as they occur.

How does McDonald's ensure compliance with the standards? All owner/operators are required to meet McDonald's standards through their franchise agreement.

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MCDOCH0071 50



General Questions

What is the purpose of the National Restaurant Building and Equipment Standards? • The NRBES are designed to ensure every McDonald's restaurant can deliver an exceptional

restaurant experience for our customers. They help support McDonald's brand image, food safety and quality, crew/customer safety and comfort, accessibility, restaurant profitability, and ensure compliance with federal, state and local regulations.

• The standards can also be used to help determine if a McDonald's restaurant has the necessary equipment and physical plant resources to:

o Support the current operating system o Execute the menu o Serve safe/quality products o Provide an exceptional restaurant experience o Enable the business to grow in a safe and profitable environment

• The NRBES tool provides for nationally consistent standards to be used in all Regions as a means to measure a restaurant's ability to deliver an exceptional McDonald's experience.

• The intent is that the NRBES become a vehicle to promote meaningful dialogue between McDonald's and the owner/operator.

When should the National Restaurant Building and Equipment Standards tool be used? The NRBES is used as a means to measure existing restaurants for the purpose of restaurant sales, relocations, rebuilds, rewrites and for developing restaurant reinvestment plans.

As a part of the Business Review, the NRBES tool will be completed by the owner/operator and Field Service. This creates the opportunity to create meaningful dialogue to discuss a reinvestment plan, how best to serve the customer and grow the business, and to help identify and prioritize the "need to have" versus the "nice to have" restaurant reinvestment items.

Are the National Restaurant Building and Equipment Standards new? No. This tool was created in 1989 as part of the "Dentise Task Force Report and McDonald's Economic Package". In 1999, a team consisting of representatives from the owner/operator community, regions, divisions and Home Office updated the NRBES to reflect the Americans with Disabilities Act and the implementation of the Made for You operating system.

The NRBES was further modified in 2001, 2003, 2005, 2007 and 2011 to reflect the feedback from the U.S. Leadership Team, owner/operators and the divisions/field.

How often will the NRBES tool be updated? The current NRBES reflect our business needs as of 2012 and will continue to evolve with our business. The NRBES tool will be reviewed /updated as needed by a team consisting of owner/operators as well as division, region and Home Office representatives. System-wide changes will be incorporated as they occur.

How does McDonald's ensure compliance with the standards? All owner/operators are required to meet McDonald's standards through their franchise agreement.

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MCDOCHOO7I5O

National Restaurant Building and EquIpment Standardsfor Traditional Restaurants


General Questions

What is the purpose of the National Restaurant Building and Equipment Standards?The NRBES are designed to ensure every McDonald’s restaurant can deliver an exceptionalrestaurant experience for our customers. They help~ support McDonald’s brand image, foodsafety and quality, crew/customer safety and comfort, accessibility, restaurant profitability,and ensure compliance with federal, state and local regulations.

• The standards can also be used to help determine if a McDonald’s restaurant has thenecessary equipment and physical plant resources to:

o Support the current operating systemo Execute the menuo Serve safe/quality productso Provide an exceptional restaurant experienceo Enable the business to grow in a safe and profitable environment

• The NRBES tool provides for nationally consistent standards to be used in all Regions as ameans to measure a restaurant’s ability to deliver an exceptional McDonald’s experience.

• The intent is that the NRBES become a vehicle to promote meaningful dialogue betweenMcDonald’s and the owner/operator.

When should the National Restaurant Building and Equipment Standards tool be used?The NRBES is used as a means to measure existing restaurants för,the purpose of restaurantsales, relocations, rebuilds, rewrites and for developing restaurant reinvestment plans.

As a part of the Business Review, the NRBES tool will be completed by the owner/operator andField Service. This creates the opportunity to create meaningful dialogue to discuss areinvestment plan, how best to serve the customer and grow the business, and to help identifyand prioritize the “need to haven versus the “nice to have” restaurant reinvestment items.

Are the National Restaurant Building and Equipment Standards new?No. This tool was created in 1989 as part of the “Dentise Task Force Report and McDonald’sEconomic Package”. In 1999, a team consisting of representatives from the owner/operatorcommunity, regions, divisions and Home Office updated the NRBES to reflect the Americanswith Disabilities Act and the implementation of the Made for You operating system.

The NRBES was further modified in 2001, 2003, 2005, 2007 and 2011 to reflect the feedbackfrom the U.S. Leadership Team, owner/operators and the divisions/field.

How often will the NRBES tool be updated?The current NRBES reflect our business needs as of 2012 and will continue to evolve with ourbusiness. The NRBES tool will be reviewed /updated as needed by a team consisting ofowner/operators as well as division, region and Home Office representatives. System-widechanges will be incorporated as they occur.

How does McDonald’s ensure compliance with the standards?All owner/operators are required to meet McDonald’s standards through their franchiseagreement.

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MCDOCH0071 50

How will Operations and Construction be trained on the NRBES and in applying the standards? The overall intent of the NRBES is to provide a consistent set of national standards. The regions and divisions are not allowed to make additions to the standards.

Improved communications and education about the vision, purpose, and application of the standards include: • NRBES is addressed in ROIP training at HU. • NRBES is incorporated into the Business Review. • NRBES and the FAQ's will be posted on AccessMCD.

Is there an appeal process for the NRBES? You can work through the region and McDonald's internal dispute resolution process. If you have any questions regarding the application, please contact your REAL team representative.

Who is responsible for communicating NRBES? The NRBES will be communicated to the field through a cascade approach beginning with the QSC VP's, McOpCo VP's and GM's.

Are the NRBES different for a rewrite versus a store sale? No, the same standards apply.

How often are NRBES reviewed for a restaurant? • Prior to the Business Review process, • approximately three years prior to the expiration of the franchise term for the rewrite review, • at time of Store Sale, Rebuilds and Relocations, and • at any other appropriate time.

Who do I contact if I have a question on NRBES? • Your first point of contact should be your regional management. • U.S. Operations • Your REAL team representative • Your regional NLC representative

If one or more of my restaurants is not in compliance with NRBES, does this affect my eligibility for growth and rewrite consideration? It may, depending on the circumstance. Typically if an owner/operator has an agreed upon reinvestment plan to bring the restaurant into compliance, they will be deemed to meet this national franchising standard. Of course, if the owner/operator does not live up to the plan or if the non-compliance is severe, then the owner/operator would not be meeting the National Franchising Standard and would be ineligible for rewrite and growth.

What bearing or consequence does non-compliance with the NRBES have on an owner/operator entity for a store sale? McDonald's will require the restaurant to be brought up to standards within 6 months after the purchase of the restaurant. This may impact the purchase price if a restaurant is in non-compliance.

4


MCDOCH0071 50

How will Operations and Construction be trained on the NRBES and in applying the standards? The overall intent of the NRBES is to provide a consistent set of national standards. The regions and divisions are not allowed to make additions to the standards.

Improved communications and education about the vision, purpose, and application of the standards include: • NRBES is addressed in ROIP training at HU. • NRBES is incorporated into the Business Review. • NRBES and the FAQ's will be posted on AccessMCD.

Is there an appeal process for the NRBES? You can work through the region and McDonald's internal dispute resolution process. If you have any questions regarding the application, please contact your REAL team representative.

Who is responsible for communicating NRBES? The NRBES will be communicated to the field through a cascade approach beginning with the QSC VP's, McOpCo VP's and GM's.

Are the NRBES different for a rewrite versus a store sale? No, the same standards apply.

How often are NRBES reviewed for a restaurant? • Prior to the Business Review process, • approximately three years prior to the expiration of the franchise term for the rewrite review, • at time of Store Sale, Rebuilds and Relocations, and • at any other appropriate time.

Who do I contact if I have a question on NRBES? • Your first point of contact should be your regional management. • U.S. Operations • Your REAL team representative • Your regional NLC representative

If one or more of my restaurants is not in compliance with NRBES, does this affect my eligibility for growth and rewrite consideration? It may, depending on the circumstance. Typically if an owner/operator has an agreed upon reinvestment plan to bring the restaurant into compliance, they will be deemed to meet this national franchising standard. Of course, if the owner/operator does not live up to the plan or if the non-compliance is severe, then the owner/operator would not be meeting the National Franchising Standard and would be ineligible for rewrite and growth.

What bearing or consequence does non-compliance with the NRBES have on an owner/operator entity for a store sale? McDonald's will require the restaurant to be brought up to standards within 6 months after the purchase of the restaurant. This may impact the purchase price if a restaurant is in non-compliance.

4


MCOOCHOO?1 50

How will Operations and Construction be trained o~ the NRBES and in applying thestandards?The overall intent of the NRBES is to provide a consistent set of national standards. The regionsand divisions are !2≤≥~ allowed to make additions to the standards.

Improved communications and education about the vision, purpose, and application of thestandards include:• NRBES is addressed in ROIP training at HU.• NRBES is incorporated into the Business Review.• NRBES and the FAQ’s will be posted on AccessMCD.

Is there an appeal process for the NRBES?You can work through the region and McDonald’s internal dispute resolution process. If youhave any questions regarding the application, please contact your REAL team representative.

Who is responsible for communicating NRBES?The NRBES will be communicated to the field through a cascade approach beginning with theQSC VP’s, McOpCo VP’S and GM’s.

Are the NRBES different for a rewrite versus a store sale?No, the same standards apply.

How often are NRBES reviewed for a restaurant?• Prior to the Business Review process,• approximately three years prior to the expiration of the franchise term for the rewrite review,• at time of Store Sale, Rebuilds and Relocations, and• at any other appropriate time.

Who do I contact if I have a question on NRBES?• Your first point of contact should be your regional management.• U.S. Operations• Your REAL team representative• Your regional NLC representative

If one or more of my restaurants is not in compliance with NRBES, does this affect myeligibility for growth and rewrite consideration?It may, depending on the circumstance. Typically if an owner/operator has an agreed uponreinvestment plan to bring the restaurant into compliance, they will be deemed to meet thisnational franchising standard. Of course, if the owner/operator does not live up to the plan or ifthe non-compliance is severe, then the owner/operator would not be meeting the NationalFranchising Standard and would be ineligible for rewrite and growth.

What bearing or consequence does non-compliance with the NRBES have on anownerloperator entity for a store sale?McDonald’s will require the restaurant to be brought up to standards within 6 months after thepurchase of the restaurant. This may impact the purchase price if a restaurant is in noncompliance.

4

HIGHLY CONFIDENTIAL MCDOCHOO7I53


MCDOCH007150

If there is a required by date" fora standard, what does that mean to a restaurant up for rewrite or sale that has not yet met that standard? • NRBES will be communicated by regional management. Any owner/operator should understand

whether they have a restaurant condition that may not be in compliance in the future. • If the rewrite or store sale is prior to the "required by date," the restaurant is considered to

be meeting the current standard. However any potential buyer should and will factor the cost of, and time frame required to bring the restaurant up to standards in the purchase price.

• If the rewrite or store sale is after the "required by date," the restaurant is considered out of compliance with that standard and will be required to meet standards.

Are traditional restaurants and SPODs reviewed the same for compliance? • No, SPOD's are special sites that may not need to have the same physical plant and

equipment package requirement to deliver an excellent QSC experience to our customers. • A NRBES tool specific to McDonald's in Walmart was developed in 2004 and revised in

2008. It is scheduled to be reviewed in 2012. The NRBES document for McDonald's in Walmart is located on AccessMCD.

Are NRBES being used as a backdoor approach to changing the franchise agreement? The franchise agreement is clear in that it is the owner/operator's obligation to maintain and keep the restaurant up to McDonald's standards. The NRBES are intended to be easy to understand, have owner/operator and field acceptance, and satisfy McDonald's legal and franchising concerns. They are also intended to clarify expectations, reduce conflicts, eliminate time-wasting discussions on which standards apply and, most importantly, help our customer experience. The NRBES does not change the franchise agreement.

Questions about Americans with Disabilities Act (ADA)

Why is the ADA included in McDonald's NRBES? All public facilities, including McDonald's restaurants, are required by law to comply with the Americans with Disabilities Act. Franchisees are required to comply with all laws applicable to their restaurants, including the ADA.

Does McDonald's have any ADA obligations on restaurants owned and operated by a franchisee? The owner/operator is required, both by law and the Franchise Agreement, to comply with the Americans With Disabilities Act for their restaurants. If the owner/operator has an issue with regard to compliance and what that means to the owner/operator's restaurant, especially with a restaurant built after 1991, then the owner/operator should contact their GM or QSC VP for further clarification.

How do we know if we are in compliance with ADA? An owner/operator can perform an ADA Self Assessment Survey to assess compliance. Alternatively, an owner/operator may choose to hire an outside consultant or architect to complete an ADA survey. The ADA Self Assessment Survey can be located on AccessMCD on the U.S. Restaurant Development website, under Construction and then ADA. The direct link is: httos://wwvv.accessmcd.com/accessmcd.html?frameTaroet=httcs://crodo.mcdexchanoe.com/mc donalds/us/natl/rest dev/Construction/ADA.html

5

HIGHLY CONFIDENTIAL MCDOCH007154.

MCDOCH007150

If there is a required by date" fora standard, what does that mean to a restaurant up for rewrite or sale that has not yet met that standard? • NRBES will be communicated by regional management. Any owner/operator should understand

whether they have a restaurant condition that may not be in compliance in the future. • If the rewrite or store sale is prior to the "required by date," the restaurant is considered to

be meeting the current standard. However any potential buyer should and will factor the cost of, and time frame required to bring the restaurant up to standards in the purchase price.

• If the rewrite or store sale is after the "required by date," the restaurant is considered out of compliance with that standard and will be required to meet standards.

Are traditional restaurants and SPODs reviewed the same for compliance? • No, SPOD's are special sites that may not need to have the same physical plant and

equipment package requirement to deliver an excellent QSC experience to our customers. • A NRBES tool specific to McDonald's in Walmart was developed in 2004 and revised in

2008. It is scheduled to be reviewed in 2012. The NRBES document for McDonald's in Walmart is located on AccessMCD.

Are NRBES being used as a backdoor approach to changing the franchise agreement? The franchise agreement is clear in that it is the owner/operator's obligation to maintain and keep the restaurant up to McDonald's standards. The NRBES are intended to be easy to understand, have owner/operator and field acceptance, and satisfy McDonald's legal and franchising concerns. They are also intended to clarify expectations, reduce conflicts, eliminate time-wasting discussions on which standards apply and, most importantly, help our customer experience. The NRBES does not change the franchise agreement.


Why is the ADA included in McDonald's NRBES? All public facilities, including McDonald's restaurants, are required by law to comply with the Americans with Disabilities Act. Franchisees are required to comply with all laws applicable to their restaurants, including the ADA.

Does McDonald's have any ADA obligations on restaurants owned and operated by a franchisee? The owner/operator is required, both by law and the Franchise Agreement, to comply with the Americans With Disabilities Act for their restaurants. If the owner/operator has an issue with regard to compliance and what that means to the owner/operator's restaurant, especially with a restaurant built after 1991, then the owner/operator should contact their GM or QSC VP for further clarification.

How do we know if we are in compliance with ADA? An owner/operator can perform an ADA Self Assessment Survey to assess compliance. Alternatively, an owner/operator may choose to hire an outside consultant or architect to complete an ADA survey. The ADA Self Assessment Survey can be located on AccessMCD on the U.S. Restaurant Development website, under Construction and then ADA. The direct link is: httos://wwvv.accessmcd.com/accessmcd.html?frameTaroet=httcs://crodo.mcdexchanoe.com/mc donalds/us/natl/rest dev/Construction/ADA.html

5

HIGHLY CONFIDENTIAL MCDOCH007154.

MCDOCHQO7I5O

If there is a “required by date” for a standard, what does that mean to a restaurant up forrewrite or sale that has not yet met that standard?• NRBES will be communicated by regional management. Any owner/operator should understand

whether they have a restaurant condition that may not be in compliance in the future.• If the rewrite or store sale is prior to the ‘required by date,” the restaurant is considered to

be meeting the current standard. However any potential buyer should and will factor the costof, and time frame required to bring the restaurant up to standards in the purchase price.

• If the rewrite or store sale is after the “required by date,” the restaurant is considered out ofcompliance with that standard and will be required to meet standards.

Are traditional restaurants and SPODs reviewed the same for compliance?• No, SPOD’s are special sites that may not need to have the same physical plant and

equipment package requirement to deliver an excellent QSC experience to our customers.• A NRBES tool specific to McDonald’s in Walmart was developed in 2004 and revised in

2008. It is scheduled to be reviewed in 2012. The NRBES document for McDonald’s inWalmart is located on AccessMCD.

Are NRBES beinq used as a backdoor approach to changing the franchise agreement?The franchise agreement is clear in that it is the owner/operator’s obligation to maintain andkeep the restaurant up to McDonald’s standards.The NRBES are intended to be easy to understand, have owner/operator and field acceptance, andsatisfy McDonald’s legal and franchising concerns. They are also intended to clarify expectations,reduce conflicts, eliminate time-wasting discussions on which standards apply and, mostimportantly, help our customer experience. The NRBES does not change the franchise agreement.


Why is the ADA included in McDonald’s NRBES?All public facilities, including McDonald’s restaurants, are required by law to comply with theAmericans with Disabilities Act. Franchisees are required to comply with all laws applicable totheir restaurants, including the ADA.

Does McDonald’s have any ADA obligations on restaurants owned and operated by afranchisee?The owner/operator is required, both by law and the Franchise Agreement, to comply with theAmericans With Disabilities Act for their restaurants. If the owner/operator has an issue withregard to compliance and what that means to the owner/operator’s restaurant, especially with arestaurant built after 1991, then the owner/operator should contact their GM or QSC VP forfurther clarification.

How do we know if we are in compliance with ADA?An owner/operator can perform an ADA Self Assessment Survey to assess compliance.Alternatively, an owner/operator may choose to hire an outside consultant or architect tocomplete an ADA survey. The ADA Self Assessment Survey can be located on AccessMCD onthe U.S. Restaurant Development website, under Construction and then ADA.The direct link is:https:I/www.accessmcd.com/accessmcd.html?frameTar~et=htt~s://~rod~. mcdexchancje.cam/mc

V donalds/us/natl/rest dev/Construction/ADA.html

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HIGHLY CONF1DENTIAL MCDOCHOO7 154


MCDOCH007150

What does "readily achievable" mean relative to ADA compliance? Readily achievable is defined as those alterations that are not "too difficult and not too expensive" to accomplish. The definition of "not too difficult and not too expensive" is the legal definition and can vary depending on the location, condition and age of the restaurant, the financial resources of the owner/operator and whether the restaurant has been remodeled. Note that in 2010 the ADA guidelines were revised and are effective on a limited basis with respect to new construction and alterations commenced on or after September 15, 2010 and before March 15, 2012. On and after March 15, 2012, all new construction and alterations must comply with the 2010 guidelines. The ADA Self Assessment Survey addresses the requirements of the 2010 guidelines. For further clarification, the owner/operator should contact their GM or QSC VP.

If a restaurant is not in ADA compliance, do corrections need to be made immediately, or can they take place overtime? Legally, all restaurants must be in compliance with ADA. This involves meeting the readily achievable standard for those restaurants built before 1992 and being in full compliance for those restaurants built after 1991. New construction and alterations commenced on or after March 15, 2012 must comply with the 2010 ADA guidelines.

Is there a central location where information related to ADA is available? Information related to ADA is posted on the U.S. Restaurant Development website, under Construction and then ADA. The direct link is: https://www.accessmcd.com/accessmcd.html?frameTarget=https://prodp.mcdexchande.com/mc donalds/us/natl/rest dev/Construction/ADA.html

Questions About Specific Elements of NRBES

Is a grill in compliance if it has not received an Annual Grill Certification and PM verification within the last 12 months? Any restaurant that has not had an Annual Grill Certification and PM Verification performed within the last 12 months will be considered out of compliance.

Why are two rapid toasters required on the NRBES if only one rapid toaster is required when utilizing a bun buffer? A toasted bun is a key component of the quality attribute of our sandwiches. Due to the high volume of buns and the high dependence on the rapid toaster, a second rapid toaster is required to ensure an operational toaster is available as back up to the unit that is on-line. Two rapid toasters provide the ability to routinely switch out toasters to perform necessary preventative maintenance.

Why is the receipt printer relocated to the cashier booth? The receipt printer has been relocated for several reasons: • If a customer has a damaged Arch Card, he/she must provide the arch card activation

receipt to get a new card. Handing the receipt to the customer along with the activated Arch Card ensures the customer gets the receipt. Mien the receipt prints in the present booth, crew often forget to hand it to the customer and the receipts may be thrown away. , Oftentimes, the customer comes back into the restaurant to get the receipt, which causes the manager to dig through the trash and this wastes time.

• Credit Card transactions of $25 or over require a signature. It's cumbersome to tell customers to "drive up to the next window to sign your receipt." If crew forget to get the signature, we are in breach of our credit card processor agreement. Signed receipts must be saved for three to five years for disputed cases.

• Customers like to be given a receipt at the place where they handed over their credit card for payment to confirm the transaction was correct.

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MCDOCH007150

What does "readily achievable" mean relative to ADA compliance? Readily achievable is defined as those alterations that are not "too difficult and not too expensive" to accomplish. The definition of "not too difficult and not too expensive" is the legal definition and can vary depending on the location, condition and age of the restaurant, the financial resources of the owner/operator and whether the restaurant has been remodeled. Note that in 2010 the ADA guidelines were revised and are effective on a limited basis with respect to new construction and alterations commenced on or after September 15, 2010 and before March 15, 2012. On and after March 15, 2012, all new construction and alterations must comply with the 2010 guidelines. The ADA Self Assessment Survey addresses the requirements of the 2010 guidelines. For further clarification, the owner/operator should contact their GM or QSC VP.

If a restaurant is not in ADA compliance, do corrections need to be made immediately, or can they take place overtime? Legally, all restaurants must be in compliance with ADA. This involves meeting the readily achievable standard for those restaurants built before 1992 and being in full compliance for those restaurants built after 1991. New construction and alterations commenced on or after March 15, 2012 must comply with the 2010 ADA guidelines.

Is there a central location where information related to ADA is available? Information related to ADA is posted on the U.S. Restaurant Development website, under Construction and then ADA. The direct link is: https://www.accessmcd.com/accessmcd.html?frameTarget=https://prodp.mcdexchande.com/mc donalds/us/natl/rest dev/Construction/ADA.html


Is a grill in compliance if it has not received an Annual Grill Certification and PM verification within the last 12 months? Any restaurant that has not had an Annual Grill Certification and PM Verification performed within the last 12 months will be considered out of compliance.

Why are two rapid toasters required on the NRBES if only one rapid toaster is required when utilizing a bun buffer? A toasted bun is a key component of the quality attribute of our sandwiches. Due to the high volume of buns and the high dependence on the rapid toaster, a second rapid toaster is required to ensure an operational toaster is available as back up to the unit that is on-line. Two rapid toasters provide the ability to routinely switch out toasters to perform necessary preventative maintenance.

Why is the receipt printer relocated to the cashier booth? The receipt printer has been relocated for several reasons: • If a customer has a damaged Arch Card, he/she must provide the arch card activation

receipt to get a new card. Handing the receipt to the customer along with the activated Arch Card ensures the customer gets the receipt. Mien the receipt prints in the present booth, crew often forget to hand it to the customer and the receipts may be thrown away. , Oftentimes, the customer comes back into the restaurant to get the receipt, which causes the manager to dig through the trash and this wastes time.

• Credit Card transactions of $25 or over require a signature. It's cumbersome to tell customers to "drive up to the next window to sign your receipt." If crew forget to get the signature, we are in breach of our credit card processor agreement. Signed receipts must be saved for three to five years for disputed cases.

• Customers like to be given a receipt at the place where they handed over their credit card for payment to confirm the transaction was correct.

6


M000CHOO7150

What does “readily achievable” fl~e~n relative to ADAcomplian?Readily achievable is defined as those alterations that are not “too difficult and not tooexpensive” to accomplish. The definition of “not too difficult and not too expensive” is the legaldefinition and can vary depending on the location, condition and age of the restaurant, thefinancial resources of the owner/operator and whether the restaurant has been remodeled. Notethat in 2010 the ADA guidelines were revised and are effective on a limited basis with respect tonew construction and alterations commenced on or after September 15, 2010 and before March15, 2012. On and after March 15, 2012, all new construction and alterations must comply withthe 2010 guidelines. The ADA Self Assessment Survey addresses the requirements of the 2010guidelines. For further clarification, the owner/operator should contact their GM or QSC VP.

If a restaurant is not in ADA compliance, do corrections need to be made immediately, orcan they take place over time?Legally, all restaurants must be in compliance with ADA. This involves meeting the readilyachievable standard for those restaurants built before 1992 and being in full cOmpliance forthose restaurants built after 1991. New construction and alterations commenced on or afterMarch 15, 2012 must comply with the 2010 ADA guidelines.

is there a central location where information related to ADA is available?Information related to ADA is posted on the U.S. Restaurant Development website, underConstruction and then ADA. The direct link is:https:/twww.accessmcd.com/accessmccj . html?frameTar~et=https:llr,rodp.mcdexchan~e.com/mcdonalds/us/nati/rest dev/Construction!ADA.html


IS a grill in compliance if it has not received an Annual Grill Certification and PMverification within the last 12 months?Any restaurant that has not had an Annual Grill Certification and PM Verification performedwithin the last 12 months will be considered out of compliance.

Why are two rapid toasters required on the NRBES if only one rapid toaster is requiredwhen utilizing a bun buffer?A toasted bun is a key component of the quality attribute of our sandwiches. Due to the highvolume of buns and the high dependence on the rapid toaster, a second rapid toaster isrequired to ensure an operational toaster is available as back up to the unit that is on-line. Tworapid toasters provide the ability to routinely switch out toasters to perform necessarypreventative maintenance.

Why is the receipt printer relocated to the cashier booth?The receipt printer has been relocated for several reasons:• If a customer has a damaged Arch Card, he/she must provide the arch card activation

receipt to get a new card. Handing the receipt to the customer along with the activated ArchCard ensures the customer gets the receipt. When the receipt prints in the present booth,crew often forget to hand it to the customer and the receipts may be thrown away.Oftentimes, the customer comes back into the restaurant to get the receipt, which causesthe manager to dig through the trash and this wastes time.

• Credit Card transactions of $25 or over require a signature. It’s cumbersome to tellcustomers to “drive up to the next window to sign your receipt.” If crew forget to get thesignature, we are in breach of our credit card processor agreement. Signed receipts must besaved for three to five years for disputed cases.

• Customers like to be given a receipt at the place where they handed over their credit cardfor payment to confirm the transaction was correct.

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MCD OCH0071 50

What options do 24-hour restaurants have when the receipt printer is located in the cashier booth? • A restaurant could have a printer in the presenter booth as well as one in the cashier booth.

The POS system will support the ability to redirect to either booth for printing. • The alternative to having two printers is to print of off the front counter register.

How do you set-up dual drive-thru receipt printers and/or use a front counter receipt printer? The required steps will vary depending on the POS model and software configuration. Please contact your POS supplier or RSSM to validate hardware and software configuration, and determine next steps.

Why is it necessary to get the system on a common POS platform? Our standard restaurant operating system cannot adequately function without a POS platform that provides all the mandatory features and capabilities. A common POS platform is required to support a system wide migration to a standard operating system.

Are there better descriptors for seating and decor than "contemporary and competitive?" The NRBES Review Team reviewed multiple proposals to revise the language of this standard. The team's position was that the term "competitive" carried less subjectivity than all the other proposed language. The "contemporary and competitive" phrase does not necessarily mean that the seating and decor must meet the standards established with programs such as "Forever Young, Re-imagining" and the Major Remodel Program.

Why will it be required to convert all turret grills to Auto/ Infinite gap technology? The conversion will be required by December 31, 2014 for the following reasons: • The auto/infinite gap technology provides improved operational flexibility and capacity. • 1,654 of the 2,580 turret grills range in age from 14 to 25 year. The aging turret equipment

results in ongoing maintenance and repair issues due to limited part availability and inability in maintaining the correct gap. Production of specific parts would require retooling at a cost that is prohibitive.

• It is 10 times more likely that a turret grill will not pass a grill certification. Turret grills currently account for 9% of the population and 51% of the grills that don't meet certification requirements. The average cost to bring a turret grill to certification requirement is $1,000 with some units running as high as $3,500.

Why is there an "unapproved equipment" section in NRBES? The intent was to facilitate discussion with the operator and Field Service relative to any potential risks as a result of using unapproved equipment. • Any unapproved piece of equipment that poses a risk to food safety, employee safety,

and/or customer safety will be in non-compliance. • Any unapproved piece of equipment that is not NSF or UL approved will be in non-compliance. • Any unapproved piece of equipment that does not meet ADA standards will be in non-

compliance. • Any unapproved equipment that can not adhere to MCD Quality and Service standard will

be in non compliance. An example is the Cold Star bulk cream dispenser which is unapproved and must be removed by 12/31/06 due to the potential food safety risk as a result of the cream being sourced outside of McDonald's system.

7


MCD OCH0071 50

What options do 24-hour restaurants have when the receipt printer is located in the cashier booth? • A restaurant could have a printer in the presenter booth as well as one in the cashier booth.

The POS system will support the ability to redirect to either booth for printing. • The alternative to having two printers is to print of off the front counter register.

How do you set-up dual drive-thru receipt printers and/or use a front counter receipt printer? The required steps will vary depending on the POS model and software configuration. Please contact your POS supplier or RSSM to validate hardware and software configuration, and determine next steps.

Why is it necessary to get the system on a common POS platform? Our standard restaurant operating system cannot adequately function without a POS platform that provides all the mandatory features and capabilities. A common POS platform is required to support a system wide migration to a standard operating system.

Are there better descriptors for seating and decor than "contemporary and competitive?" The NRBES Review Team reviewed multiple proposals to revise the language of this standard. The team's position was that the term "competitive" carried less subjectivity than all the other proposed language. The "contemporary and competitive" phrase does not necessarily mean that the seating and decor must meet the standards established with programs such as "Forever Young, Re-imagining" and the Major Remodel Program.

Why will it be required to convert all turret grills to Auto/ Infinite gap technology? The conversion will be required by December 31, 2014 for the following reasons: • The auto/infinite gap technology provides improved operational flexibility and capacity. • 1,654 of the 2,580 turret grills range in age from 14 to 25 year. The aging turret equipment

results in ongoing maintenance and repair issues due to limited part availability and inability in maintaining the correct gap. Production of specific parts would require retooling at a cost that is prohibitive.

• It is 10 times more likely that a turret grill will not pass a grill certification. Turret grills currently account for 9% of the population and 51% of the grills that don't meet certification requirements. The average cost to bring a turret grill to certification requirement is $1,000 with some units running as high as $3,500.

Why is there an "unapproved equipment" section in NRBES? The intent was to facilitate discussion with the operator and Field Service relative to any potential risks as a result of using unapproved equipment. • Any unapproved piece of equipment that poses a risk to food safety, employee safety,

and/or customer safety will be in non-compliance. • Any unapproved piece of equipment that is not NSF or UL approved will be in non-compliance. • Any unapproved piece of equipment that does not meet ADA standards will be in non-

compliance. • Any unapproved equipment that can not adhere to MCD Quality and Service standard will

be in non compliance. An example is the Cold Star bulk cream dispenser which is unapproved and must be removed by 12/31/06 due to the potential food safety risk as a result of the cream being sourced outside of McDonald's system.

7


MCDOCHOO7I 50

What options do 24-hour restaurants have when the receipt printer is located in thecashier booth?• A restaurant could have a printer in the presenter booth as well as one in the cashier booth.

The POS system will support the ability to redirect to either booth for printing.• The alternative to having two printers is to print of off the front counter register.

How do you set-up dual drive-thru receipt printers and!or use a front counter receiptprinter?The required steps will vary depending on the POS model and software configuration. Pleasecontact your POS supplier or RSSM to validate hardware and software configuration, anddetermine next steps.

Why is it necessary to get the system on a common POS platform?Our standard restaurant operating system cannot adequately function without a POS platformthat provides all the mandatory features and capabilities. A common POS platform is required tosupport a system wide migration to a standard operating system.

Are there better descriptors for seating and decor than “contemporary and competitive?”the NRBES Review Team reviewed multiple proposals to revise the language of this standard.The team’s position was that the term “competitive” carried less subjectivity than all the otherproposed language. The “contemporary and competitive” phrase does not necessarily meanthat the seating and decor must meet the standards established with programs such as “ForeverYoung, Re-imagining” and the Major Remodel Program.

Why will it be required to convert all turret grills to Auto! Infinite gap technology?The conversion will be required by December 31, 2014 for the following reasons:• The auto/infinite gap technology provides improved operational flexibility and capacity.• 1,654 of the 2,580 turret grills range in age from 14 to 25 year. The aging turret equipment

results in ongoing maintenance and repair issues due to limited part availability and inabilityin maintaining the correct gap. Production of specific parts would require retooling at a costthat is prohibitive.

• It is 10 times more likely that a turret grill will not pass a grill certification. Turret grillscurrently account for 9% of the population and 51% of the grills that don’t meet certificationrequirements. The average cost to bring a turret grill to certification requirement is $1,000with some units running as high as $3,500.

Why is there an “unapproved equipment” section in NRBES?The intent was to facilitate discussion with the operator and Field Service relative to anypotential risks as a result of using unapproved equipment.• Any Unapproved piece of equipment that poses a risk to food safety, employee safety,

andfor customer safety will be in non-compliance.• Any unapproved piece of equipment that is not NSF or UL approved will be in non-compliance.• Any unapproved piece of equipment that does not meet ADA standards will be in non

compliance.• Any unapproved equipment that can not adhere to MCD Quality and Service standard will

be in non compliance. An example is the Cold Star bulk cream dispenser which isunapproved and must be removed by 12/31/08 due to the potential food safety risk as aresult of the cream being sourced outside of McDonald’s system.

7

HIGHLY CONFIDENTIAL MCDOCHOO7ISS


Exhibit 8

COOCHOO7 157


January 2012

I. Regulatory Requirements• Government & Municipal Codes• ADA Compliance• Kitchen Fire Suppression

II. Customer Satisfaction/Quality & Safety• Building Exterior

Drive-thru• Playplaces and Playlands

Restrooms• Lobby/Dining Area• Front Counter Service Area• POS• Kitchen & Prep Area• Food Safety

Ill. Employee Satisfaction & SafetyEmployee Satisfaction

• Employee Safety• Physical Plant/Building• Unapproved Equipment

V. Required Signatures

Restaurant Information

Region: Restaurant No.: ____________ ____________

State/Site Natl. Store#

Restaurant Address:Street City/State

Original Open Date: ____________________ Franchise Expiration Date: _______________

Operator Name: ___________________ Or McOpCo No.: ______________

Relocation: ________________ Rewrite: _________________ Sale: _______________

Business Review

Note: If you are completing this survey and you are unsure of a response,please note it in the comments by stating “not reviewed or “not observed”.

12/04/2011J~ EXHIBIT

D:,oflHIGHLY CONFIDENTIAL L ~ MCDOCHOO7157

RptrWWW.DE?OB00~°


~~.~DoCHoo71 57


January 2012

January 2012

The most recently updated National Restaurants Building and Equipment Standards establishesa set of consistent national standards that reflect today’s business needs and helps grow ourbusiness by being able to deliver an outstanding restaurant experience. The Field, Franchiseeand Division Management have provided their input in the development of the NRBES tool forRestaurant Sales, Relocations/Rebuilds, Rewrites and Business Reviews. Universal applicationand consistent execution are key components of the NRBES tool.

Vision

The National Restaurant Building and Equipment Standards are designed to identify aconsistent set of standards to ensure every restaurant can be positioned to deliver anexceptional restaurant experience and support our vision to be our customers’ favorite placeand way to eat. The NRBES enable our ability to execute our best-in-class operating system,ensuring brand image, food safety and quality, and crew/customer safety and comfort.

Purpose

The NRBES are intended to be easy to understand, consistent and uniformly applied. They arealso intended to clarify expectations, reduce conflicts, eliminate time-wasting discussions onwhich standard applies and most importantly, help our customers’ experience the sameoutstanding QSC &V on every visit to our McDonald’s.

Appllcat~onAs in the past, the NRBES will be used in all Regions as a means to measure an existingrestaurant for purposes of Restaurant Sales, Relocations, Rebuilds and Rewrites as needed.To ensure consistent application of the NRBES in all regions, no additions to the NRBES will beallowed on a regional and divisional level. The NRBES also will be used in the Business Reviewprocess to encourage discussion of common sense steps the restaurant needs to take to meetthe standards. The goal is to remove surprise, develop long-term reinvestment plans from abusiness perspective, and insure that all our restaurants are delivering the optimum McDonald’sexperience to our customers.

If there are questions regarding application, please contact your REAL teamrepresentative.

12/04/2011



MCDOCHOO7I57

National Restaurant Building and Equipment StandardsNote: Compliance with this walk-thru does not necessarily constitute full compliance of local

codes

I. REGULATORY REQUIREMENTS

1. GOVERNMENT & MUNICiPAL CODESFederal, State, County, Municipal Zoning, Building,Health, OSHA. Note: Project Manager should informof any special requirements.

Yes No Comments

2. AMERICANS WITH DISABILITIES ACT (ADA) COMPLIANCEConstructed and Operational in 1992 or later

o Restaurant must be in total compliance with ADA guidelines including all remodels done duringthis timeframe.

• Constructed and Operational prior to 1992o Restaurant must meet “Readily Achievable” ADA standards by making those alterations that

are not “too difficult and not too expensive” to accomplish.o Restaurants built prior to 1992 may be subject to different governmental standards of ADA

compliance depending on the condition of the site, available resources, and any remodeling oralterations.

Note: Compliance with this walk-thru does not necessarily constitute full compliance with ADA. In order to determine if arestaurant is in compliance with ADA, a Franchisee can perform an ADA Self Assessment Survey to assess complianceor the Franchisee may àhoose to hire an architect or other accessibility consultant to complete an ADA survey

3. KITCHEN FIRE SUPRESSIONCertified cooking equipment fire suppression system

o Ansul Wet System and hand-held fireextinguishers

o UL-300 R-102 Ansul system where requiredby state and local laws

Yes No Comments

4. EXTERIOR• All exterior signs should be properly lit and

illuminated, free of cracks, fading and discoloration.o Entrance/Exito Rear Door

o Drive-thru menu boardo Drive-thru windowso Balance of site

Yes No

12/04/2011

II. CUSTOMER SATISFACTJONIQUALITY AND

o Corral

SAFETY

Cornments

HIGHLY CONFIDENTIAL MCDOCHOO7I 59


M000CHOO7I 57

Yes No CommentsEXTERIOR (cont.)

o Soffit lighting and roof beams _____ _____ ______________________

o Building and lot lighting _____ _____ _______________________o Road sign/reader board _____

o Fascia _____

• Parking stalls designed to meet local code and optimizelot capacity _______________________

• Parking lot in good repair (properly graded, surfaced &sealed) _______________________

• Parking spaces designed for disabled customersdriving a vehicle _____

• Clearly marked parking stalls _____ _____ ______________________

• Curbs in good repair _____ _____ ______________________

• Walks in good repair _____ _____ ______________________

• Landscaping, well-maintained _____ _____ ______________________

• A minimum of 2 outside trash receptacles available andin good repair for restaurants with drive-thru

5. DRIVE-THRUICBB Yes No Comments• Clear directional flow and lane identification _____ _____ ________________________• Drive-thru clearance sign if building has an overhang _____ _____ ________________________a Menu board in good repair (i.e. Plexiglas, menu strips) _____ _____ ________________________• OPF Drive-thru menu board or FP43 Drive-thru menu

board, with the flip or topper, unless prohibited by localcodes.

• 2-booth speaker or 3-booth face-to-face as a minimumstandard ________________________

Note: Face-to-face drive-thru will be required to convert to speakerwith COD 18 months prior to franchise expiration date, exceptwhere required by code and noise laws.

a Number of keystations and printers adequate to satisfydrive-thru configuration requirements _______________________

a 3 keystations are minimum requirement ______________________

12/04/2011



MCDOCHOO71 57

DRIVE-THRU!CBB (continued) Yes No Comments• Drive-thru signage in place _____ _____ _________________

• National approved drive-thru branding packagerequired (except where prohibited by local code)

o Two window signs _____ ____ ________________

o A gateway sign or branded canopy _____ _____ ________________

o “Thank You” message by utilizing at least one ofthe following options: a bollard sign, a windowsign, and/or drive-thru lot striping ______ ______ __________________

o Drive-thru lot striping ______ _____ __________________

Note: Go-Go logo remains an approved option

• Handrail at building exit adjacent to the drive-thru lane _________________

• Drink tower, with fast-flow valves, functioning and ingood repair _________________

a Two coffee brewers are required in support of frontcounter and drive-thru, except where space limitationsonly allow for a single brewer.

Note: Space limitations may dictate that both brewers arepositioned together in either drive-thru or front counter

a Cream and sweetener dispensers present and in goodrepair (a minimum of one dispenser is required to serveboth drive-thru and front counter. Space limitation mayrequire positioning on the center island). _____ _____ _________________

• Specialty Coffee Machine _____ _____

• Blended Ice machine _____ _____

OJ Dispenser _________________

a Drive-thru windows, functioning and in good repair _________________

• Effective, clear communication system (where face-to-face is not used) speaker post or Speaker/COD system _________________

o COD is required

Note: LED will no longer be supported after 01/01/16

o Drive-thru headsets: a minimum of 5 workingheadsets

o Instructional signage for customers withdisabilities

6. PLAYPLACES AND PLAYLANDS Yes Commentsa Required — Attach the current PlayPlace inspection to

NRBES document (or GDCT recap) together withdocumentation that all findings have been corrected(including date and the company that corrected thefindings) _________________

a All unapproved equipment has been removed -

12/04/2011

HiGHLY CONFIDENTIAL MCDOCHOO7I6I


MCOOCHOO71 57

PLAYPLACES AND PLAYLANDS (continued)a No climb netting required on the outside of the play

struäture below 7 feet (84 inches). Review most recentannual Playplace/Playland inspection to ensurerestaurant is compliant.

• Indoor/outdoor play areas (Playplace/Playland) exterioregress alarms (e.g. Detex~ are installed and functioning _____

7. RESTROOM• Plumbing fixtures in good repair, with either automatic

or wing faucets, pipes are covered if exposed. _____

• Exhaust fan operating and capable of removing odors _____

• Floors (tile, grout, base tile) in good repair _____

• Walls in good repair _____

• Adequate number of plumbing fixtures as required bylocal code

• Ceiling in good repair (painted drywall — no lay-inceilings)

a Adequate lighting• Warm air hand dryers or towel dispensers, soap

dispensers

8. LOBBY! DINING AREA• Lighting properly illuminated and in good repair _____

a Lay-in acoustical ceiling and grid or “exposed” ceilingsystem clean and in good repair

• Seating and decor contemporary, competitive, and ingood repair

• Quarry tile floor and base, grout and tile in good repaira W1FI (where available), a TV and/or music (ADA

requirements call for close captioning to be enabled ifTV sound is on)

• Adequate seating designated for disabled customerswith the international symbol or accessibility

Yes No

PlayPlace Comments:

Comments

Yes No Comments

Yes No Comments

12/04/2011

HIGHLY CONFIDENTIAL MCDOCHOO71 62


MCDOCHQO7I 57

9. FRONT COUNTER SERVICE AREA Yes No Comments• Customer conveniences (high chairs, napkin/straw

dispensers, condiments, etc.) attractive and in goodrepair ________________________

• Front counter in good repair. Note: Under counterfluorescent lighting fixture must be removed _____ _____

• MB2K menu board current, meets Marketing needs• Menu board in good repair _____ _____ ______________________

• Digital McCafé board _____ _____ ______________________

• Drink tower with fast-flow valves functioning and ingood repair ______________________

• Shake and sundae equipment that’s functional, meetsoperational standards and supports the dispensing ofTTS product _______________________

• One McFlurry spindle and two candy holdingcontainers in place and in good repair _______________________

• Runner Condiment Center or Raised Condiment(exception required if non-drive thru restaurants orexisting center island space is not available. RCC to beappropriately sized for space available) ________________________1 pie merchandiser

Yes No Comments• P05 SYSTEMIFRONT COUNTER

• NP 6.5 wilt be required 12/31/12• Adequate number of keystations, printers and monitors

to satisfy QSC standards, functioning and in goodrepair _________________________

o 3 POS are required as a minimum (exceptionfor restaurants with counter lengths less thanloft.> ___________

o Monitor GuidelineFront counter monitor: video capture ormerge point monitorCBB monitor _____________________

2 drive-thru order monitors and1 Danger Zone monitor

o Printer Guidelines1 printer per front counter register __________________________1 printer for drive-thru located incashiers booth _____ _____

• I printer for prep line _____ _____

Sticky printer required by 6/1/12 _____ _____ _______________________

MeCafé sticky printer required by 6/1 /12 _____ _____ _______________________

• Four KVS monitors and two bump bars _____ _____

o For restaurants with Cashless: An approvedMeD cashless card swipe device for each frontcounter register and cash drawer in drive-thru ________________________

12/04/2011

HIGHLY CONFIDENTIAL MCDOCHOO7I63


MCDOCHOO7I 57

• KITCHEN I PREP AREA Yes No Comments• FR P/Tile walls in good repair ______ _____ ______________________

• Unglazed, abrasive quarry tile floor or treated non-slipsurface — grout in good repair _______________________

• Lighting properly illuminated and in good repair _______________________

• Vinyl covered board lay-in ceiling and grid — orexisting ceiling in good repair ______________________

• All equipment cords, plugs and outlets functioning andin good repair ______________________

• Raw and finished product holding time systemavailable and fully operational _______________________

• 2 Clamshell grills functioning and in good repairo Both auto gap required by 12/31114 _______________________

a Annual Grill certifications and PM verification required _______________________

• Fryers functioning and in good repair. The restauranthas enough fry vats to meet McDonald’s QSCstandards, support the menu, and grow the business

• A minimum of one multi-product fryer front is requiredwhen only two vats are available for white meatproduction _______________________

• Automated Fry Dispenser ________________________• Grill-side meat freezer(s) with minimum capacity to

hold one case 10:1 and one case of 4:1

Made For You: A two-sided MFY prep-line is required.This is the list of equipment required/standard toexecute two-sided prep.

Yes No Comments• Prep tabie level with HLZ’s and are not to exceed 35”

from floor• I convection ovena 2HLZ’s• I UHC heated table dual-sided _____________________

• UI-IC capacity to support two trays for each item heldin the UI-IC, ______ _____ _____________________

• I dual-sided heated prep table ______ _____ _______________________

• I toaster table ______ _____

• 2 rapid toasters or 1 universal toaster _______ _____

• I Filet steamer _______ ______ _________________________• 2 q-ing ovens

• 1 muffin/bagel toaster (q-ing oven) stand ______ _____ ________________________• I muffin/bagel toaster or I universal toaster ______ _____ ________________________• Ibunrack _____ ____

• I thaw rack in frozen bun markets ______ _____

• Refrigerated storage sufficient to hold a minimum of16 salad blanks within 10 feet in the primary initiatorposition _________________________

• A stand alone ice machine in place and in goodrepair _______________________

12/04/2011



MCDOCHOO7I 57

Kitchen/Prep Area Comments:

e FOOD SAFETY Yes No Comments• AN food storage areas, refrigeration/freezer equipment,

cooking and holding equipment meet McDonald’s FoodSafety requirements ______________________

• Functional cooking timers, compensating computers, andcountdown timers (where needed) to support all standardmenu items including, but not limited to, raw meat andegg products ______________________

• Hand-wash sink (one) in kitchen or more as required bylocal code, along with a timing system for handwashingand a means of drying hands

• Washing machine in good repair, clothes dryer (ifrequired by local code) ______________________

• 3-compartment sink, or as required by local code, in agood repair; proper equipment and supplies for propercleaning and sanitizing ______________________

• Food preparation sink as required by local code• Required booster tank and filtration system in support of

fountain equipment. An approved water filtration systemwith 0.5 micron filters (either Cuno or Everpure) T9systems are no longer acceptable _____________________

• A minimum of 2 Bulk Coke tanks required for restaurantsutilizing bulk Coke. Bulk Coke tanks must be bolted tothe floor or wall.

• Proper containers for storing opened packages of food• Properly functioning pyrometer with a food and beverage

probe, grill surface probe, and shortening probe ______________________

• All outside doors of the restaurant are seated at thebottom with weather-strips to prevent pest entry ______________________

IlL EMPLOYEE SATISFACTION AND SAFETY

• EMPLOYEE SATISFACTION Yes No Comments• Area dedicated to crew — comfortable, clean, in good

repair, with seating _______________________• • Clock, mirror

• Adequate lighting in crew area ______________________

12/04/2011



MCDOCHOO7I57

EMPLOYEE SATiSFACTION (continued)• Training system and materials, complete and current

e Computer-based training system• Wage and hour labor laws and others posted (from the

state)• 9-1 poster, which covers basic employment issues,

MSDS sheets (available from 1RC Parts)• Worker’s compensation poster (state, the employee’s

right-to-know information)• Office equipment and furniture in good repair• Adequate lighting in office

Yes No Comments

Rear door in good repair and properly set-up as anemergency exit (no dead bolts or lock bars installed)

• Rear door alarm (i.e. Detex)• Cooking equipment/exhaust fan/fire suppression pull

station dearly labeled• C02 safety procedures clearly posted, bulk tank vented

to outside, fill box above ground with safety signs andlabels posted, portable tanks securely chainedBulk C02 tanks must be bolted to the floor or wallC02 detectors are required and installed permanufacturer

• A C02 sensory must be located in the walk-in cooler forrestaurants with Bulk Sweet Tea Dispensing systems

• Shortening filtration disposal equipment, complete crewprotective equipment, shortening disposal cartNote: Shortening filtration disposal equipment notrequired for restaurants with bulk oil

• First Aid Kit meets O&T requirements

• SAFETY Yes No Corn ments

12/04/2011



MCOOCHOO71 57

PHYSICAL PLANT I BUILDING Yes No Comments• Building exterior, appealing to the consumer, clean and

in good repair _____ _____________________

• Supply diffusers and return grills clean and in good repair _____ ______________________

• Supply diffusers positioned over aisles, not over foodprep equipment _____ _____________________

• Trash corral in good repair (i.e. gate, walls, plumbing,electrical) _____ _____________________

a All roof surface should be clean and in good repair _____ _____________________

• Exhaust fans, belts, and motors operating and in goodrepair _____________________

• MAC unit operating and in good repair _____________________

a HVAC units functioning and in good repairo System capable of maintaining 68°F in winter,

78°F summer• All equipment cords, plugs, outlets functioning and in

good repair _____________________

a Roof ladder and roof access pathways should be safeand in good repair with lockable hardware on all accessdoors

Section 16 — Unapproved Equipment Yes No Commentsa Is only McDonald’s approved equipment utilized? If no,

please list any unapproved items

RECOMMENDATION: lt is recommended that a qualified technician inspect HVAC,refrigeration equipment, roof and irrigation system It is also recommended that a PowerAudit using CPP documentation, be complete to ensure that the restaurant meetsMcDonald’s Power Quality Guidelines

12/04/2011

HIGHLY CONFI DENT1AL MCDbCHOO7I 67


MCOOCHOQ7I 57

IV. SIGNATURES

Completed by:

Signature Title Date

Print Name


Print Name


Print Name


Print Name

12/04/2011

HIGHLY CONFIDENTIAL MCDOCHOO7IS8


Exhibit 9

From: To: Sent: Subject: Attachments:

Dubois Steven Smith Michael (US Partners) 11/4/2014 9:58:28 AM RE: Action Plan Telegraph Action Plan report-1745.htm

EXHIBIT j./.5= Ashley Soevyn, CSF2 No. 12019

Date Witnes

Hi Michaels

I hope this is the one you are looking for. This is the only one I found.

Thanks,

Steve

From: Smith Michael (US Partners) Sent Monday, November 03, 2014 3:13 PM To: Dubois Steven Subject Action Plan Telegraph

Good afternoon Steve,

Could you please get the last action. plan for the last. FOR. that we came up with for store #1745 telegraph. Thanks I'm having a hard time retrieving the info.

Sem from my Siimsung, (.4aIrmy smmiphohc.



Open objectives only Open objectives only

Restaurant Action Plan Restaurant Restaurant Address

(1745) OAKLAND-TELEGRPH 4514 TELEGRAPH AVE, CA, ALAMEDA, OAKLAND, 94609-2020

Owner/Operator Edward Smith Franchisee Consultant Date The action plans below have been developed and agreed upon by: Franchisee (Consultant

System - 1 : Production Category QSC Objective To serve each and every day the highest quality products Objective modified date 21-June-2013

Key Success Factors • Restaurant manager ensures MFY standards are executed according to standard

• Restaurant Manager maintains production charts

Action ff 1 Person Accountable Target completion date Actual Completion Date Kitchen Department manager and GM 22-July-2013

Action(s) agreed upon to ensure root causes are corrected

1. Focus on breakfast procedures in the grill area 2. Kitchen staff as well and production manager know how to calibrate the grill to get achieve that sweet spot for the beef coming of the grill 3. Perform SOC's on all production staff to ensure all procedures are being done correctly

Measurement

1. RDM is taking place within the restaurant and is being done correctly to impact the store on a positive basis 2. SOC's being perform by the department manger and being communicated 3. Training to all productions staff on what good quality looks and taste like

Comments:

System - 2 : Service Category QSC Objective To provide the highest quality service to each and every guest Objective modified date 21-June-2013

Key Success Factors

• Service employees effectively communicate with the guests

• Shift/service manager responds appropriately when there are 3 or more guests in line at a register

• Order taker/cashier responsibilities are split if 4 or more crew are scheduled in Drive-thru

• Shift/service manager responds appropriately when there are 3 or more cars at the DT order point

Action # 1 Person Accountable Target completion date 'Actual Completion Date General Manager Guest Service manager 21-July-2013

HIGHLY CONFIDENTIAL

MCDOCH018771



1. Make sure the staffing levels in the restaurant are correct during the peak I snack hours 2. Check staffing levels to have a drink specialist if the drinks per hour call for it 3. Pre make oatmeal to speed up the service experience 4. Shift management needs to understand the danger zones and make good decisons

4easurement 1. Service time's should improve 2. Utilizing the staffing needs report should be checked monthly 3. Observing the shift managers and working with them shoulder to shoulder to understand how to make decisions on the floor

Comments;

System - 3 : Production Category

Objective

Sales Two sides of the table open during all peak periods minimum 80% of the time as of May 31, 2013

Objective modified date 02-May-2013

Key Success Factors

'

• Initiator stays in position

• French fry person stays in position according to positioning guide

• All stations are properly stocked for 24/2

• Restaurant manager ensures MFY standards are executed according to standard


• Shift manager responds appropriately when there are 3 or more orders on the KVS or 3 or less orders of fries prepared

Action # 1 Person Accountable Target completion date Actual Completion Date Laura 19-June-2013

Action(s) agreed upon to en sure root causes are corrected

Ensure that enough people are scheduled to allow the second side to be open.

Measurement +VLH during peak period. Commen •

System - 4 Category

anagement QSC

h i ft

Objective To run great shifts to provide every cutomer with great QSCV Objective modified date

Key Success Factors

18-Mar-2013

• Managers visible on floor actively, managing by observing (from observation post) service and production barriers, danger zones and crew positions

• Pre-shift Checklist is used

• Shift manager is shift certified/verified

• Crew are positioned according to the positioning guide and stay in position

• Shift targets/ information are communicated to all employees

• Crew recognized and rewarded for meeting targets or excellent performance

HIGHLY CONFIDENTIAL

MCDOCH018772


• Shift manager interacts with guests and follows guest recovery process when necessary and role models hospitality

• Travel path is conducted by manager every half hour, priorities set and action taken

Action # 1 Person Accountable Target completion date !Actual Completion Date . .. Laura 31-Dec-2012


Ensure all new managers and old attend McDonalds classes coomunication with your management staff React to all danger schedule's and make sure that there is a good schedule posted Targets

Having good zones Follow-up of Set and Communicate

staff following-up Measurement schedule for classes weekly/monthly rap seesions with management with store manager write-up's must take place

Comments:

Action # 2 Person Accountable General Manager / All restaurant staff

Target completion date

31-Dec-2013

Actual Completion Date


Bring CSO score below 20% for this year

Measurement

1. SSP is taking place and being follow up on a weekly and monthly basis 2. Ensure shift manangment is adhering the danger zones and reacting 3. Good HTW practices are taking place with good interviews, orientations and on the floor training is happening 4. Celebrate when the goals are meet

Comments;

Action # 3

Person Accountable Target completion date Actual Completion Date General manager/ Production manager/ Guest Service Manager

18-June-2013


Maintain 1000 cars per day in the Drive-thru

Measurement 1. Have the proper number of crew on the floor and focused 2. Maintain split function for the drive-thru team 3. Ensure good shift managment is taking place 4. Open 2nd side of the prep table 80% of the time 5. Ensure that all equipment is working

Comments:

System - 5 : Business Plannin Category Objective Objective modified date

g Profit To run a profitable business while maintaining a high standard of sucess 18-Mar-2013

Key Success Factors

• Assess and reassess the business Develop goals - CSC- People - Sales - Profit

• Communicate the goals

• Provide resources and motivation as needed

• Oversee execution of action plan and provide feedback

HIGHLY CONFIDENTIAL

MCDOCH018773


• Measure results, recognize and reward

Action # 1 Person Accountable Targetompletion date Actual Completion Date Laura 31-Dec-2012


The routine for food cost must be as follows: 1-Establish and communicate store guidelines for each food cost after entering QCR projection at least 25th. of each month fOr the next month 2-Restaurant must identify and do a daily five items from the daily and weekly all food items inventory 3-All transfer-in and out must be entered at the ISP 4-I mmediately after pulling and troubleshooting the weekly stet, pull a month to date QCR Report 5-Once Food Cost Areas of opportunity are determined; observe the ON-FLOOR procedures that impact those areas:

ieasurement Improve Food Over base by at leastl% starting December 2011 to December 2012 Comments:

Action # 2 Person Accountable Target completion date Actual Completion Date General Manager / Swing Management Team 18-May-2013


Lower Food Cost to below 3.5% food over base and increase the P&L to the top 25% of the regional average

Measurement 1. Ensure UHC chart's ar being followed 2. Weekly managers meeting to discuss progress on food cost 3. Review all 7 items under the QCR report ie. raw waste/ complete waste 4. Review P&L's on a monthly basis and make new goals

Comments:

System - 6 : Production Category — QSC Objective To provide every customer with quality food Objective modified date 20-May-2012

Key Success Factors

• Initiator stays in position

• French fry person stays in position according to positioning guide

• All stations are properly stocked for 24/2

• Restaurant manager ensures MFY standards are executed according to standard


• Shift manager responds appropriately when there are 3 or more orders on the KVS or 3 or less orders of fries prepared

Action # 1 erson Accountable Target completion date Actual Completion Date

Laura — 31-Dec-2012


open second side of the prep table when the sandwich count is more than 100 having a headset worn by production manager following production charts Utilize DSPT

Measurement visually checking kvs reports being checked and also setting achievable targets communication with all staff

Comments:

System - 7 : Shift Management

HIGHLY CONFIDENTIAL

MCDOCH018774


Category QSC Objective to coordinate production,equipment and people to achieve great QSC Objective modified date 29-Sept-2008 Key Success Factors

Action # 1 Person Accountable Target completion date !Actual Completion Date store manager/production and service team 31-Dec-2008


preshift checklist is being done daily proper postioning according to the positioning guide based on the sales rate pulling reports every 30 minutes and communicating the I results tarrgets be set daily I

Measurement improvement in service time mystery shop score increase all equipment is working preshift checklist is being done check positioning daily

Comments:

System - 8 : Production Category QSC

Objective provide all products needed and provide fast accurate friendly service to each and every customer

Objective modified date 29-Sept-2008 Key Success Factors

Action # 1 Person Accountable Target completion date Actual Completion Date store manager/production managers 31-Dec-2008


manage kvs danger zones preshift checklist being done properly wach and everyday proper positioning food safety being done everyday

Measurement pulling reports every 30 minutes preshift checklist being done daily and properly check uhc levels and communicate targets manage danger zones

Comments:

• The above action plans and dates have been developed and agreed upon,

Signature of Restaurant Manager

Signature of Owner / Operator or McOpCo Supervisor :

Date :

Consultant Signature :

CONFI DENT] AL AND PROPRI ETARY I NFORMATI ON



O McDonald's Corporation. The material contained herein is the exclusive property of McDonald's Corporation and has been prepared exclusively for use of designated McDonald's recipients that are employees or licensees of McDonald's Corporation. Any unauthorized use or copying of this material may lead to civil or criminal prosecution. (33917)



Exhibit 10



































Documents

Case 3:14-cv-02098-JD Document 271-11 Filed 08/17/15 …static.politico.com/6b/21/...materials-on-mcdonalds-exhibit-1.pdfMCDOCH907528 , 3. When will McDonald's begin applying the revised