FRANCHISE DISCLOSURE DOCUMENT PDF Free Download

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FRANCHISE DISCLOSURE DOCUMENTMcDonald’s USA, LLCa Delaware limited liability companyOne McDonald’s PlazaOak Brook, Illinois 60523(630) 623-3000www.mcdonalds.comThe franchisee will own and operate a quick service restaurant offering a limited menu ofvalue-priced foods using the McDonald’s System.The total investment necessary to begin operation of a traditional McDonald’s franchise rangesfrom 1,031,350 to 2,182,050 (see Item 7 for small town oil, small town retail, and Satellitelocations). This includes an initial franchise fee of 45,000.00 (see Item 5 for small town oil,small town retail, and Satellite locations) that must be paid to the franchisor.This disclosure document summarizes certain provisions of your franchise agreement and otherinformation in plain English. Read this disclosure document and all accompanying agreementscarefully. You must receive this disclosure document at least 14 calendar-days before you sign abinding agreement with, or make any payment to, the franchisor or an affiliate in connectionwith the proposed franchise sale. Note, however, that no governmental agency has verifiedthe information contained in this document.You may wish to receive your disclosure document in another format that is more convenient foryou. To discuss the availability of disclosures in different formats, contact the Franchise PracticeGroup at 2915 Jorie Boulevard, Oak Brook, IL 60523 and (630) 623-6934.The terms of your contract will govern your franchise relationship. Don’t rely on the disclosuredocument alone to understand your contract. Read all of your contract carefully. Show yourcontract and this disclosure document to an advisor, like a lawyer or an accountant.Buying a franchise is a complex investment. The information in this disclosure document canhelp you make up your mind. More information on franchising, such as “A Consumer’s Guideto Buying a Franchise,” which can help you understand how to use this disclosure document, isavailable from the Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP orby writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can alsovisit the FTC’s home page at www.ftc.gov for additional information. Call your state agency orvisit your public library for other sources of information on franchising.There may also be laws on franchising in your state. Ask your state agencies about them.Issuance Date: May 1, 2013, as amended October 25, 2013

STATE COVER PAGEYour state may have a franchise law that requires a franchisor to register or file with astate franchise administrator before offering or selling in your state. REGISTRATION OF AFRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THEFRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSUREDOCUMENT.Call the state franchise administrator listed in Exhibit P for information about thefranchisor or about franchising in your state.MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEWUNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TOSIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDERTO CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDERWHAT RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHATTERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.Please consider the following RISK FACTORS before you buy this franchise:1.THE FRANCHISE AGREEMENT STATES THAT ILLINOIS LAW GOVERNSTHE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAMEPROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TOCOMPARE THESE LAWS.2.THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.Effective Date: See the next page for state effective dates-ii-

STATE EFFECTIVE DATESThe following states require that the Franchise Disclosure Document be registered or filed with the state,or be exempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota,New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.This Franchise Disclosure Document is registered, on file, or exempt from registration in the followingstates having franchise registration and disclosure laws, with the following effective dates:CaliforniaMay 1, 2013, as amended October 25, 2013HawaiiApril 1, 2013, as amended May 1, 2013, asamended October 25, 2013IllinoisMay 1, 2013, as amended October 25, 2013IndianaMay 1, 2013, as amended October 25, 2013MarylandMay 1, 2013, as amended October 25, 2013MichiganMay 1, 2013, as amended October 25, 2013MinnesotaMay 1, 2013, as amended October 25, 2013New YorkMay 1, 2013, as amended October 25, 2013North Dakota May 1, 2013, as amended October 25, 2013Rhode Island April 1, 2013, as amended May 1, 2013, asamended October 25, 2013South Dakota May 1, 2013, as amended October 25, 2013VirginiaApril 30, 2013, as amended October 25, 2013WashingtonMay 1, 2013, as amended October 25, 2013WisconsinApril 15, 2013, as amended October 25, 2013iii

THE FOLLOWING APPLY ONLY TO TRANSACTIONS GOVERNED BYTHE MICHIGAN FRANCHISE INVESTMENT LAWTHE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THATARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWINGPROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS AREVOID AND CANNOT BE ENFORCED AGAINST YOU.(a)A prohibition on the right of a franchisee to join an association of franchisees.(b)A requirement that a franchisee assent to a release, assignment, novation, waiver, orestoppel which deprives a franchisee of rights and protections provided in the Michigan FranchiseInvestment Act. This shall not preclude a franchisee, after entering into a franchise agreement, fromsettling any and all claims.(c)A provision that permits a franchisor to terminate a franchise prior to the expiration of itsterm except for good cause. Good cause shall include the failure of the franchisee to comply with anylawful provision of the franchise agreement and to cure such failure after being given written noticethereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.(d)A provision that permits a franchisor to refuse to renew a franchise without fairlycompensating the franchisee by repurchase or other means for the fair market value at the time ofexpiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings. Personalizedmaterials which have no value to the franchisor and inventory, supplies, equipment, fixtures, andfurnishings not reasonably required in the conduct of the franchise business are not subject tocompensation. This subsection applies only if: (i) the term of the franchise is less than 5 years and(ii) the franchisee is prohibited by the franchise or other agreement from continuing to conductsubstantially the same business under another trademark, service mark, trade name, logotype, advertising,or other commercial symbol in the same area subsequent to the expiration of the franchise or thefranchisee does not receive at least 6 months advance notice of franchisor's intent not to renew thefranchise.(e)A provision that permits the franchisor to refuse to renew a franchise on terms generallyavailable to other franchisees of the same class or type under similar circumstances. This section does notrequire a renewal provision.(f)A provision requiring that arbitration or litigation be conducted outside this state. Thisshall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conductarbitration at a location outside this state.(g)A provision which permits a franchisor to refuse to permit a transfer of ownership of afranchise, except for good cause. This subdivision does not prevent a franchisor from exercising a rightof first refusal to purchase the franchise. Good cause shall include, but is not limited to:(i)The failure of the proposed transferee to meet the franchisor's then currentreasonable qualifications or standards.(ii)The fact that the proposed transferee is a competitor of the franchisor orsubfranchisor.-iv-

(iii)The unwillingness of the proposed transferee to agree in writing to comply withall lawful obligations.(iv)The failure of the franchisee or proposed transferee to pay any sums owing to thefranchisor or to cure any default in the franchise agreement existing at the time of the proposedtransfer.(h)A provision that requires the franchisee to resell to the franchisor items that are notuniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to afranchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions asa bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit aprovision that grants the franchisor the right to acquire the assets of a franchise for the market orappraised value of such assets if the franchisee has breached the lawful provisions of the franchiseagreement and has failed to cure the breach in the manner provided in subdivision (c).(i)A provision which permits the franchisor to directly or indirectly convey, assign, orotherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision hasbeen made for providing the required contractual services.If the franchisor's most recent financial statements are unaudited and show a net worth of lessthan 100,000, the franchisor shall, at the request of a franchisee, arrange for the escrow of initialinvestment and other funds paid by the franchisee until the obligations to provide real estate,improvements, equipment, inventory, training, or other items included in the franchise offering arefulfilled. At the option of the franchisor, a surety bond may be provided in place of escrow.THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITHTHE ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL,RECOMMENDATION, OR ENDORSEMENT BY THE ATTORNEY GENERAL.Any questions regarding this notice should be directed to:State of MichiganDepartment of Attorney GeneralConsumer Protection DivisionAttn: Franchise Section525 West Ottawa StreetG. Mennen Williams Building, 1st FloorLansing, Michigan 48913Telephone Number: (517) 373-7117-v-

Table Of ContentsItemPage No.1.The Franchisor and any Parents, Predecessors, and Affiliates. 12.Business Experience . 23.Litigation. 44.Bankruptcy . 125.Initial Fees. 126.Other Fees . 127.Estimated Initial Investment . 188.Restrictions on Sources of Products and Services . 199.Franchisee’s Obligations . 2210.Financing . 2311.Franchisor’s Assistance, Advertising, Computer Systems, and Training . 2312.Territory . 3013.Trademarks . 3014.Patents, Copyrights, and Proprietary Information . 3115.Obligation to Participate in the Actual Operation of the Franchise Business . 3216.Restrictions on What the Franchisee May Sell . 3217.Renewal, Termination, Transfer, and Dispute Resolution . 3318.Public Figures . 3619.Financial Performance Representations . 3620.Outlets and Franchisee Information . 3821.Financial Statements . 4922.Contracts . 4923.Receipts. 50-vi-

Table of Contents (Continued)ExhibitsA.Financial StatementsB.Franchise Agreement (Traditional)C.Franchise Agreement (Satellite)D.Franchise Agreement (Walmart)E.New Restaurant RiderF.BFL RiderG.Operator’s LeaseH.Assignment to an EntityI.Assignment AgreementJ.Preliminary AgreementK.Restaurant Evaluation Release LetterL.McDonald’s Rewrite (New Term) PolicyM.Rewrite (New Term) Offer LetterN.Loan and Related DocumentsO.List of Agents for Service of ProcessP.State AdministratorsQ.McDonald’s AffiliatesR.List of Franchised RestaurantsS.List of franchisees who had an outlet terminated, canceled, not renewed,or otherwise