McDonalds 2015 Annual Report Download - page 10

8 McDonald's Corporation 2015 Annual Report
ITEM 3. Legal Proceedings
The Company has pending a number of lawsuits that have been
filed in various jurisdictions. These lawsuits cover a broad variety
of allegations spanning the Company’s entire business. The
following is a brief description of the more significant types of
claims and lawsuits. In addition, the Company is subject to various
national and local laws and regulations that impact various
aspects of its business, as discussed below. While the Company
does not believe that any such claims, lawsuits or regulations will
have a material adverse effect on its financial condition or results
of operations, unfavorable rulings could occur. Were an
unfavorable ruling to occur, there exists the possibility of a material
adverse impact on net income for the period in which the ruling
occurs or for future periods.
Franchising
A substantial number of McDonald’s restaurants are franchised to
independent owner/operators under contractual arrangements
with the Company. In the course of the franchise relationship,
occasional disputes arise between the Company and its current or
former franchisees relating to a broad range of subjects including,
but not limited to, quality, service and cleanliness issues,
contentions regarding grants or terminations of franchises,
delinquent payments of rents and fees, and franchisee claims for
additional franchises or rewrites of franchises. Additionally,
occasional disputes arise between the Company and individuals
who claim they should have been granted a McDonald’s franchise
or who challenge the legal distinction between the Company and
its franchisees for employment law purposes.
Suppliers
The Company and its affiliates and subsidiaries generally do not
supply food, paper or related items to any McDonald’s restaurants.
The Company relies upon numerous independent suppliers,
including service providers, that are required to meet and maintain
the Company’s high standards and specifications. On occasion,
disputes arise between the Company and its suppliers (or former
suppliers) which include, for example, compliance with product
specifications and the Company’s business relationship with
suppliers. In addition, disputes occasionally arise on a number of
issues between the Company and individuals or entities who claim
that they should be (or should have been) granted the opportunity
to supply products or services to the Company’s restaurants.
Employees
Hundreds of thousands of people are employed by the Company
and in restaurants owned and operated by subsidiaries of the
Company. In addition, thousands of people from time to time seek
employment in such restaurants. In the ordinary course of
business, disputes arise regarding hiring, termination, promotion
and pay practices, including wage and hour disputes, alleged
discrimination and compliance with labor and employment laws.
Customers
Restaurants owned by subsidiaries of the Company regularly
serve a broad segment of the public. In so doing, disputes arise as
to products, service, incidents, advertising, nutritional and other
disclosures, as well as other matters common to an extensive
restaurant business such as that of the Company.
Intellectual Property
The Company has registered trademarks and service marks,
patents and copyrights, some of which are of material importance
to the Company’s business. From time to time, the Company may
become involved in litigation to protect its intellectual property and
defend against the alleged use of third party intellectual property.
Government Regulations
Local and national governments have adopted laws and
regulations involving various aspects of the restaurant business
including, but not limited to, advertising, franchising, health, safety,
environment, zoning, employment and taxes. The Company
strives to comply with all applicable existing statutory and
administrative rules and cannot predict the effect on its operations
from the issuance of additional requirements in the future.
ITEM 4. Mine Safety Disclosures
Not applicable.