FRANCHISE DISCLOSURE DOCUMENT McDonald's USA, LLC a

FRANCHISE

DISCLOSURE

DOCUMENT

McDonald's

USA, LLC

a Delaware

limited

liability

company

One

McDonald's

Plaza

Oak

Brook,

Illinois

60523

(630) 623-3000

www.mcdonalds.com

The

fi-anchisee

will

own and

operate

a quick service

restaurant

offering

a

limited

menu of

value-priced foods using the

McDonald's

System.

The total investment

necessary

to begin operation of

a

traditional

McDonald's

franchise

ranges

from

$1.068,8501.004.450 to $1.892.1002.155.700 (see Item 7

for

small

town

oil,

small town

retail,

and Satellite locations). 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

other

information

in

plain

Enghsh.

Read

this

disclosure

document

and all

accompanying

agreements

carefully.

You

must

receive

this

disclosure

document

at

least

14

calendar-days

before

you

sign

a

binding

agreement

with,

or

make

any

payment

to, the

franchisor

or an

affiliate

in

cormection

with

the

proposed

franchise

sale.

Note,

however,

that

no

governmental

agency

has

verified

the

information

contained

in

this

document.

You

may

wish

to receive your disclosure document in

another

format

that

is more convenient for

you.

To discuss the

availability

of

disclosures in different formats, contact the Franchise

Practice Group

at

2915 Jorie

Boulevard,

Oak

Brook,

IL

60523 and (630) 623-6934.

The

terms

of

your contract

will

govem your franchise relationship. Don't rely on the disclosure

document alone to

understand

your contract. Read

all of

your contract

carefully.

Show your

contract 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 can

help you make up your

mind.

More information on

franchising,

such as

"A

Consumer's Guide

to

Buying

a Franchise,"

which

can help you

understand

how to use this disclosure document, is

available

from

the Federal Trade

Commission.

You

can contact the

FTC

at

1-877-FTC-HELP

or

by

writing

to the

FTC

at

600

Peimsylvania

Avenue,

NW,

Washington,

D.C.

20580.

You

can also

visit

the

FTC's

home

page

at

www.ftc.gov

for

additional

information.

Call

your

state

agency or

visit

your

public

library

for

other

sources

of

information

on

franchising.

There may also be laws on

fi-anchising

in

your

state.

Ask

your

state

agencies

about

them.

Issuance

Date: Mav 1, 2011, as amondod January^

15,

2012MaY

1. 2012

STATE COVER PAGE

Your

state

may

have

a

fi"anchise

law

that

requires

a

franchisor

to

register

or

file

with

a

state

franchise

administrator

before

offering

or

selling

in

your

state.

REGISTRATION OF A

FRANCHISE BY A STATE

DOES

NOT

MEAN

THAT THE STATE RECOMMENDS THE

FRANCHISE OR HAS VERIFIED THE INFORMATION IN

THIS

DISCLOSURE

DOCUMENT.

Call

the

state

franchise

administrator

listed

in

Exhibit

P for

information

about

the

franchisor

or

about

franchising

in

your

state.

MANY

FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW

UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY

HAVE

TO

SIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND

CONDITIONS

IN ORDER

TO CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER

WHAT

RIGHTS

YOU

HAVE

TO RENEW YOUR FRANCHISE, IF

ANY,

AND WHAT

TERMS 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 GOVERNS

THE AGREEMENT, AND

THIS

LAW

MAY

NOT PROVIDE THE SAME

PROTECTIONS

AND BENEFITS AS

LOCAL

LAW.

YOU

MAY

WANT TO

COMPARE

THESE LAWS.

2. THERE

MAY

BE OTHER RISKS CONCERNING

THIS

FRANCHISE.

Effective

Date:

See the

for

state

effective

dates

-11-

STATE

EFFECTIVE

DATES

The

following

states

require

that

the Franchise

Disclosure

Document be registered or

filed

with

the

state,

or

be exempt

from

registration:

Califomia,

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

following

states

having

franchise

registration and disclosure

laws,

with

the

following

effective

dates:

Califomia

May 1.201 Las amondod jQnuar\'

15.

2012Mav

1.2012

Hawaii

April

1,

2011,

ao

amondod

May

1, 2011, as amended

Januar.'

15.

2012April

1.

2012.

as amended

Mav

1.2012

Illinois

May

1.

2011.

as amended January

15.

2012Mav

1. 2012

Indiana May 1.

2011.

as amended January

15.

2012May

1.

2012

Maryland

March

30, 2011, as amondod January 15,

2012MayJ^

2012

Michigan

May

1.

2011.

as amondod

Januar.^

15.

2012Mav

1. 2012

Minnesota

May

1.

201L

as amended-January

15.

2012Mav

L 2012

New

York

May 1.201 Las amondod January

15.

2012Mav

1.2012

North

Dakota Mav 1.201

Lao

amondod January

15.

2012Mav

1.2012

Rhode

Island

April

1,

2011,

as amondod

May

1,

2011,

as amended

Januar,'

15.

2012April

1.

2012.

as amended

Mav

1.

2012

South

Dakota

May

1. 2011. os amended

Januar>^

15.

2012Mav

1.2012

Virginia

April

30.

2011.

as amended

Januar>^

15.

2012April

30,

2012

Washington

May

I.

20-l-L

as amended January

15,

2012May

1. 2012

Wisconsin

April

15.

2011. as amended January

15.

2012April

15.

2012

111

THE

FOLLOWING

APPLY

ONLY

TO

TRANSACTIONS

GOVERNED

BY

THE

MICHIGAN

FRANCHISE

INVESTMENT

LAW

THE

STATE

OF

MICHIGAN

PROHIBITS

CERTAIN

UNFAIR

PROVISIONS

THAT

ARE

SOMETIMES

IN

FRANCHISE

DOCUMENTS.

IF

ANY

OF

THE

FOLLOWING

PROVISIONS

ARE

IN

THESE

FRANCHISE

DOCUMENTS,

THE

PROVISIONS

ARE

VOID

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,

or

estoppel

which

deprives a

franchisee

of

rights

and protections

provided

in

the

Michigan

Franchise

Investment

Act.

This

shall

not preclude a

franchisee,

after entering into a

franchise

agreement,

from

settling

any and

all

claims.

(c)

A

provision

that

permits a

franchisor

to terminate a

franchise

prior

lo

the

expiration

of

its

term except

for

good

cause.

Good

cause

shall

include

the

failure

ofthe

franchisee

to

comply

with

any

lawful

provision

of

the

franchise

agreement

and to cure such

failure

after

being

given

written

notice

thereof

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

fairly

compensadng the

franchisee

by repurchase or other

means

for

the

fair

market value at the time of

expiration

ofthe franchisee's inventory, supplies, equipment,

fixtures,

and

fumishings.

Personalized

materials

which

have no value to the

franchisor

and

inventory,

supplies, equipment,

fixtures,

and

fumishings

not reasonably required in the conduct

of

the

franchise

business are not subject to

compensation.

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 conduct

substantially

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 the

franchisee

does

not receive at least 6 months advance notice

of

franchisor's

intent not to renew the

franchise.

(e)

A

provision

that

permits the

franchisor

to

refuse

to renew a

franchise

on

terms

generally

available

to other

franchisees

of

the

same

class or type under

similar

circumstances.

This

section

does

not

require a renewal

provision.

(f)

A

provision

requiring

that

arbitradon or

litigation

be conducted outside this

state.

This

shall

not preclude the

franchisee

from

entering into an

agreement,

at the time

of

arbitration,

to conduct

arbitration

at a

location

outside this

state.

(g)

A

provision

which

permits a

fi"anchisor

to refuse to permit a transfer

of

ownership

of

a

franchise,

except

for

good

cause.

This

subdivision

does

not prevent a

franchisor

from

exercising

a right

of

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 current

reasonable

qualifications

or standards.

(ii)

The

fact

that

the proposed

transferee

is a competitor

of

the

franchisor

or

subfranchisor.

-IV-

(iii)

The unwilhngness

of

the proposed

transferee

to

agree

in

writing

to

comply

with

all

lawful

obligations.

(iv)

The

failure

of

the

franchisee

or proposed

transferee

to pay any sums

owing

to the

franchisor

or to cure any default

in

the

franchise

agreement

existing

at the time of the proposed

transfer.

(h)

A

provision

that

requires the

franchisee

to resell to the

franchisor

items

that

are not

uniquely

identified

with

the

franchisor.

This

subdivision

does

not prohibit a

provision

that

grants

to a

franchisor

a right

of

first

refusal

to purchase the

assets

of

a

franchise

on

the

same

terms

and conditions as

a

bona

fide

third party

willing

and able to purchase

those

assets,

nor

does

this

subdivision

prohibit a

provision

that

grants

the

franchisor

the right to acquire the

assets

of

a

franchise

for

the market or

appraised value

of

such

assets

if

the

franchisee

has breached the

lawful

provisions

of

the franchise

agreement

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, or

otherwise transfer its obligadons to

fulfill

contractual obligadons to the

franchisee

unless

provision

has

been made

for

providing

the required contractual services.

If

the

franchisor's

most recent

financial

statements

are unaudited and show a net worth

of

less

than $100,000, the

franchisor

shall,

at the

request

of

a

franchisee,

arrange

for

the escrow of

inidal

investment and other

fiinds

paid

by

the franchisee

until

the obligations to provide real

estate,

improvements, equipment, inventory,

training,

or other items

included

in

the

franchise

offering

are

fulfilled.

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

WITH

THE

ATTORNEY

GENERAL

DOES

NOT

CONSTITUTE

APPROVAL,

RECOMMENDATION,

OR

ENDORSEMENT

BY

THE

ATTORNEY

GENERAL.

Any

questions regarding this notice should be directed to:

State

of

Michigan

Department

of

Attomey

General

Consumer Protection

Division

Atto:

Franchise

Unit

670

G.

Mennen

Williams

Building

525 West Ottawa Su-eet

Lansing,

Michigan

48933

Telephone

Number:

(517)373-7117

-v-

Table

Of

Contents

Item

Page

No.

1. The Franchisor and any Parents, Predecessors, and

Affiliates

'. 1

2.

Business Experience 3

3. Litigation : 4

4.

Bankmptcy

4^\6

5. Initial Fees 16

6.

Other Fees

, 4^11

1.

Estimated Initial Investment i422

8. Restrictions on Sources

of

Products and Services 3324

9. Franchisee's Obligations 2^27

10.

Financing 2628

11.

Franchisor's Assistance,

Advertising,

Computer Systems, and

Training

3?29

12.

Territory ^537

13.

Trademarks ^37

14.

Patents,

Copyrights, and Proprietary Information ^38

15.

Obligation

to Participate

in

the

Actual

Operation

of

the Franchise Business ^39

16. Restrictions on What the Franchisee

May

Sell

^39

17. RenewaL Termination, Transfer, and Dispute Resolution ^840

18.

Public

Figures 4443

19.

Financial

Performance Representations 4443

20.

Outlets and Franchisee Information 4345

21.

Financial

Statements

^57

22.

Contracts

§457

23.

Receipts

^Sl_

-VI-

Table of

Contents

(Continued)

Exhibits

A.

Financial

Statements

B.

Franchise Agreement (Traditional)

C.

Franchise Agreement (Satellite)

D.

Franchise Agreement (Walmart)

E.

New

Restaurant Rider

F.

BFL

Rider

G.

Operator's Lease

H.

Assignment to an Entity

I.

Assignment Agreement

J.

Preliminary

Agreement

K.

Restaurant

Evaluadon

Release Letter

L.

McDonald's

Rewrite (New Term)

Policy

M.

Rewrite (New Term)

CommitmentOffer

Letter

N.

Loan

and Related Documents

O.

List

of

Agents

for

Service

of Process

P.

State

Administrators

Q.

McDonald's

Affiliates

R.

List

of

Franchised

Restaurants

S.

List

of

franchisees

who had an outlet terminated, canceled, not renewed,

or otherwise

voluntarily

or

involuntarily

ceased to do business

T.

State

Specific

Addenda

-Vll-

Item

1

The Franchisor and any

Parents,

Predecessors,

and

Affiliates

The Franchisor is

McDonald's

USA, LLC,

which

will

be referred to

in

this disclosure document as

"McDonald's",

"we", "us" or "our". A person who buys a franchise

from

McDonald's

will

be referred to in this

disclosure document as "you".

We

are a Delaware

limited

liability

company.

Our

principal

place

of

business is One

McDonald's

Plaza,

Oak

Brook,

Illinois,

60523.

We

currently do business under the

name

of

McDonald's

USA, LLC.

Our

agents

for

service

of

process are disclosed in

Exhibit

O.

We are a

wholly-owned

subsidiary

of

our

parent

and predecessor,

McDonald's

Corporation,

a Delaware corporation.-Our

predecessor's

principal

place

of

business is

One

McDonald's

Plaza,

Oak

Brook,

Illinois,

60523. Our predecessor currently

does

not

offer

franchises.

Neither

we nor our predecessor have ever

offered

franchises

in any other

line

of

business.

We

have domestic

affiliates

and intemadonal

affiliates.

Some

of

our intemational

affiliates

offer

McDonald's

franchises

outside

of

the

United

States.

None

of

them have

offered

franchises in any other line of

business. These intemational

affiliates

are disclosed in

Exhibit

Q.

We

develop,

operate,

franchise,

and service a system

of

restaurants

that

prepare,

assemble, package, and

sell

a

limited

menu

of

value-priced

foods

under the

McDonald's

System

in

the

U.S.

The

"McDonald's

System" is

a concept

of

restaurant

operations

that

includes, among other things, certain rights

in

trademarks, manuals, and

other

confidential

business

information;

operational, real

estate,

and marketing

information;

and the expertise and

continuing

information

that

we

provide.

All

McDonald's

restaurant

businesses

in the

U.S.

arc operated under

franchise

agreements

and are owned by

franchisees

who are independent third parties, by

affiliates

operating as

joint

partnerships, or

by

our

wholly-owned

subsidiaries

("McOpCo

companies"). Currently,

about

89% of all

U.S.

restaurants

are

franchised

to independent

franchisees

or

affiliates

operating

as

joint

partnerships, and

about

11%

are

franchised

to

McOpCo

companies.

McDonald's

restaurants

offer

the

public

a

high

standard of

quality

and

uniformity

in

food,

service, and

decor.

McDonald's

restaurants

are located

in

freestanding

buildings,

storefronts,

food

courts, and other locations

that

are appropriate to

McDonald's

image. A

grant

of

a

McDonald's

franchise authorizes you to

operate

a

McDonald's

restaurant

business at a

specific

location and to use the

McDonald's

System

in

the operation

of

that

restaurant

business

for

a

specific

period

of

time, usually 20 years.

We

also

grant

franchises

for

McDonald's

restaurant

businesses

located

in

retail

stores

such as Walmart.

We

call

these

satellite ("Satellite") locations.

McDonald's

restaurants

located in strip

centers,

airports, universities, shopping

malls,

hospitals, and other diverse

locations may also be Satellites. Satellites may serve a scaled-down menu of

a

traditional

McDonald's

restaurant

and, in some

cases,

will

also serve

non-McDonald's

trademarked products. The term

of

the franchise

for

a

Satellite

depends

on its

locafion.

Some

McDonald's

restaurants

that

are located in

fuel

station/convenience

store

facilities

are

called

small

town

oil

("STO")

locations.

STOs

are not Satellites. Rather,

STOs

are

full-menu

restaurants

that

share

building

space

with

a convenience

store

and have a

fuel

station located outside

of

the

building.

At

each

STO,

the

fuel

station/convenience

store

typically

will

be associated with a national or regional branded chain. Some

McDonald's

restaurants

that

anchor a

small

retail

center

in

mral communities arc called

small

town retail

("STR")

locations.

STOs

and

STRs

are not Satellites. The term

of

the franchise

for

an-STOs

and

STRs

is usually

10

years.

In

certain

limited

cases,

we may also

grant

franchises

with

leases

that

include the business

facilities.

We

call

these

Business

FaciUties

Lease

("BFL")

franchises.

A

BFL

is a special

arrangement

that

we may

offer

when

certain economic and other factors exist. The term

of

a

BFL

is usually

3

years. Under a

BFL,

you may have a

conditional

option to purchase certain

restaurant

assets

after the first year and extend the

franchise

for up to

20

years

after the beginning ofthe term. In this disclosure document, the word

"restaurant"

refers to each

McDonald's

restaurant

business location generally, regardless

of

whether it is franchised as a tradiuonal

restaurant,

Satellite,

STO, STR.

or

BFL

(unless otherwise provided).

-1-

All

franchisees who

operate

a

restaurant,

whether a

traditional.

Satellite,

STO, STR.

or

BFL

location,

will

sign

the applicable

form

of

our standard

franchise

agreement

attached as

Exhibits

B, C,

and D

(collectively

"Franchise Agreement").

.

In 1955, our predecessor,

McDonald's

Corporation,

began granting

franchises

to

individuals

for

the

operation

of

McDonald's

restaurants.

In 1960, our predecessor began

forming

and granting

franchises

to

McOpCo

companies

for

the operation of

McDonald's

restaurants.

In 2004, our predecessor

formed

us as a

subsidiary

and

in

2005, as

part

of a

global

company alignment, transferred to us a

majority

of

the

assets

used

in

its

U.S.

business,

including

its interests

in

the

McOpCo

companies and the franchises

for

McDonald's

restaurants

in

the

U.S.

In 2007,

restaurants

in

Puerto

Rico

and the

Virgin

Islands operated by

McOpCo

companies were

sold

to,

and a master

franchise

to

offer

and

sell

franchises

in

Puerto

Rico

and the

Virgin

Islands was granted to,

LatAm,

LLC,

a Delaware

limited

liability

company,

which

is not an

affiliate

of

McDonald's.

In May

2010, our predecessor acquired the portion

of

the business and

assets

of

Verety

Software

Intemadonal

LLC

(VSl),

Shields

Enterprises Intemational

LLC

(SEI),

and related entities

that

serves the

McDonald's

System

in

the

U.S.

and other countries.

Prior

to the

acquisition,

VSI

was the vendor of

our

proprietary point

of

sale

("POS")

platform

known

as

NewPOS

(the current version is

NP6).

Prior

to the

acquisition,

SEI

provided help desk support services

for

us, our

franchisees,

and

franchisees

in

other countries.

Our

predecessor

formed

a subsidiary, Restaurant

Application

Development Intemational

LLC

(RDl),

a Delaware

limited

liability

company, to acquire the portion

of

the business and

assets

of VSI

that

served the

McDonald's

System.

RDTs

principal

place

of

business is 1420

Kensington

Road,

Suite 106, Oak

Brook,

IL

60523.

Our

predecessor also

formed

Restaurant

Technology

Services

LLC

(RTS),

a Delaware

limited

liabihty

company, to

acquire the portion

of

the business and

assets

of

SEI

that

served the

McDonald's

System.

RTS's

principal

place

of

business is 1420

Kensington

Road,

Suite 106,

Oak

Brook,

IL

60523.

As

a

franchisee,

you should not have any expectation

that

the economic and demographic factors

that

exist

at your

McDonald's

restaurant

location

will

remain constant. In

addirion,

other

McDonald's

restaurants

(including

those

that

we develop in the future) may have an

effect

on

the sales

of

your

McDonald's

restaurant,

since customers

typically

patronize various

McDonald's

restaurants

depending

on

their travel

patterns

and other

factors.

You

also

will

be competing

with

other

restaurants

and

food

service businesses

that

offer

the

same

types

of

products

that

you

do. These

restaurants

and

food

service businesses may be associated

with

national or

regional

chains (whether or not franchised) or may be

local,

single

restaurant

locadons.

You will

compete

with

other

restaurants

and

food

service businesses

that

feature

products

different

from

those

in

a

McDonald's

restaurant.

In certain

STOs,

the

fuel

station/convenience

store

operators

will

have the

right

to

sell

fountain

drinks

and hot beverages

in

the convenience

store

located

within

the

same

building

as the

McDonald's

restaurant.

Your

products and services

will

be

offered

primarily

to

individual

consumers

for

on-site or

off-site

consumption. The

market

for

the products you

will

offer

is

developed in some

areas

and

sfill

developing

in

other

areas,

depending on

the number

of

restaurants

of

this type operating

in

each particular area.

You will

be required to

comply

with

all

local,

state,

and

federal

laws,

including

health and sanitation

laws,

that

apply to

restaurant

operations. There are other laws

that

apply generally to

all

businesses,

including,

but not

limited

to, the

Americans

with

Disabilifies

Act,

and we encourage

you

to make further

inquiries

about

these

laws.

We

have

from

time to time developed incentive programs designed to help

enhance

the image of

McDonald's

restaurant

facilities.

These programs

typically

require

remodeling,

rebuilding,

or relocating

restaurant

buildings

and leasehold improvements.

Your

participation

in

any

of

these

programs is voluntary.

Participafion

may be made a

condition

of

the grant of

a

new term

franchise,

which

is also voluntary (see Item 17

and

Exhibit

L).

Only

franchisees who

meet

each program's

stated

eligibility

requirements and

who

are approved

by

us are

allowed

to participate. These programs

often

require additional capital investment

in

the site by the

franchisee and us, an adjustment to the

rent

payable to us, and may

involve

an adjustment to the

initial

franchise

fee or its due

date

(see

Items

5, 6, and 7).

If you

desire and are approved to participate

in

any of

these

programs,

we

will

provide you

with

complete details

of

the program, its

terms

and

conditions,

and copies of

any

agreements

that

you

must sign

with

us.

We

may

modify

or discontinue

offering

any

of

these

programs at any time.

-2-

Item

2

Business

Experience

All

of the

officers

and directors listed below

became

employees of

McDonald's

on January 1, 2005. However, all

have

long histories with our

predecessor

and the

date

they joined our

predecessor

is listed below.

Title

Director

and President

U.S.

Executive

Vice

President -

Chief

Operations

Officer

U.S.

Senior

Vice

President -

Chief

Restaurant

Officer

U.S.

Division

President - Central

Division

U.S.

Division

President - East

Division

U.S.

Division

President - West

Division

U.S.

Senior

Vice

President ~

Restaurant

Support

Officer

U.S.

Senior

Vice

President -

Restaurant

Support

Officer

U.S.

Senior

Vice

President -

Restaurant

Support

Officer

U.S.

Vice

President -

Global

Franchising

U.S.

Vice

President -

Training,

Learning & Development

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President—General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - General Manager

U.S.

Vice

Prooidont—General Manoger

U.S.

Vice

President ~ General Manager

U.S.

Vice

President -

OSGGeneral

Manager

U.S.

Vice

President - General Manager

U.S.

Vice

President - QSC

U.S.

Vice

President -

OSC

U.S.

Vice

President - QSC

U.S.

Vice

President - QSC

U.S.

Vice

President - QSC

U.S.

Vice

President - QSC

U.S.

Vice

President -

OSC

U.S.

Vice

President - QSC

U.S.

Vice

President -

QSC.

U.S.

Vice

President - QSC

Name

Peter

J.

Bensen

Gloria

Santona

Janice

L.

Fields

James

L.

Johannesen

Lee

Renz

Michael

Andres

Karen

King

Steven

M.

Plotkin

Rick Colon

James

Norberg

Charles Robeson

John

A.

Kujawa

Diana

Thomas

Monica F.

Boyles

Harry

L.

Coaxum

James

Collins

Joseph Erlinger

Karen

Garcia

Roberto Garcia

Mwaffak

Kanjee

Marie

McKinney

Ofelia

Melendrez-Kumpf

Mark

Moreno

Deborah Mossa

Cassiopie

Nelson

Steven Norby

Martin

Ranft II

Terrence Reese

Bettina

Roberts

Debbie Roberts

Shirley

Rogers-Reece

James

Sappington

Albert

Seecharan

Mason

Smoot

Debra Stroud

Cody

Teets

Marcy

Amble

Martha

Ball

Yolanda

Cook

William

Garrett

Daniel

Gehret

Francisco Gonzalez

Darren

Hall

Gary

Hensley

Cedric

Jones

Steven

Kerley

Start

Date

June

30, 1996

November 14, 1977

May

1, 1977

June

4, 1979

August

22, 1975

August

24, 2007(1)

August

1, 1975

May

9, 1972

September 26, 1994

June

12, 1983

August

6, 1976

August

15, 1989

June

15,1979

June

15,1987

November 6, 1975

February 11, 1985

April

22, 2002

May

1, 1978

June

29, 1994

November 15, 1980

July

19. 1977

June

17, 1992

September

1,2000

October 1, 1975

January 1, 1981

November 23, 1973

July

1, 197^

April

27, 1975

December 7, 1979

Febmary 12, 1990

October 1, 1981

June

22, 1987

May

16, 1985

March

1, 1994

June

25, 1990

July

1, 1993

October 1, 1978

November 26. 1982

August

16, 1981

September 16, 1980

May

1, 1978

June

1,2009

(2)

September 25. 1985

April

1, 1974

Febmary

1,.1991

May

9, 1980

-3-

Title

Name

Start

Date

U.S.

Vice

President-

QSC

Walter Maney

July

2, 1982

U.S.

Vice

President

-

QSC

William

McKeman

November 11, 1983

U.S.

Vice

President-

QSC

Atila

Noronha

May

24, 1991

U.S.

Vice

President-

QSC

Bianca

OHvas

September

15, 1978

U.S.

Vice

President-

QSC

Gino

Potesta

March

7, 1980

U.S.

Vice

President-

QSC

Scott

Rockwell

April

1, 1988

U.S.

Vice

President-

QSC

Wendell

Sconiers October 28, 1984

U.S.

Vice

President-

QSC

Sharlene

Smith

January

31, 1989

U.S.

Vice

President

-

QSC

WiUiam

Tice November 16, 1991

U.S.

Vice

President-

QSC

JeffWilfong

September

1, 1977

U.S.

Vice

President

-

OSC

Alex

Williams

August 27.

2007

(3)

Managing Director, Hawaii

Veronica

Kaneko

April

4, 1980

(1)

Michael

Andres

retumed

to McDonald's as a

Vice

President

in August

2007

and

became

U.S.

Division

President

in Febmary 2010. From

June

2000 to August 2007, he was

President

and

CEO

of

our former

affiliate,

Boston Market Corporation, Golden, Colorado.

(2) Francisco Gonzalez has

been

a

Vice

President

of

McDonald's

since

June

2009. From August

2007

to

June

2009, he was Managing Director

of

Mexico

for

Arcos

Dorados,

B.V.,

Buenos

Aires,

Argentina. From

January

2006

to August 2007, he was Managing Director

of

McDonald's

Mexico

S.A.

de

C.V.,

Huixquilucan,

Mexico.

From

January

2002 to

January

2006, he held

management

positions with

McDonald's

Mexico

S.A.

de

CV.

and

Sistemas

Central America

S.A.,

Panama

City,

Panama.

(31

Alex

Williams

has

been

a

Vice

President

of

McDonald's

since

May

2011. From October

2009

to

May

2011

he was a Director

of

Operations, and

from

August

2007

to October

2009

he was a Director

in

our Accelerated

Development Program. From

January

2005

to August 2007. he served as a Regional Director of Operations

for Starbucks Corporation in Overland Park. Kansas.

Item

3

Litigation

Pending

Cases

AA&S

Food Service

Corp..

et

al.

v. McDonald's Corporation. McDonald's

Systems

de

Puerto

Rico.

Inc., Golden

Arch

Development Corporation. Inc.. et

al.

(Case

No.

KAC07-0725

(603)). On

January

29, 2007, the

plaintiffs,

franchisees

of various McDonald's

restaurants

in

Puerto

Rico,

filed

a complaint

against

our

predecessor,

its

Puerto

Rican companies, and

others

in

the

Puerto

Rico

Court

of

First

Instance,

San Juan,

Puerto

Rico.

In 2008,

plaintiffs

amended

their complaint seeking a determination

that

the

Puerto

Rico

franchise distribution law

(Law

75)

govems

the

franchise

agreements

and relationships

between

the

parties

and

that

the

defendants

have

violated the provisions of

Law

75, an injunction prohibiting the

defendants

from

denying

rewrites

except

for

just

cause

and

from

opening new

McDonald's

restaurants

or kiosks within

3

miles

of

plaintiffs'

restaurants,

damages

of

up to $66,725,000,

attorney's

fees,

and

costs.

In

2009

and 2010,

plaintiffs

further

amended

their complaint to,

among

other

things, include us as a

named

defendant.

In July 2011. the

court

mled

that

Law

75 applies to the

Puerto

Rican

franchises

and in August 2011. the

defendants

appealed

the

order

to the

Puerto

Rico

Court of

Appeals. The

defendants

intend to defend their

interests

vigorously in

this

case.

Physicians Committee

for

Responsible Medicine v. McDonald's Corporation. Burger

King

Corporation, TGI

Friday's. Inc.. Carlson

Restaurants

Worldwide, Inc.. Applebee's Intemational, Inc.,

Chick-Fil-A,

Inc., Brinker

Intemational. Inc., and

OSI

Restaurant

Partners,

Inc. (Case

No.

383722). On

January

16, 2008, the plaintiff

filed

a complaint

in

the Superior Court

of

Los

Angeles County,

Califomia,

alleging violations

under

Proposition 65,

the Safe

Drinking

Water and

Toxic

Enforcement Act

of

Califomia's

Health and Safety Code.

Plaintiff

claims

.that

a compound called

2-AMINO-l-METHYL-6-PHENYLIMIDAZO[4,5-b]PYRADINE

("PhIP") is

created

during

the cooking

process

used

by the

defendants

when making grilled chicken

products,

and

that

the

defendants

have

violated Proposition 65 since 1995 by

failing

to provide

consumers

certain wamings

about

PhlP.

The complaint

seeks

an injunction, a declaratory

judgment

that

defendants

must

post

specific wamings,

civil

penalties,

attomeys'

-4-

fees, and costs. In June 2009, the court granted the defendants'

motion

for

summary judgment and dismissed the

action

in

its entirety. The

plaintiff

appealed the court's order and

in

August 2010, the appellate court reversed die

court's

decision.

Our

predecessor intends to defend its interests

vigorously

in

this case.

Arbitration

undor tho

United

Nations

Commiooion

on Intomational Trade

Law

Rules

among Bambang Raohmadir

PT

Rozoki

Mumi

and

McDonald's

Corporation.

On

Juno 1, 2009, the claimants, a ioint vonturo partner and its

shareholder,

filed

an ad hoc arbitration

olaim

alleging,

among other

things,

that

our prodccossor, through a

subsidiary:

(i) excludedthe

claimants-from

management

of-the-joint

venture;

(ii)

mismanaged or

failed

to act

in

the

best

interests

of

the

joinWenture-by-making

business deoisions-that

only

benefited our predecessor,"and

(iii)

sought to

wrongfully

end its relationship

with

the claimants,

including

having

improperly

sold

tho

joint

venture's

assets

and other actions

that

violated Indonesion corporate

law.

The claimants seek money

damages

and

other

relief

Our

predecessor intends to defend its interests

vigorously

in

this

matter.

Rebecca

Delio

and

Mary-Ann

Ellison

v.

McDonald's

Corporafion.

Burger

King

Corporation

and

Friendlv

Ice

Cream

Comoration

(Case

No.

HHD-CV09-5033704S).

On

October 6, 2009, the

plainfiffs

filed

a complaint

in

the

Connecticut

Superior

Court,

Judicial

District

of

Hartford,

Connecticut,

alleging

violations

ofthe Connecticut

Unfair

Trade Practices

Act

("CUTPA").

The

plaintiffs

seek to

form

a class

of

consumers and

claim

that

a

compound

called

2-AMlNO-l-METHYL-6-PHENYLIMlDAZO[4,5-b]PYRADINE

("PhIP") is created during

the

cooking

process used by the

defendants

when

making

grilled

chicken

products, and

that

the

defendants

have

violated

CUTPA

since 1994 by

failing

to provide consumers certain wamings about

PhlP.

The complaint

seeks

a

declaratory judgment

that

defendants

must post

specific

wamings, monetary

damages

for

the

individual

plaintiffs,

punitive

damages, attomeys' fees, and costs.

Our

predecessor intends to defend its interests

vigorously

in

this

case.

Sved

Ali

Husain

and

Khursheed

Husain

v.

McDonald's

Corporation.

McDonald's

USA.

LLC.

Mwaffak

Kanjee.

and Does 1-20 (Case

No. CIV

09-6177).

On

December

8,

2009, the

plaintiffs,

franchisees,

filed

a complaint

against our predecessor,

Mwaffak

Kanjee,

and us in the Superior

Court

of

Califomia,

Marin

County,

California,

which

has been amended. The complaint

asserts

that

we

refused

to grant new term

franchises

for

restaurants

after

entering into

agreements

to do so and alleges breach

of

contract, fraudulent and negligent misrepresentation,

promissory

estoppel, breach

of

the

implied

covenant

of

good

faith

and

fair

dealing,

unjust enrichment, equitable

estoppel,

unfair

business

pracfices,

and

violafion

of

the

Unmh

Act. The

plaintiffs

seek an order

directing

McDonald's

to grant new 20-year

franchise

terms

for

3

restaurants,

compensatory damages, and costs.

We

and

our predecessor

filed

a cross-complaint against the

plainfiffs

alleging

that

their rights to

operate

one

of

their

franchises expired on December

26,

2009, and seeking an order

requiring

the Husains to vacate the

restaurant,

compensatory damages, and attorneys' fees. In December

2010,

the court issued an order granting

a

preliminary

inj

uncfion

permitting the

plaintiffs

to

operate

the

3

restaurants

pending

trial

and, in Febmary

2011,

the

defendants

appealed the order. The

case

is set

for

trial

in

May 2012.

The

defendants

intend to defend their interests

vigorously

in

this case.

George

Vazakas

and Stamar

Monoprosopi

E.P.E.

v.

McDonald's

Hellas

M.E.P.E.

(Case

No.

5283). On

September

2,

2010, the

plaintiffs,

former franchisees

of

McDonald's

restaurants

in

Greece,

filed

a complaint

against our

affiliate,

McDonald's

Hellas

M.E.P.E.,

with

the

Hellenic

Compefition

Commission

(HCC)

alleging

infringement

of

Article

1

of

the Greek

Competifion

Act

and

Article

101

TFEU. The

plaintiffs

allege

that

our

affiliate

engaged

in

price

fixing

and

violated

compefition

rules by requiring franchisees to obtain

food

products

from

certain suppliers. In their

complaint,

the

plainfiffs

ask the

HCC

to take actions to require our

affiliate

to

cease

the alleged

violations

and to impose

fines

for such conduct, and seek a declaration

that

any requirement

of

franchisees to use certain suppliers is

illegal

under Greek

law. Our

affiliate

intends to defend its interests

vigorously

in

this case.

Monet

Parham.

on

behalf

of

herself

and

those

similarly

situated, and her daughter.

Maya,

on

behalf

of

herself

and

those

similarly

situated v.

McDonald's

Comoration

and

McDonald's

USA. LLC

(Case

No.

CGC-10-506178).

On

December 15, 2010, the

plaintiffs

filed

a purported class action complaint against our predecessor and us

in

the

Superior

Court

of

Califomia,

San

Francisco

County,

Califomia,

asserting

that

our use

of

toys to market Happy

Meals

is deceptive and

unfair,

and therefore violates

Califomia's

Unfair

Compefition

Law,

False

Advertising

-5-

Law,

and Consumer

Legal

Remedies

Act.

The

plaintiffs

filed

this

action seeking to

represent

a class

of

Califomia

residents

who

have

seen

markefing for and

purchased

Happy Meals and

request

a declaration

that

defendants'

advertising violates

these

statutes

and an injunction to

prevent

defendants

from

continuing to

advertise

Happy

Meals

featuring

toys

to children in

Califomia,

as

well

as

fees

and

costs.

In Febmary 2011, the

defendants

removed the

case

to the Federal District Court for the Northem District

of

Califomia.

In July 2011. the Federal

District

Court

remanded

the

case

to the Superior Court

of

Califomia.

The

defendants

intend to defend their

interests

vigorously in

this

case.

Sonal Bose,

individually,

on behalf

of

herself and

all

others

similarly

situated

v. McDonald's Corporation.

CBS

C-erperation,"Mazda

Motor

of

America.

Inc..

Microsoft

Corporation and Does

1

50

(C-ese4>Je:-10

CIV

9569). On

Docombor 23, 2010, tho

plaintiff

filod

a

purported

olass

acfion complaint

against

our

prodeoesoor

and

other

companies

in the Federal Distriot-Geurt

for

th&

Southefn^Pistriot

of

New

York.

Witlw-espect-to our

predecessor,

tho

plaintiff

allogOG

that

it violated

computer

privacy laws

through

its advertising campaign

World

Cup

themed

game.

The oompkiftt

alleges-the-defendtHits'-conduct

constitutes

decepfive acquisition of

personal information; invasion

of

privacy'-violation

of

the Computer-Fraud and Abuse

Act,

the-Electronic

Communications

Privacy-A-ctTand

the New

York

Deceptive Practices

Aot;

trespass

to

persona-1

property;

breach

of

implied

contract;

tortious

interference

with

contract;

and

unjust

enrichments—The

plaintiff

seeks

injunctive-reltef

prohibiting

defendants

from

engaging in the alleged

acts

and

requiring-defendants

to notify

consumers

regarding

itS"data"OQlleotien-activities,

delete

all

data

coUeoted

through

the-alleged

acts,

and provide a

means

for

consumers

to doclino participation in the oolleoUon

of

data.

Our prodooesGor

intends

to dofond its

interests

vigorously in

this

Ahmed

Ahmed,

individually

and on behalf

of

all

similarly

situated

persons

v. McDonald's Corporation, Finlev's

Management

Co.

D/B/A

McDonald's

#11663

(Case

No.

11-014559-C21.

On

November 23, 2011. the

plaintiff

filed

a lawsuit

against

our

predecessor

and our

franchisee

in the

Circuit

Court

of

Wayne County,

Michigan,

alleging the

defendants

violated the

Michigan

consumer

protection act by falsely advertising

that

certain chicken

products

sold at a

Michigan

restaurant

conformed to

MusUm

dietary laws. The

plaintiff

seeks

class

certification,

a

temporary

restraining

order

prohibiting the alleged violations,

monetary

damages,

interest,

attorneys'

fees,

and

costs.

The

defendants

intend to defend their

interests

vigorously in

this

case.

Michael

Siegel. individually and on behalf

of

all

others

similarly

situated

v. McDonald's Corporation. The

Marketing

Store

Woridwide.

LLC,

and

DDB

Chicago. Inc. (Case

No.

11CH5519). On December 12, 2011, the

plaintiff

filed

a lawsuit

against

our

predecessor

and

others

in the Circuit Court

of

Lake

County,

Illinois,

alleging

that

the

defendants

did not include certain information

that

is required

under

the

Illinois

Prizes and

Gifts

Act

("Act") on the

game

stamps

used

in McDonald's 2011

Monopoly

promotion. The

plaintiff

seeks

class

certification, a

finding

that

the

defendants'

conduct violates the

Act,

statutory

damages,

interest,

attomeys'

fees,

and

costs.

Our

predecessor

intends

to defend hs

interests

vigorously in

this

case.

Primer

Hispania.

S.L.

vs McDonald's

Sistemas

de

Espafia.

Inc., Sucursal en Espana

(MSB")

(Case

No.

41/2012).

On

January

9, 2012. a

franchisee

in Spain,

through

his operating

enfity.

filed

a complaint

against

our

affiliate.

MSE.

in the Commercial Court

n"

10

of

Madrid

alleging violations

of

the

Unfair/Disloyal

Competition and

Defense

of

the Competition laws

for

unequal

treatment.

The

plaintiff

is seeking an

order

that

requires

our

affiliate

to

cease

the alleged violations and provide

rent

reductions

and money

damages.

Our

affiliate

intends

to defend its

interests

vigorously in

this

case.

Concluded

Cases

Dale Gibson v. McDonald's Corporation (Case

No.

020600115). On

April

25, 2002, a

franchisee

filed

an action

in

the Sixth Judicial District, Sevier County, Utah, alleging

that

representatives

of

our

predecessor

reneged

on a

promise to

offer

Gibson a different

franchise

in

another

state.

Gibson

asserted

claims for

fraud,

negligent

misrepresentation,

and

breach

of

fiduciary

duty. The

parties

settled

the

dispute

in

July 2002 by our

predecessor

paying the sum of

$

1,402,972

(plus the value

of

inventories, gift certificates,

current

promotional

materials

and

new and

unused

uniforms) for Gibson's 2 franchises, with much

of

the

purchase

price being paid directly to

-6-

Gibson's creditors-(including our

predecessor

and

OPNAD).

Our

predecessor

also

agreed

to pay Gibson's

advertising

co-op

up to

$49,000

and Gibson paid his remaining

business

debts.

Tosar Corporation.

Statom

Corporation.

Thomas

Borin

and Sara

Borin

v. McDonald's Comorafion

(Case

No.

02-

20792).

On March 21, 2002,

franchisees

filed

a complaint in the Federal Disttict Court for the

Southern

District

of

Florida

alleging

that

our

predecessor's

decision not to offer the plaintiffs new

franchise

terms

on the expiration

of

2

of

their

franchises

constituted

breach

of

contract,

breach

of

an implied

covenant

of good faith

contract

performance,

a violation

ofthe

Illinois

Consumer

Fraud and Deceptive Business

Practices

Act,

and a violation of

the

.Illinois

Franchise

Disclosure

Act.

Plaintiffs

sought

an unspecified

amount

of

damages

exceeding

$100,000,

attorneys'

fees

and

costs.

On August 29, 2002, the Borins

agreed

to

settle

the

matter

by selling

their

3

franchises

to our

predecessor

for $3.5 miUion.

Hugh Strong and Valerie Strong, individually and doing

business

as Hiess, Inc. v. McDonald's Corporation and

Livia

Combs

(Case

No.

02CA000611 (OC)). On May 2, 2002, a

franchisee

filed

a complaint

against

our

predecessor

and

Livia

Combs, an

employee

of

our

predecessor,

in the Circuit Court of

St.

Lucie County, Florida,

asserting

causes

of action for

breach

of

contract,

breach

of

the implied

covenant

of good faith and fair dealing,

fraud in the

inducement,

intentional

infliction

of

severe

emotional

distress,

and

unjust

enrichment

relating to our

predecessor's

sale

of

the

restaurants

to the plaintiffs and its decision to

open

a new

McOpCo

restaurant

in the

area.

The plaintiffs

sought

of

monetary

damages

and an

order

compelling McDonald's to

cease

operating

the

McOpCo

restaurant.

The

parties

settled

the

case

on

September

20, 2002, when the

Strongs

sold

their

restaurants

to our

predecessor

for

$4,180,000.

Brent

Christensen

v. McDonald's Corporafion

(Case

No.

01 L

0887),

filed

August 22, 2001, in the Circuit Court

of

DuPage County, Illinois;

Alison

C.

Reiter v. Simon Worldwide. Inc., Simon Marketing. Inc.. McDonald's

Corporation, and Black Corporations 1-X

(Case

No.

Civ

01

1572PHXJAT),

filed

August 22, 2001, in the Federal

District Court for the District

of

Arizona;

Wayne

V.

Jones

v. McDonald's Comoration (Small

Claim

No.

Yl

4850),

filed

August 28, 2001, in the District Court

of

King

County, Washington; Kenneth Luan v. McDonald's

Comoration (Docket

No.

SCI

972-01),

filed

September

4, 2001, in the Superior Court

of

New

Jersey;

Traci Lee v.

McDonald's Corporation. Simon Worldwide. Inc.. Simon Marketing, Inc..

Jerome

P.

Jacobson,

Linda

L.

Baker,

Noah Dwight Baker. Sr.. John

F.

Davis. Andrew Glomb. Michael

L.

Hoover, Ronald

E.

Hughev. Brenda S.

Phenis, and unknown

others

(Case

No.

01C7193),

filed

September

18, 2001, in the Federal District Court for the

Northem District

of

Illinois;

Alison

C.

Reiter

v.

Simon Worldwide. Inc.. Simon Marketing. Inc.. McDonald's

Corporation, and Black Corporations 1-X

(Case

No.

CV2001-014617),

filed

August 23, 2001, in the Superior

Court of Maricopa County,

Arizona;

David

Allen

v. McDonald's Corporation. Simon Worldwide. Inc.. and

Simon

Markefing.

Inc.

(Case

No.

CT-005223-Ol),

filed

August 23, 2001, in the Circuit Court

of

Memphis,

Termessee;

Cameron

McCoy

and Logan

Sutton,

by

their

mother.

Dawn McCoy-Sutton. v. McDonald's

Corporation

(Case

No.

01

CA

2085),

filed

August 23, 2001, in the Circuit Court

of

Leon

County, Florida; Lee

Ohaber.

Kelly

Walker. Ray

McNair.

and Deborah

Stephens

v. McDonald's Comoration

(Case

No.

4-01-CV-

00543GTE),

filed

August 23, 2001, in the Federal Distt-ict Court for the

Eastern

District of Arkansas; Maria

Casagrande

v. McDonald's Corporafion, Simon Worldwide. Inc., Simon Marketing. Inc.. and

Jerome

Jacobson

(Case

No.

01

CV

4038),

filed

August 24, 2001, in the Federal District Court for the District

of

New

Jersey;

Nick

Popovich

V.

McDonald's Corporation and Simon

Markefing.

Inc.

(Case

No.

OIC

6622),

filed

August 24, 2001, in

the Federal District Court for the Northem District of

Illinois;

Donald R.

Stone

v. McDonald's Corporation,

Simon Worldwide. Inc..

Jerome

Jacobson,

Linda

L.

Baker. Noah

D.

Baker. Andrew

M.

Glomb. Ronald E.

Hughey. Michael

L.

Hoover. John F. Davis, and Brenda S.

Phenis

(Case

No.

CI-01-08578),

filed

August 27,

2001, in the Court

of

Common

Pleas

in

Lancaster

County, Pennsylvania; Ceciha

George

v. McDonald's

Corporation and Simon Woridwide. Inc.

(Case

No.

012-9415),

filed

September

27, 2001, in the Circuit Court of

St.

Louis,

Missouri;

Candy

L.

Verret v. Simon

Markefing.

Inc.. Simon Worldwide. Inc.. and McDonald's

Corporation

(Case

No.

Ol-CV-866),

filed

in the

18"*

Judicial District Court

ofthe

State

of

Louisiana and

served

December

19, 2001; Danielle S. Creason v. Simon Marketing. Inc..

Jerome

P.

Jacobson.

and McDonald's

Corporafion

(Case

No.

02C0709),

filed

January

28, 2002, in the Federal District Court for the Northem District of

Illinois;

Marylou Harwood and Lawrence Buchanan v. McDonald's

Restaurants

of

Florida.

Inc.

(Case

No.

01-

20642

CA25),

filed

August 31, 2001, in the Circuit Court

of

Dade

County, Florida; Karrvn Boland and

Jamie

Kirsch

v. Simon Marketing. Inc. and McDonald's Comoration

(Case

No.

01CH13803),

filed

August 22, 2001, in

-7-

the Circuit Court

of

Cook

County,

Illinois;

Jillian

Manos v. McDonald's Corporation and Simon Worldwide. Inc.

(Case

No.

01CH14042),

filed

August 24, 2001, in the Circuit Court

of

Cook

County,

Illinois;

Colleen Lowery.

Sara Elizarraraz, and Veronica

Guagenfi

v. Simon Marketing, Inc. and McDonald's Corporation (Case No.

01CH14199),

filed

August 28, 2001, in the Circuit Court of

Cook

County,

Illinois;

George

Wilfrid

Smith. Jr. v.

McDonald's

Comoration and Simon Marketing. Inc. (Case

No.

01CH14327),

filed

August 29, 2001, in the

Circuit

Court

of

Cook

County,

Illinois;

Lisa

Jimenez. Lauren Jimenez.

Victor

Jimenez, and

Janine

Jimenez, bv

their

father.

Anthonv Jimenez v. McDonald's Comoration (Case

No.

01CH14438),

filed

August 30, 2001, in the

Circuit

Court of

Cook

County,

Illinois;

Alan

H.

Hammerman, and

James

Dworkin

and Jeffrey

Dworkin.

by their

father.

Alan

Dworkin

v.

McDonald's Corporation (Case

No.

01CH15353),

filed

September

17, 2001, in the

Circuit

Court

of

Cook

County,

Illinois;

Zachary Lee and Tyler

Lee,

by their

mother

Traci

Lee, and Danielle Cole

and Lauren

Cole,

by their

mother

Kathy Cole v. McDonald's Corporation. Simon

Worldwide.

Inc.. and Simon

Marketing.

Inc. (Case

No.

01CH20130),

filed

November 28, 2001,

in

the

Circuit

Court of

Cook

County, Illinois;

Stephanie

Blackwell

and

James

Blackwell

v. Simon

Marketing.

Inc. and McDonald's Corporation (Case No.

01CH21645),

filed

December 20, 2001,

in

the

Circuit

Court

of

Cook

County,

Illinois;

Charies Brewster Squires.

Jr.

V.

McDonald's

Corporafion.

Simon

Worldwide.

Inc.. Simon

Markefing.

Inc.. and

Jerome

P. Jacobson (Case

No.

1:01CV02172),

filed

October 19, 2001, in the Federal District Court

for

the Disttict

of

Columbia;

Chester Lee

Marks

v. Simon

Worldwide.

Inc.. Simon Marketing. Inc.. McDonald's Corporation, and Black Corporation

l-X

(Case

No.

CIV02-0379PHXDKD),

filed

March

4, 2002, in the Federal Distt-ict Court

for

the District

of

Arizona;

George R. Chandler, as

parent

and guardian of Charles

W.

Chandler. Zhen

Ming

Wei.

Shi

Tan Wang. Peggy

A.

Dieks

and John

A.

Dieks v. Simon Marketing. Inc. and McDonald's Corporation (Case

No.

02-005929-CA),

filed

August 20, 2002, in the

Circuit

Court for

Duval

County,

Florida;

Vera

Watts

and Chris

Morris

v. McDonald's

Corporation (Case

No.

02-820-PC),

filed

May 31, 2002, in the Circuit Court for

Ingham

County,

Michigan;

Robert Rookc v. McDonald's Corporation. McDonald's Corporation in Their Capacity as Companv Owners of

McDonald's

Restaurants

in the

State

of

Califomia.

and Does

1

through

100 (Case

No.

01CC00361),

filed

August 23, 2001, in the Superior Court

of

Orange

County,

California;

Michael

D.

Loefler

and Edward

Sandstedt

V.

McDonald's Corporation. Simon Marketing. Inc.. Simon

Worldwide.

Inc.

of

Los

Angeles.

Jerome

Jacobson,

and Does

1

through

100. Inclusive (Case

No.

01CC00371),

filed

September

6, 2001, in the Superior Court of

Orange

County,

Califomia;

Harry

Powell

v. McDonald's Corporation. Simon

Marketing,

Inc.. and Does 1

through

100. Inclusive (Case

No.

GIC

773181),

filed

August 23, 2001, in the Superior Court

of

San Diego

County,

Califomia;

Annette Hoyos, Bmce Graham, and

Jose

Navarro v. McDonald's Corporation. Simon

Worldwide.

Inc.. Robin Colombo,

William

R.

Fisher,

Gloria

Brown.

Andrew

Glomb.

James

Patrick Faherty.

Marvin

Braun. and

Eari

Stuart

(Case

No.

01

20463

CA24),

filed

August 29, 2001, in the Circuit Court

of

Dade

County,

Florida;

Preston

Parsons

v. McDonald's

Restaurants

of

Canada

Limited.

McDonald's Corporation, and

Simon

Marketing. Inc. (Case

No.

02-CV-235958CP),

filed

September

13, 2002, in the Superior Court

of

Justice

in

Toronto, Ontario, Canada; Delores Mendoza and

Lisa

Dominguez

v.

McDonald's

Corporafion.

Simon

Marketing.

Inc.. Simon

Worldwide.

Inc.. and Does

1

through

100. Inclusive (Case

No.

BC256646),

filed

August 23, 2001, in the Superior Court of

Los

Angeles County,

Califomia;

Liane

E.

Hicks

v. McDonald's

Comoration. Simon Marketing. Inc.. and Does

1

through

100 (Case

No.

BC

256 945),

filed

August 27, 2001, in

the Superior Court of

Los

Angeles County,

Califomia;

Aree Burke

v.

McDonald's Corporation. Simon

Woridwide

Inc.. and Does I

through

40 (Case

No.

GIO773606),

filed

August 30, 2001, in the Superior Court of

San Diego County,

Califomia;

Christopher John

Gelfiiso

and Dresden

Felicity

Hauck v.

McDonald's.

Inc.. Simon

Marketing.

Inc., the McDonald's Franchisee at

2269

Foothill

Blvd..

La

Veme.

Califomia

91750. and Does 1

through

500. Inclusive (Case

No.

BC259519),

filed

October 10, 2001, in the Superior Court of San Bernardino,

Califomia;

Cheryl

A.

Knoblock

v.

McDonald's Corporation and Does I

through

150 (Case

No.

GIN01587),

filed

in

the Superior Court of San Diego County,

Califomia,

and served October 10, 2001;

Linda

James

v. McDonald's

Corporation, the McDonald's

Restaurant

at 2720 West Broadway,

Louisville.

Kentucky. Simon Marketing

Services. Inc., and Ante Enterprises

LLC

d/b/a the

McDonald's

Restaurant

at 1-65

N-LDT

Site. Franklin,

Kentucky (Case

No.

3:01CV-691-H),

filed

November

27,

2001,

in

the Federal Disttict Court

for

the Westem

District

of

Kentucky;

and Magnus Aburime and Tony Esosa v. McDonald's Corporation (Case

No.

01GC25916),

filed

December

27,

2001, in the Mettopolitan General Sessions Court

of

Davidson County,

Tennessee.

Beginning

in August 2001, various

consumers

filed

these

actions

against

our

predecessor,

Simon

Marketing,

Inc. ("Simon"), and various

affiliates

and

individuals.

Simon administered the promotional

games

offered to

some

McDonald's

restaurant

customers

from

1995 until 2001. The

plaintiffs

in

these

actions

challenged the integrity

of

the random seeding process

that

Simon

used,

alleging

that

the process was

compromised by a

Simon

employee. Some

plaintiffs

claimed to

represent

a class

of

consumers who purchased

food

and otherwise participated in the promotions. These actions

involved

claims

for fraud, fraudulent

concealment,

fraudulent

inducement, unjust enrichment,

unfair

competifion,

and misrepresentafion;

violafions

of

various

state

consumer

fraud

acts, consumer protection acts, deceptive and

unfair

trade

practices acts, the

Racketeer Influenced and Cormpt Organizations

Act,

and related common law

claims;

breaches

of contract, the

implied

covenant

of

good

faith

and

fair

dealing,

and warranty; and negligence, conspiracy, conversion, and

similar

claims.

The

plaintiffs

in

these

actions generally sought

unspecified

actual

damages,

punitive

damages,

treble

damages,

disgorgement ofthe

profits

and increased

sales

resulting

from

the promotions, restitution,

injimctive

relief, and recovery of attomeys' fees, costs, and

interest.

Our

predecessor removed some

of

these

cases

to the applicable Federal

Disttict

Court and consolidated

some

cases

in certain venues. The

ttial

courts dismissed other

cases.

On April 19,

2002, our predecessor

entered

into a

settlement

agreement

with a number

of

plaintiffs

in

many

of

these

cases.

Under

that

agreement,

our

predecessor sponsored a prize giveaway with a total

of

$15

million

in

prices randomly awarded to

persons

at

selected

McDonald's

restaurants

over

a

designated period

of

time.

This,

coupled

with

the $10

million

that

our

predecessor randomly awarded to

persons

at selected

McDonald's

restaurants

over

Labor

Day

weekend in 2001,

brought the total amount

of

addifional

prizes awarded to $25

million.

On

January 3, 2003, the judge presiding

over the

cases

pending in the

Circuit

Court

of

Cook

County,

Illinois,

approved the

settlement.

Christopher

Gallant,

et

al.

v.

McDonald's

Corporation and Hardee's

Food

Systems. Inc. (Case

No.

L01CV4255).

On April

26, 2002, a franchisee

filed

an amended complaint against our predecessor and Hardee's

Food

Systems,

Inc. in the Federal District Court

for

the

District

of

Maryland.

The amended complaint describes Gallant's

experience as a Hardee's franchisee and his negotiations with our predecessor conceming the potential sale of

certain

restaurants

that

he operated. The complaint

asserted

causes

of

action

against our predecessor

for

violation

of the

Racketeer Influenced and Cormpt Organizations

Act,

intentional misrepresentation, breach

of

contract,

tortious interference with contractual relations, constmctive

fraud,

and unjust enrichment. The

plaintiffs

sought

compensatory

damages,

punitive

damages,

treble

damages,

attomeys' fees,

interest,

and costs.

On

December 18,

2002, our predecessor was served

with

an amended complaint

that

Gallant and his operating companies

filed

on

August

30, 2002,

in

the

Circuit

Court

for

Anne

Axundel

County,

Maryland,

against our predecessor and Hardee's

Food

Systems, Inc. Christopher

Gallant,

et

al.

v.

McDonald's

Corporation and Hardee's

Food

Systems. Inc.

(Case

No.

C-2002-79990). This complaint was

virtually

identical to the complaint

in

the Federal

District

Court.

On

March

21, 2003, the parties settled both lawsuits and our predecessor paid Gallant $150,000.

DeBorah

Sonnenschein

v.

McDonald's

Corporafion

(Case

No.

300CV2130).

On

March

1,

2001,

our predecessor

was served with a complaint

filed

in the Federal

District

Court

for

the

District

of

Connecticut

alleging

that

our

predecessor's

decisions conceming the

lease

for

property where

1

of

the

plaintiffs

franchises

was located, the

effect

of

a new

restaurant

opening on her franchises, and other issues constituted

race

discrimination,

breach of

contract, breach

of

the

implied

covenant

of

good

faith

conttact performance,

violation

of

the Connecticut

Unfair

Trade Practices

Act,

violafion

of

the Connecticut Franchise

Act,

fraudulent misrepresentafion and concealment,

and negligent misrepresentation and concealment. Sonnenschein sought an

unspecified

amount

of

damages,

attorneys' fees, costs, interest and

punifive

damages.

On

January 16, 2003, Sonnenschein

filed

another

suit in the

Federal

Disttict Court

for

the

District

of

Connecticut. DeBorah Sonnenschein

v.

McDonald's

Corporafion

(Case

No.

3:03CV115(CSD)).

Our

predecessor had

threatened

to terminate 2 of Sormenschein's 4 franchises

for

failure

to comply with operational

standards.

The second complaint

asserted

that

conduct relating to the

threatened

terminations constituted

race

discrunination, breach of contract, breach

of

the

implied

covenant

of

good

faith

and

fair

dealing,

violation

of

the Cormecticut

Unfair

Trade Practices

Act,

and

violation

of

the Connecticut Franchise

Act.

Sormenschein sought an order

enjoining

McDonald's

from

terminating the franchises at issue, an

unspecified

amount

of

damages,

costs, and attomeys' fees. The parties settled

all

claims

in

both actions on

April

9, 2003. Under the

settlement

agreement,

Soimenschein sold her

4

restaurants

to

another

franchisee,

who

paid

$4.2

million.

Our predecessor also paid Sonnenschein $150,000.

Ronald

Daley.

Olsen-Daley

Corporation d/b/a

Maydale

Co.. R.

Daley

Corporation and

Daley

Foods of

Cudahy,

Inc. v.

McDonald's

Corporation d/b/a Delaware

McDonald's

Corporation.

Jeffrey

Schwartz and Does 1-50

-9-

(NC03300).

On

October

2,

2002, a franchisee

filed

a complaint against our predecessor

in

the Superior Court of

Los

Angeles

County,

California

, alleging

that

our predecessor

made

intentional and negligent misrepresentations,

breached its

conttacts

with

plaintiffs,

breached the

implied

covenant

of

good

faith

and

fair

dealing,

interfered

with

prospective business

advantages,

violated the

Califomia

Franchise Investment

Law

and the

Califomia

Franchise

Relations

Act,

and engaged in

unfair

business practices. Daley sought compensatory

damages

and

unspecified

exemplary

damages,

attorneys'

fees

and costs.

As

of

July

10,

2003,

the parties settled this

matter

by agreeing

that

our predecessor

would

contribute up to $50,000

(if

Daley

conttibuted $30,000)

for

local

store

marketing at

1

of

his

franchised

restaurants,

permit Daley's son to acquire I

of

his franchises

if

certain conditions were met, and

adjust

rent

at

1

restaurant

location.

The parties also exchanged mutual

releases

and agreed to certain other

conditions regarding ongoing operafions.

Simon

Markefing.

Inc. and

Simon

Worldwide.

Inc. v.

McDonald's

Corporafion

and Does

1

through 100. Inclusive

(Case

No.

BC260348).

On

October

23,

2001,

Simon

Marketing,

Inc., and

Simon

Woridwide,

Inc.,

filed

a

complaint against our predecessor and various unnamed

defendants

in

the Superior

Court

of

Los

Angeles County,

Califomia.

The complaint alleged

that

our

predecessor's

pubhc

statements

regarding the Justice Department's

investigation of

allegafions

that

a

Simon

Marketing

employee compromised the integrity

of

the promotional

games

offered

to

McDonald's

customers consfituted

fraud,

breach

of

contract, breach

of

a

licensing

agreement,

defamation, interference with

exisfing

and

potenfial

contractual and business relationships, and

unfair

competition.

The

plainfiffs

sought actual

damages

exceeding $500

million,

special

damages,

punitive

damages,

costs, and attomeys' fees. On July

31,

2003, our predecessor and other

enfities

entered

into

a

joint

setfiement

with

Simon

to conclude

all

litigation

among them. The

settlement

was

condifioned

upon Simon's insurance

carriers'

enfirely

funding

the $15

million

in

prizes and the implementation

costs

of

the prize giveaway used to

settle

the consumer class

acfion

lawsuits relating to

McDonald's

promofional

games, as

well

as court approval.

The parties exchanged

worldwide

releases

for

all

claims in

all

countries. Our predecessor further agreed to assign

its claims against

Simon

to

Simon,

so

that

Simon

could

pursue

any remaining proceeds

from

its insurance carriers.

Finally,

our predecessor, through its insurance carriers, agreed to pay $4.75

milfion

to

Simon

as

part

of

the

settlement.

Dadina

Sri

vs.

McDonald's

Development Italy. Inc. (Case

No.

9487/03).

On

Febmary 6, 2003, a licensee in Italy,

through his operating company,

filed

a complaint against our

affiliate

in

the Court

of

Milan,

Italy. Dadina

brought claims

for

breach of contract, misrepresentation and

illegal

contract provisions due to

sales

projections

that

our

affiliate

ahegedly

provided.

The

plaintiff

sought 250,000 Euros

in

compensatory

damages

and a

declaration to

nullify

the

franchise

agreement

or,

altemafively,

for

the application

of

a lower

rent.

On

August 28,

2003,

our

affiliate

and

Zocca

signed a

settlement

agreement,

under

which

our

affiliate

forgave 269,000 Euros of

receivables and

expenses

and relieved

him

of

his

rent

for

2003.

Gemar 2000

Sri

vs.

McDonald's

Development Italy, Inc. (Case

No.

9486/03). On Febmary 6, 2003, a licensee in

Italy, through his operafing company,

filed

a complaint against our

affihate

in the Court

of

Milan,

Italy. Gemar

brought claims

for

breach

of

contract and

illegal

contract provisions due to

sales

projections

that

our

affiliate

allegedly

provided.

The

plaintiff

sought 280,000 Euros

in

compensatory

damages

and a declaration to

nullify

the

franchise

agreement

or,

altemafively,

for

the application

of

a lower

rent.

On September 1, 2003, our

affiliate

and

Radicchi

signed a

settlement

agreement,

under

which

our

affiliate

forgave 215,000 Euros

of

receivables and

expenses

and restmctured his

rents

until

2006.

Maria

Sa

Cameiro

- Restauracao

Rapida,

Lda.

v. Sistemas

McDonald's

Portugal.

Lda.

(Case

No.

157/2002 -

civil

court of

Lisbon

-

5^*^

court).

On

November 8, 2002, our

affiliate,

received notice

that

Maria

Sa Cameiro,

franchisee in Portugal, had

filed

a complaint against it

in

the Court

of

Lisbon.

The complaint included claims for

breach of contract and bad

faith,

and the

plainfiff

also

claimed

that

the franchise

agreement

violated certain

provisions

of

the Treaty

of

Rome

and was not covered by the European

Anti-Tmst

Block

Exemption

Regulations.

The

plaintiff

sought to have the franchise

agreement

declared

null

and

void

and further sought compensatory

damages

and clientele

(goodwill)

compensation in the amount of

1,103,879

Euros.

The parties settled the action

on

July

31,

2003, when our

affiliate

bought the

plainfiffs

restaurant

for

550,000 Euros. On September

26,

2003,

the Court of

Lisbon

approved the

agreement

between the parties and dismissed the case.

-10-

Palumbo

&

Associates,

LLC

v.

Golden

Arch

of

Califomia.

Inc. and

McDonald's

Corporation

(Case

No.

GIC

792517).

On

July

18,

2002, Palumbo served our predecessor and

Golden

Arch

of

Califomia,

Inc., an

affiliate,

with

a complaint

filed

in

the Superior

Court

for

the

State

of

Califomia,

County of

San

Diego.

On

Febmary 2,

1996, Palumbo and

Golden

Arch

created the Palumbo Enterprises Partnership ("Partnership"),

which

owned and

operated

33

McDonald's

restaurants.

The complaint

included

claims

for

tortious interference

with

conttactual

relations, breach

of

the partnership

agreement,

and breach

of

the

franchise

agreements.

The complaint sought

declaratory

relief,

compensatory

damages

in

an

unspecified

amount, punitive damages, attorneys' fees, costs and

interest.

Golden

Arch

then

filed

a cross-complaint against

Palumbo

and its

principals

for

breach of contract,

breach

of

written

guaranty, breach of

fiduciary

duty,

conversion,

declaratory

relief,

an

accounfing,

and a

preliminary

and permanent

injunction.

The cross-complaint alleged

that

the cross-defendants misappropriated at

least $1,455,017

from

the Partnership exceeding the compensation

that

the partnership

agreement

permitted. On

Febmary 7, 2003,

Golden

Arch

filed

its amended cross-complaint to add a

claim

for

dissolution

of

the

Partnership.

On

August 29, 2003, the parties signed a settlement

agreement

and a partnership

dissolution

agreement.

Pursuant to

those

agreements,

the Partnership

assets

were valued at $16

million

and distributed to the

partners

according to their

proportional

interests

in

the Partnership,

after

being

adjusted to give

Golden

Arch

an

additional

distribution of

$1,592,862

and Palumbo an additional distribution of

$100,000.

Following

dissolufion

of

the Partnership on September

30,

2003,

Philip

J.

Palumbo,

Jr. and Jamie

C.

Straza remained

franchisees,

with

each operating

7

restaurants.

Leadership Systems. Inc.. Robert Foster and

Lisa

Foster

v.

McDonald's

Corporation.

Jerry

Hicks.

Amheath.

Inc.

and John and

Jane

Does

1

-10

(Case

No.

CV-2003-1883-OC).

On

April

23,

2003, the Fosters and their company

("Leadership")

filed

a complaint against our predecessor, Jerry

Hicks,

and his operating company ("Amheath"), in

the

District

Court

of

Bannock

County,

Idaho. The

plainfiffs

tried to

sell

2

restaurants

in

Pocatello,

Idaho, and

1

restaurant

in

Chubbuck,

Idaho, to Jerry

Hicks

and

Amheath.

The complaint

included

claims

against our

predecessor

for

breach

of

contract, tortious interference

with

prospective business advantage, conspiracy to

torliously

interfere

with

prospective business advantage, and breach ofthe

implied

duty

of

good

faith

contract

performance

in

connection

with

the abandoned sale. The

plaintiffs

sought an

unspecified

amount

of

damages,

reasonable attomeys' fees, costs and interest.

On

June 27, 2003, Leadership prohibited

our

predecessor's

representatives

from

inspecting I of

its

restaurants

and

notified

our predecessor

that

it

would

not

allow

future

unannounced inspections

of

its

3

restaurants.

On

July

3, 2003, our predecessor

filed

a complaint against

Leadership

in

the Federal

District

Court

for

the

District

of

Idaho asserting a

claim

of

trademark

infringement

and

material

breach

of

license

agreements

and seeking

injimctive

refief

directing

Leadership to permit our predecessor

to inspect the

restaurants

at

all

reasonable

times.

McDonald's

Corporation

y.

Leadership Systems, Inc. (Case

No.

03-0283-E-BLW).

On

July

18, 2003, the Federal

District

Court granted our predecessor's

motion

for

a

preliminary

injunction

and entered a memorandum

decision

and order

enjoining

Leadership

from

blocking

or

preventing

in

any maimer inspections conducted by our predecessor at

all

reasonable

fimes,

announced or

unannounced. The parties settled the dispute on October

31,

2003, when our predecessor acquired the

plaintiffs'

restaurants

for $2,350,000.

Dama

Sri

vs.

McDonald's

Development

Italy.

Inc. (Case

No.

11827/02).

On

October 18, 2002, a

hcensee

in

Italy,

through his operating company,

filed

a complaint against our

affihate

at the Court

of

Bologna,

Italy. The

complaint

included

claims

for

breach of contract, bad

faith

and

unfair

competifion

and sought 1.25

million

Euros

in

compensatory damages.

On

Febmary 12, 2003, our

affiliate

filed

its reply to the

plaintiffs

claims

and a

counterclaim

for 307,000 Euros plus interest and

legal

expenses

for

unpaid

rent

and

royalties.

On

December 29,

2003,

our

affiliate

and

Dama

signed a settlement

agreement,

pursuant to

which

Dama

agreed to dismiss this

lawsuit

and grant our

affihate

a general release. In exchange, our

affiliate

forgave

450,000 Euros

of

receivables

and expenses and restmctured

rents

until

2006.

McDonald's

Corporation

v.

Kristina

Denise Enterprises, Inc. and

Lynn

Robinson

(Case

No.

99

Civ.

1584). On

March

19, 1999, our predecessor sued

Lynn

Robinson,

a

franchisee,

and her operating company

in

the Federal

Disttict

Court

for

the Eastern

District

of

New

York.

Our

predecessor terminated Robinson's

franchise

for

breach

ofthe

franchise

agreement,

including

the

failure

to pay amounts

owed.

Our

predecessor's suit sought to enforce

its rights

in

connecfion

with

the

terminafion

of

Robinson's

franchise,

and

included

claims

for

injuncfive

relief

and

damages,

together

with

costs and attomeys' fees.

On

May

14, 1999, the court granted our predecessor's motion

-11-

for

preliminary

injunction,

ordering, among

other

relief,

that

Robinson retum possession

of

the

restaurant

and

stop

using the

McDonald's

ttademarks

and

other

intellectual property. Robinson

filed

a second

amended

counterclaim

on

January

10, 2000. That counterclaim alleged

that

our

predecessor's

actions in her

purchase

and operation of

1

restaurant,

and her earlier operation and

sale

of

2

other

restaurants,

constituted breach

of

the franchise

agreement,

tortious interference,

wrongful

terminafion

of

the franchise

agreement,

unjust

emichment, fraud,

conversion, and a

violation

of

18

U.S.C.

Section 1961, the

Illinois

Franchise Disclosure

Act,

New

York

General

Business Law

Secfion

687, and 42

U.S.C.

Sections 1981 and 1982. It

appeared

that

Robinson was seeking

$250

million

in

compensatory

damages

and unspecified punhive

damages.

In

April

2004, the

parties

settled their

disputes

and our

predecessor

paid Robinson $100,000. In

exchange,

our

predecessor

obtained a

judgment

against

Krisfina

Denise Enterprises for

more

than

$1.1

million,

the franchise termination was

affirmed,

and our

predecessor

retained

all

property associated with the

restaurant.

Daniel

L.

Formica

v.

McDonald's

Corporation (Case

No.

04-CV-0345).

On

March

29, 2004, a franchisee

filed

a

complaint

against

our

predecessor

in the Federal District Court for the Northem District

of

New

York

alleging

violation

of

the New

York

Consumer Protection

Act.

The complaint described Formica's experience as a

franchisee, the

financial

difficulties

he experienced, the circumstances surrounding his decision to rebuild

1

ofthe

restaurants

he

operated,

and our

predecessor's

decision not to award additional

restaurants

to

him.

On

January

27,

2005, the

parties

agreed

to

settle

the lawsuit.

McDonald's

paid $659,302 to Formica's creditors, and Formica's

franchises

were

terminated.

Abdul

Ali

AI'Amin.

Lawrence Richardson, Dukhan

Iqraa

Jihad

Mumin

and

William

Rogers, Jr. v. McDonald's

Corporation (Case

No.

8:01CV385),

filed

June

8, 2001, in the District Court

of

Douglas County, Nebraska;

Kenneth

A.

Hinton v.

McDonald's

Corporation

(Civil

Action

No.

AW-2001-1400),

filed

May 14, 2001, in the

Federal District Court for the District

of

Maryland;

Jack

L.

Chacanaca.

Dovie

D.

Chacanaca and Jack

L.

Chacanaca II v.

McDonald's

Corporation (Case

No.

F025699

RECDLB),

filed

in

the Superior Court

of

Kem

County,

Cahfomia,

and served

May

14, 2002; Bobby

Brown

v.

McDonald's

Comorafion

(Case

No.

03CV0928-

N),

filed

May 5, 2003, in the Federal District Court

for

the Northem District

of

Texas; Bobby

Brown

v. Ronald

McDonald's

Comorafion

(Case

No.

03CV1978-L),

filed

September

2,

2003,

in

the Federal District Court for the

Northem District

of

Texas; Sat

Bansal.

Bhagubhai

K.

Patel and Pushker

Raj

v.

McDonald's

Corporation.

McDonald's

Restaurants

of

Texas. Inc. and

Haljohn

Holdings,

Inc., now Pushker

Raj.

Viswanathan Ramamurthy

and

Atul

Badwal

v.

McDonald's Corporation.

McDonald's

Restaurants

of

Texas, Inc. and

Haljohn

Holdings.

Inc.

(Case

No.

GN101758),

filed

June

8, 2001, in the District Court

of

Travis

County, Texas; Glenn

D.

Shackelford v.

John/Jane

Doe, et

al.

(Case

No.

04CV-0043M),

filed

January

9, 2004, in the Federal Disttict Court

for

the

Northem Disttict

of

Texas;

Brij

M.

Sharma. Charaniit Singh and

Lisa

M.

Bertini v.

McDonald's

Corporation.

McDonald's

Restaurants

of

Washington.

Inc. and Does

1

through 100 (Case

No.

01-2-12267-3SEA),

filed

May 1,

2001, in the Superior Court

of

King

County, Washington (putafive class action, consolidated with

Block):

Vandana

Makker.

Baia

M.

Krishna and

Sunil

Khemaney

v.

McDonald's

Corporation.

McDonald's

Restaurants

of

Califomia.

Inc. and Does

1

through 100 (Case

No.

841162-4),

filed

May 10, 2001, in die Superior Court of

Alameda

County,

Califomia

(putative

class action, consolidated with

Block):

Penelope

Baim

Block

v.

McDonald's

Comorafion

(Case

No.

OICH

09137),

filed

June

4, 2001,

in

the

Circuit

Court

of

Cook

County,

Illinois

(putative

class

acfion);

and

Jeffrey

I. Zimmerman v.

McDonald's

Corporation

(Civil

Action

No.

4057 01),

filed

June

27, 2001, in the Superior Court

of

Camden County, New

Jersey

(putative

class action, consolidated

with

Block).

Since

May

2001, various

consumers

and

others

brought

actions

against

our

predecessor

asserting

that

they

believed

McDonald's

French fries

were

vegetarian when the French

fries

contained beef flavoring. Some

plaintiffs

claim

to

represent

a class of

similarly

situated consumers,

like

persons

of

the

Hindu

faith,

vegetarians,

and

persons

who do not eat

meat

for religious, ethical, health or

other

reasons.

These

actions

assert

claims for

fraud, fraudulent concealment, fraudulent inducement,

unjust

enrichment, unfair competition, and

misrepresentation; violations

of

various

state

consumer fraud

acts,

consumer protection

acts,

unfair compefition

laws, deceptive and unfair

ttade

pracfices

acts,

and related common law claims; violations

of

federal and

state

constitutional rights; and intentional and negligent

uifliction

of

emofional

distress

and mental anguish. Some

claims allege personal injuries and

others

seek

purely

financial

relief The

plaintiffs

in

these

actions generally

seek

unspecified

damages,

although

some

allege

damages

of

up

to approximately $200

million,

and many

-12-

plaintiffs

also

seek

punitive

damages,

treble

damages,

disgorgement

of

the

profits

and retum

of

the monies paid

for

the French

fries,

restitution,

injunctive

relief

(including

requiring additional disclosures conceming beef

flavoring

on

the

McDonald's

website), and recovery

of

attomeys' fees, costs, and

interest.

The applicable

trial

courts dismissed the

AI'Amin

case

on October 17, 2001, the

Hinton

case

on

June

27,

2002, the

Brown

cases

in

Febmary 2004, and the

Shackelford

case

on

May

17, 2004. Our predecessor settled the

Chacanaca

case

in July 2003 by paying the

plaintiffs

a total of

$2,000

and the

Bansal

case

in

January 2004 by

paying

plaintiffs

a total of $

1,700.

Our

predecessor consolidated some

of

the remaining

cases

with

the

Block

case

pending

in

the

Circuit

Court of

Cook

County,

Illinois.

On October 30, 2002,

that

court approved a

settlement

under

which

our predecessor agreed to: (a)

donate

$10

million

to

Hindu,

vegetarian and other charitable

organizations; (b) pay the

plaintiffs'

attomeys'

fees

of

$2.1

million;

(c) issue an apology; (d) establish an advisory

board to make recommendations on marketing to

individuals

who

follow

vegetarian dietary restrictions; and

(e)

reaffirm

its commitment to the enhanced nutritional disclosures

that

it adopted

in

August

2001.

In

May

2003,

the court

entered

a

final

order

deciding

how to distribute the

settlement

funds.

In

April

2005, the

Illinois

Court of

Appeals

affirmed

the

trial

court and rejected

all

appeals.

Motmanco.

Inc..

Fryguys.

LLC,

and

Motwest.

LLC

v.

McDonald's

Corporafion

(Case

No.

3:04-CV-270-J-

99HTS).

On

April

14, 2004, a

franchisee

served our predecessor

with

a complaint

filed

in

the Federal

District

Court

for

the

Middle

District

of

Florida.

The complaint alleged

that

in

2002,

our predecessor adopted a

Re-Imaging

and Incentive

Plan,

under

which

it agreed to pay

for

certain remodeling

expenses

at franchised

restaurants

under certain

condifions.

The complaint alleged

that

plainfiffs

satisfied

all

the conditions, but our

predecessor abandoned the plan and denied

plaintiffs

participation. In addition, the complaint alleged

that

after

Mofiey

complained

about

the plan, our predecessor denied

plaintiffs

rewrite and

unfairly

graded

plaintiffs'

restaurants.

The complaint

made

claims based on estoppel, a

violation

ofthe

Florida

Unfair

and Deceptive

Practices

Act,

negligent misrepresentation, breach

of

contract and the

implied

covenant

of

good

faith

and

fair

dealing.

Plaintiffs

sought unspecified

damages,

attomey's

fees, interest and costs. In

May

2004, our predecessor

filed

a

mofion

to dismiss the case. On July

14,

2005, the parties agreed to

settle

the case.

McDonald's

agreed to

buy

all

20

of

plaintiffs'

franchises and

restaurant

assets

for

approximately $35

million,

and the parties agreed to

dismiss

all

claims and exchange mutual

releases.

Fooditalia

S.p.A.

N.I.T.A.

srl.

SO.GE.RI.

- Societa Gestione Ristorante

srl.

C.I.A.

- Centto Italiano Alimentare

srl.

and

Mr.

Jacques

Bahbout

v.

McDonald's

Corporation and

McDonald's

Development Italy Inc.. (formerly

McDonald's

Franchising

and Operations

Company),

both Delaware corporations (Case

No.

- 15469/97). On

March

20, 1997, a developmental licensee

filed

a complaint against our predecessor and

an"affiliate

in

the First

Secfion

ofthe

Civil

Court

in

Rome,

Italy, alleging claims

for

breach

of

contract and

unfair

competition and sought

unquantified compensatory

damages.

On

November

28,

1997, the

defendants

filed

a

defense

to the licensees'

claims

and a counterclaim

for

breach

of

conttact.

On

May

22, 2003, the Court

of

Rome

rejected

all

Bahbout's

claims

and the

defendants'

counterclaims.

The

judge

addifionally

ordered Bahbout to refund legal

expenses

to the

defendants

of

55,000

euros.

On

December

28,

2005, the parties settled the case.

McDonald's

purchased the

plaintiff

operating companies,

which

operated

restaurants

and a distribution

center,

for

approximately

21

million

euros; and the parties agreed to dismiss

all

claims and exchanged mutual

releases.

BanTransFats.com. Inc. vs.

McDonald's

Comoration (Case

No.

034828); and Katherine

D.

Fettke vs.

McDonald's

Corporafion

(Case

No.

044109).

On

January 9, 2004, BanTransFats.com

filed

an amended

complaint against our predecessor

in

the Superior Court

of

the

State

of

Cahfomia,

County

of

Marin,

claiming

that

our predecessor

failed

to implement the

change

to its

cooking

oils

that

it

publicly

announced in September 2002,

and

that

it

failed

to adequately

publicize

its

failure

to make the change. The suit, brought under Section 17200 of

the

Califomia

Business and Professions

Code,

sought a court order requiring our predecessor

to;

1)

effectively

inform

the

public

that

it

failed

to

change

the new

cooking

oil

as aimounced and promised

in

September 2002;

2) post prominent notices in its

restaurants

that

it

failed

to make the change; 3) implement and complete the

change

to the new

cooking

oil;

and 4) pay reasonable attomeys' fees. In

April

2004, the court denied the

plaintiffs

motion

for

a preliminary

injunction.

-13-

On

December

29,

2004, Katherine

D.

Fettke,

in

the Superior

Court

of

the

State

of

Califomia,

County

of

Marin,

filed

an amended complaint seeking class action

status

on

behalf

of

individuals

who purchased or

consumed certain

fried

foods

from

McDonald's

restaurants.

This

plaintifTs

allegafions

were substantially the

same

as

those

in

the BanTransFats.com case.

This

plaintiff

asserted

claims

under the consumer protection laws or

statutes

of

all

50

states,

along

with

claims

for

fraud,

breach

of

contract, negligence, breach

of

warranty, strict

product

liability,

and battery.

Our

predecessor denied

all

of

the

plaintiffs'

claims

in

both cases.

To

resolve the

matter,

our predecessor

agreed to

settle

both

cases

by agreeing

to:

1)

donate

$7

million

to the

American

Heart

Association

to be used

exclusively

for

programs related to

trans

fatty acids; 2) spend at least $1.5

million

notifying

its customers about

the delay

in

changing the

cooking

oil;

and 3) pay

legal

fees, costs and expenses

of

plaintiffs'

counsel up to

$2

million.

On

Febmary 9, 2005, the court

preliminarily

approved the settlement.

On

August 24, 2005, the court

granted

final

approval ofthe settlement.

On

October 20 and

21,

2005,

2

parties

who

objected to the approval of

the settlement

filed

appeals

with

the

Califomia

Court

of

Appeals.

On

March

14,

2006, the appeals were dismissed

and the settlement became

final.

Antal.

Inc..

Nicholas

L.

Antal

and

Mary

Dianna

Antal.

Husband and

Wife

v.

McDonald's

Corporation

and

McDonald's

Restaurants

of

Oklahoma,

Inc. (Case

No.

ClV-0401441).

On September

24,

2004, former

franchisees

filed

a petition

in

the

District

Court

of

Oklahoma

County,

Oklahoma,

commencing Case

No.

CJ-2004-

7891.

Our

predecessor

filed

a notice

of

removal

on

October

27,

2004,

removing

the

case

to the Federal

District

Court

for

the Westem

District

of

Oklahoma.

The

case

was remanded back to

state

court

in

Febmary

2005.

The

petition

alleged

that

the

defendants

issued "false

field

inspecfions"

and

"false

re-investment schedules" and

threatened

to default the

plainfiffs

if

they did not

sell

their

franchises,

which

forced

plainfiffs

to

sell

their

franchises at less than their value and to forego future

profits.

The petition contained counts labeled

"Bad

Faith

Breach

of

Contract" and "Fraud and

Coercion"

and sought compensatory and

punitive

damages, costs and

attorneys' fees. In June 2006, our predecessor settled this

litigation

by agreeing to pay $300,000 to the

plaintiffs

in

exchange

for

general releases.

Sandra

Darling

and

Darling

Management

Corporation

v.

McDonald's

Comorafion.

Dean

L.

Hecker.

Robert

Rodriguez.

Elizabeth

A.

Tatman.

Howard

&

Tatman and Does Conspirators 1-10 and Does General 11-25 (Case

No.

KC

035084).

On

Febmary 9,

2001,

a former

franchisee

filed

an action

in

the Superior

Court

of

Los

Angeles

County,

Califomia,

against our predecessor, 2

of

its

former

employees and

Darling's

former

accountants. The

complaint

included

claims

for conspiracy to defraud and convert

funds,

breach

of

an

implied

covenant

of

good

faith

contract performance, and

violation

of the

Califomia

Unfair

Competition

Law

in

connection

with

our

predecessor's inspections

of

Darling's

restaurants,

our predecessor's decisions conceming new

restaurant

openings, and

Darling's

sale

of

her

restaurants

to a third party.

Our

predecessor denied the allegations and

filed

a

counterclaim.

Upon

leaming

that

Darling

had

filed

bankmptcy, our predecessor removed this

case

to the

United

States

Bankruptcy

Court

for

the

Centra!

District

of

Califomia,

which

approved the sale

of

the

litigation

to a

third

party and remanded the

matter

to the Superior

Court.

On

April

29, 2003,

a

jury

awarded the

plaintiff

compensatory and punitive damages. In January 2006, the

Califomia

appellate court reversed the judgment and

ordered a new

trial

on compensatory

damages

alone. In Febmary 2007, the

case

was settled.

Our

predecessor

paid

$4.6

million,

and the parties exchanged mutual releases.

Bob

Johnson and

Tykasa.

Inc. v.

McDonald's

Comoration

(Case

No.

CV05-5810

JFW

(AJWx)).

On

August 10,

2005,

a franchisee

filed

a complaint against our predecessor

in

the

Federal

District

Court

for

the

Central

District

of

Califomia

alleging

that

our predecessor charged excessive

rent

at

2

of

plaintiffs'

restaurants

and breached a

promise to pay certain remodeling costs. The complaint made

claims

for

breach

of

contract, breach

of

the

implied

covenant

of

good

faith

and

fair

dealing,

promissory estoppel,

fraud,

and

unfair

and deceptive

ttade

practices.

Plaintiffs

sought a declaratory judgment,

unspecified

damages, attomeys'

fees

and costs. The

case

was settled in

Febmary

2007.

Our

predecessor agreed to purchase

2

of

the

plaintiffs'

restaurants

for

about $4.35

million

(of

which

$2

million

is

guaranteed)

and to

sell

2 other

restaurants

to Johnson

for

about $1.5

million,

contingent on

government

approval.

The purchase and sale prices may change depending on whether

additional

real

estate

tenure

is obtained and when the transactions

close.

The parties also exchanged mutual releases.

-14-

Greg

Currie v.

McDonald's

Restaurants

of

Canada

Limited.

McDonald's

Corporation, and

Simon

Marketing.

Inc.

(Case

No.

02-CV-238276CMI).

On October 28, 2002, the

plaintiff

filed

a complaint in the Superior Court of

Justice

in

Toronto, Ontario, Canada, challenging the integrity ofthe random seeding

process

that

Simon

Marketing

used in

McDonald's

promotional

games,

alleging

that

the

process

was compromised by a

Simon

Marketmg

employee. The

plaintiff

claimed

to

represent

a class

of

consumers who purchased

food

and otherwise

participated in the promotions. The

plaintiff

alleged violations

of

the Canadian Competition

Act,

deceit, breach of

conttact,

and negligence and

sought

compensatory and punitive

damages

and disgorgement

of

profits. On

May

10, 2007, the

parties

entered

into a Settlement Agreement,

pursuant

to

which

McDonald's

agreed

to make

available one

$1

million

prize in a promotional

game

in Canada before the end

of

2009. The prize was awarded in

2008 and the lawsuit has

been

dismissed.

James

W.

Garrett. Bonita

L.

Garrett, the

James

W.

Garrett Tmst and the

Bonita

L.

Garrett Tmst

v.

McDonald's

Corporation.

Bemie Schaefer. Sarah Zenger. John Does

1-V.

Jane

Does

1-V.

Comoration

I-V

(Case

No.

C20046486). On December 1, 2004,

plainfiffs

filed

a complaint in the Superior Court

for

the

State

of

Arizona,

County

of

Pima,

alleging

that

in 2000 our

predecessor

decided to rewrite

1

of

plaintiffs'

franchises without

disclosing

that

it had decided not to rewrite

plaintiffs'

2 remaining

franchises,

which

were not scheduled lo be

considered

for

rewrite until 2004.

Plaintiffs

asserted

claims for tortious breach of

an

implied

covenant

of

good

faith

and

fair

dealing, negligent misrepresentation,

fraud

by concealment/deceit, and

fraud

by misrepresentation.

Plaintiffs

further

asserted

claims

against

Schaefer and Zenger

for

breach of

fiduciary

duty/constmctive fraud and

aiding

and abetting the commission

of

a

tort.

Plaintiffs

sought

unspecified compensatory and punitive

damages,

costs, and

interest.

Our

predecessor,

Schaefer, and Zenger removed this

case

to the Federal

District

Court for the

Disttict

of

Arizona,

and

in

March

2006, the court granted Schaefer's and Zenger's motion to dismiss. In December

2007, the

parties

settled the

case

when the

plaintiffs

sold their franchise to one

of

our

affiliates

for $1,975,000.

Council

for Education and Research on

Toxics

v.

McDonald's

Corporafion

and Burger

King

(Case

No.

BC280980);

and People

v.

Frito-Lay.

Inc., Pepsico, Inc..

J.J.

Heinz,

Inc.. Kettle Foods. Inc..

KFC

Comoration.

Lance,

Inc.. The Procter

&

Gamble

Distribufing

Company.

The Procter

&

Gamble

Manufacturing

Company.

Wendy's Intemational. Inc..

McDonald's

Corporafion

and Burger

King

(Case

No.

BC338956).

On September 5,

2002, the

Council

for

Educafion

and Research on

Toxics

("CERT")

filed

a complaint

against

our

predecessor

and

Burger

King

in the Superior Court

for

Los

Angeles County,

Califomia,

alleging

that

French

fries

contained

acrylamide, and

that

our

predecessor

and Burger

King

had a duty since January 1, 1990, to "wam their

customers

that

their French

fries

contain a chemical known by the

State

of

Califomia

to

cause

cancer."

CERT

claimed

that

our

predecessor

and Burger

King

violated Proposition 65 and the

Califomia

Unfair

Compefition

Act.

The

complaint

sought

an

injunction,

product wamings,

civil

penalties,

attorneys'

fees,

and costs. On August 26, 2005,

the

Califomia

Attomey General

filed

suit

against

all

the

defendants

in

the

CERT

case,

and

others,

in the Superior

Court

for

Los

Angeles County,

Califomia,

alleging

that

all

the

defendants'

products contained acrylamide, and

that

their

failure

to wam violated Proposition 65 and the

Cahfomia

Unfair

Competifion

Act.

The complaint

sought

injuncfive

relief

requiring warnings,

civil

penalties, and costs.

On

November

13,

2007, the action

filed

by

the

Califomia

Attomey General was settled by our

predecessor

paying $666,000 in

civil

penalfies and $275,000 in

attomeys'

fees

and agreeing to

post

a warning in

all

McDonald's

restaurants

in

Califomia.

On

March

7, 2008, our

predecessor

settled the

CERT

case

by paying $1.4

million

to

fully

resolve

all

claims.

H.

Keith

Mehon,

Mark

M.

Watson, and

Melton

Management. Inc. v. Charles Robeson and

McDonald's

USA,

LLC

(Case

No.

50 2008

CA040438).

On

December

23,

2008, franchisees and their operating company

filed

a

complaint

against

Charles Robeson and us

in

the

Circuit

Court

of

Palm

Beach County,

Florida.

The action was

filed

in

response

to a lawsuit we

filed

against

the

plaintiffs,

McDonald's

USA.

LLC

v.

Melton

Management. Inc.

H.

Keith

Mehon.

and

Mark

Watson (Case

No.

8:08-cy-2303-T17TBM),

on November 18, 2008, in the Federal

District

Court

for

the

Middle

District

of

Florida.

In addition to the

state

court action, the

plaintiffs

filed

a motion

to dismiss and

stay

proceedings in our federal action. The

state

court complaint

asserted

claims for fraud,

negligent misrepresentafion, and tortious interference

with

prospective

business

advantage.

The

plaintiffs

sought

unspecified monetary

damages,

attomey's

fees,

costs, and

interest.

The

parties

settled this

litigation

on

December 30, 2009, with our purchasing 7

of

Melton's

franchises and settiing

all

claims for $10,330,844, plus

other

terms

including

offering

Watson

1

of

the purchased franchises for $320,000. The

parties

also exchanged

mutual

releases.

-15-

Collection

or

Filed

in

30102011

Against

Franchisees

McDonald's

Sistemas de Espana. Inc..-Sucursal en

Espaiia

(MSE) vs

Gesar-Julia-(Gase

No.-623/2010).

filed

March

22, 2010,

in

the Ist'lnstanco

Court

n. 1 of

Hospitalot

do

Llobregat,

Spain.

McDonald's

Sistemas de

Espana.

Inc.. Sucursal en Espana

(MSE)

vs

Jose

Alcalde

&

JOFICRISAL

SL

(Case

No.

1698/2010),

filed

July

30, 2010,

in

tho

Civil

Court

No.

88

of

Madrid,

Spain.

McDonald's

France vs

Brescia

Investissement.-and Franoesco

Brescia

(Gase-NorRG

2010

F-03975).

filed

Soptombor

22,

2010,

in

tho

Commorcial

Court

of

VorGaillos,

Franco.

McDonald's

Dovolopmont

Italy. Inc.

vo HP

Hamurger

&

Patafinc

(Case

No. RG

616^5/2010),

filed

October 18,

2010, in

the Court

of

Romo,

Italy-

McDonald's

Dovolopmont

Italy. Inc. vs

Tilly ori

(Caso

No. RG

3563/2010).

filod

Octobor

21. 2010. in

the Court

of

Rome,

Italy.

MoDonald'G

Siotomao do Espana. Inc.. Sucursal on Eopana

(MSE) vo

JOFICRISAL

SL

(Case No.1076/2010).

filed

December

22,

2010,

in

the-Commercial

Court

No.

2

of

Barcelona,

Spain.

McDonald's

USA. LLC v.

Nathan

Pvles

(Case

No.

11-2378).

filed

August

19.

2011,

in

the

Circuit

Court ofthe

Fifth

Judicial

District.

Marion

County.

Florida.

McDonald's

Hellas

M.E.P.E.

vs.

Deligiannis

EPE

(Case

No.

147/2011),

filed

January 7. 2011,

in

the Magistrates

Court

of

Athens.

Greece.

McDonald's

Hellas

M.E.P.E.

vs.

Deligiannis

EPE

(Case

No.

42902/3290/2011).

filed

March

9.

2011. in

the Court

of

Athens.

Greece.

McDonald's

Hellas

M.E.P.E.

vs.

ETEX SA

and

Mrs. M.

Kontiza

(Case

No.

84232/1182/2011).

filed

May 12,

2011. in

the

Multi-Member

First

Instance

Court

of

Athens.

Greece.

McDonald's

Development Italy. Inc. vs Ristorante Veroneseper

famighe

(Case

No. RG

313/10).

filed

May 18.

201L in

the Court of

Milan.

Italy.

McDonald's

Holdings

Companv (Japan).

Ltd.

vs.

Hayakawa

Foods

Co. Ltd.

(Case

No.

17194).

filed

Mav

26.

2011, in

the

Tokyo

Disttict

Court.

Japan.

McDonald's

Suisse Franchise

Sari

vs.

Mrs.

Kathleen Strasser

(CaseNo.

JPl

1.034305).

filed

September

12.

2011,

in

the

Patrimonial

Court

of

the Canton

of

Vaud,

Lausanne.

Switzerland.

Occasionally,

disputes arise

with

our

franchisees.

If a

dispute carmot be resolved through our intemal

processes

such as appealing to higher

level

individuals

(our "open door

policy")

or our

formal

Ombudsman

process, then as a

matter

of

common

pracfice

(not required by the Franchise Agreement) we

will

often

agree

to

use

mediation.

Even

though we

follow

these

practices,

occasionally

lawsuits

alleging

the

same

or

similar

allegafions

to

those

listed

in

this Item

3

have been brought against us or our predecessor and

could

be brought

against us

in

the future.

Other than

these

actions, no

litigation

is required to be disclosed

in

this Item.

Item

4

Bankruptcy

No

person

previously

identified

in

Item

1

and no

officer

identified

in

Item

2 of

this disclosure document

has been

involved

as a debtor

in

proceedings under the

U.S.

Bankruptcy

Code,

or

foreign

bankmptcy laws,

required to be disclosed

in

this Item.

Item 5

Initial

Fees

All

franchisees pay a $45,000 lump sum

inifial

franchise fee on the opening

of

the

restaurant,

except

for:

(a) the

McOpCo

companies,

which

do not pay any

initial

franchise

fee;

(b) franchisees

of

locations having

10

years

or less of

real

estate

tenure

will

pay

a

prorated

initial

franchise

fee based on the term

of

the franchise;

(c)

franchisees

who

rebuild

or relocate their

restaurants

will

pay the

initial

franchise

fee less a credit

for

a portion

-16-

of

the previously paid

initial

franchise fee, on the earlier

of

the first

of the

month after the seventh year after the

opening of

the

rebuilt or relocated

restaurant,

or the end

of the

term (see Item 7,

note

I);

(d)

franchisees

of

Satellite

locations, who are required to pay a $500

initial

franchise fee upon opening of

the

Satellite

(except franchisees of

Walmart

locations, who pay no

initial

franchise

fee) and an annual fee (see

Item 6); (e) franchisees of

STO

and

STR

locations pay a $22,500 lump sum

initial

franchise

fee; and

(f)

franchisees who have an option to purchase

assets

under a

BFL

pay the $45,000

initial

franchise

fee when they

exercise the

option.

The entire

initial

franchise fee

will

be refunded

if the

restaurant

constmction is not completed

within

1

year ofthe

date

the Franchise Agreement is signed. There are no refunds under other circumstances.

Item

6

Other

Fees

OTHER FEES

Type

of

fee

Amount

Due

Date Remarks

Service

Fee

(1)

4% of

Gross

Sales

(2)

Payable monthly on

the

10th day of the next month.

"Gross

Sales" include

all

revenues

from

your

sales

based upon all

business

conducted

at

or

from

the

restaurant,

but exclude

sales

or use

tax.

Rent(l)

Varies

(3)

(4)

Base Rent:

Payable on

the

1

st

day

of

the month.

Percentage

Rent:

Payable monthly on

the

10th day of the next month.

Advertising

and

Promotion

(5)

Not

less than 4% of

Gross

Sales

Spent during each calendar

year.

Most

franchisees

participate

in

local

advertising cooperatives and

the

national advertising

fund

("OPNAD").

The contribution

rates

are established by the franchisees

and, depending upon

then-current

advertising

costs

and

needs,

may or

may not exceed the required 4% of

Gross

Sales. "Grand Opening"

promotions are strongly

recommended.

Audit/Inspection

Fee (1)

Cost

of audit Immediately upon

billing.

Payable

only

if

audit/inspection fee

shows an

understatement

of

at

least

2%

of

Gross

Sales.

Satellite

Annual

Fee

(1)

$500 to $2,500

On

each anniversary of

opening or on a

fixed

date

annually.

Satellite Rent(l)

Varies

(6)

Payable monthly on

the

10th day

of

the next month.

STO

and

STR

Rent(l)

Varies

(3)

(7)

Same as Rent above.

BFL

Rent(l)

Varies

(3)

(8)

Same as Rent above.

Relocation

Contribution

(1)(9)

$50,000

On

opening

of

the relocated

restaurant.

NewPOS

Integration Fee

(!)

$1,000 integration fee

(one-time fee) (13)

$200 annual

integration fee

Payable annually (July

1)

within

30 days

of

billing.

You

pay the annual integration fee

to

us for the integration

of

your

store

system

platform.

Restaurant

File

Maintenance

(RFM)

Fee

(1)(11)(14)

$150 Payable annually (July

1)

within

30 days of

billing.

You

pay this fee to us

for

the annual

maintenance

of

RFM.

-17-

Type

of

fee

Amount

Due

Date Remarks

R2D2

Software

Maintenance Fee

(1)

$125 Payable annually (Julv

11

within

30 days

of billing.

Your

participation in

the

R2D2

program is

optional.

See

Item

11.

NewPOS

Software

Fee

(i)(io)-

$1,600 license

fee

(one-time fee)

(13)

$400 annual software

maintenance

fee

Payable annually (July

1)

within

30 days

of billing.

You

pay

the

annual software

maintenance fee

to us

and

we

remit

payment to

RDI,

our

affdiate,

which

owns

the

portion of the

VSI

business

that

serves

the

McDonald's

System.

See Item

1.

Fee

(1)(I2)(15)(16)

$216 license fee (one-

time fee)

$154 annual

maintenance

fee

Payable annually (Julv

1)

within

30

days of

billing.

You

pay

these

fees

to us

and

we

remit payment

to a

third-party

vendor.

Help

Desk Support

Fee

(10)

$2,040

Payable in monthly

installments of $170.

You

pay this fee

to our

affiliate,

RTS.

See Item

1.

Microsoft

Subscription

License

(1)

(11)

(16)

$449 Payable annually

fJulv

1)

within

30 days

of billing.

You

pay

this fee

to us

and we remit

payment

to

Microsoft.

Restaurant System

Management

(RSM)

(1)(11)(16)

$250 Payable annually (July

1)

within

30 days

of billing.

You

pay

this fee

to us

for

the

annual

maintenance of

RSM.

Restaurant Integrated

Data

Movement

(RIDM)

Fee

(I)

(11) (16)

$75 Payable annually (July

1)

within

30 days

of billing.

You

pay

this fee

to us

for

the

annual

maintenance of

RIDM.

e*Restaurant Fee (1)

(11)

(16)

$54 Payable annually (July

1)

within

30 davs

of billing.

You

pav

this fee

to us

for

the

annual

maintenance of.

and

enhancements

for.

this integrated back

office

suite

of

products.

Identity Management Fee

(i)(in(i6)

$75 Pavable annually (July

1)

within

30 days

of billing.

You

pav

this fee

to us

for

the

annual

support and maintenance of

restaurant

crew identity security

management software.

Store

Mail

(email

accounts)

Fee

$79.80 Pavable annually

within

30 davs

of billing.

You

nay this fee

to us

for annual

email

account support for using

the

us.stores.mcd.com domain.

(1)

All

fees

are imposed and collected by and payable to

McDonald's.

All

fees

are non-refundable and

uniform.

We

will

automatically draft

rent

and service

fees

from

your bank account

according

to the

terms

ofthe Franchise Agreement.

We

also may draft miscellaneous receivables

that

you

owe us,

provided

you

confirm

the amount of

each

draft.

(2) 4.5%

of

Gross

Sales

in

Alaska,

Hawaii,

Guam,

and the

Northem

Mariana

Islands.

(3) The

following

is the

rent

stmcture

for

new

restaurants

and

for

new term

franchises

for

existing

restaurants:

Fixed

Percentage

Rent

with

Monthly

Base

Rent

Monthly

Base

Rent

All

restaurants

will

have a

Monthly

Base

Rent.

For

a site where both the land and the

building

are owned

by

McDonald's

or its

affiliates,

Monthly

Base Rent is based upon the total amount invested by

McDonald's

in

the

acquisition

and development

of

the land and the

building.

A

finance

factor is applied

to this amount to produce an appropriate retum

for

McDonald's.

For

a site where the land and/or

building

is leased by

McDonald's

from

a

third

party.

Monthly

Base Rent is based upon the total amount

invested by

McDonald's

in

the acquisttion and development

of

the

land

and the

building

as

well

as

monthly

rent

paid to a third party

landlord.

A

fmance

factor is

applied

to each

of

these

amounts

to

-18-

produce

an

appropriate

retum

for

McDonald's.

You

must

pay

this

amount

every month

of

the

franchise

term.

Fixed

Percentage

Rent

The

Fixed

Percentage

Rent is

for

new

restaurants

that

opened

on or

after

June

13,

2007, generally

computed

as

follows:

McDonald's

Total

Acquisition

and

Development Costs Franchisee's

More Than

Up

to

Fixed

Percentage

$0.00

$900,000 8.50%

$900,000.01

$910,000 8.75%

$910,000.01

$920,000 9.00%

$920,000.01

$930,000 9.25%

$930,000.01

$960,000 9.50%

$960,000.01

$990,000 9.75%

$990,000.01

,

$1,020,000

10.00%

$1,020,000.01

$1,050,000

10.25%

$1,050,000.01

$1,080,000

10.50%

$1,080,000.01

$1,140,000

10.75%

$1,140,000.01

$1,170,000

11.00%

$1,170,000.01

$1,200,000

11.25%

$1,200,000.01

$1,230,000

11.50%

$1,230,000.01

$1,260,000

11.75%

$1,260,000.01

$1,290,000

12.00%

$1,290,000.01

$1,320,000

12.25%

$1,320,000.01

$1,350,000

12.50%

$1,350,000.01

$1,380,000

12.75%

$1,380,000.01

$1,410,000

13.00%

$1,410,000.01

$1,470,000

13.25%

$1,470,000.01

$1,530,000

13.50%

,

$1,530,000.01

$1,590,000

13.75%

$1,590,000.01

$1,650,000

14.00%

$1,650,000.01

$1,810,000

14.25%

$1,810,000.01

$1,910,000

14.50%

$1,910,000.01

$2,010,000

14.75%

$2,010,000.01

$2,110,000

15.00%

$2,110,000.01

$2,210,000

15.25%

$2,210,000.01

$2,310,000

15.50%

$2,310,000.01

and

above

Established

on

a

case^

The

Fixed

Percentage

Rent

for

new term

franchises

for

existing

restaurants

that

opened

before

June

13,

2007,

is generally computed as

follows:

McDonald's

Total

Acquisition

and

Development Costs Franchisee's

More Than

Up

to

Fixed

Percentage

$0.00

$750,000 8.50%

$750,000.01

$780,000 8.75%

$780,000.01

$810,000 9.00%

$810,000.01

$840,000

9.25%

$840,000.01

$870,000 9.50%

$870,000.01

$900,000 9.75%

$900,000.01

$930,000

10.00%

,

$930,000.01

$960,000

10.25%

$960,000.01

$990,000

10.50%

-19-

McDonald's

Total

Acquisition

and

Development

Costs

Franchisee's

More Than Up to Fixed

Percentage

Rent

Rate

$990,000.01 $1,020,000

10.75%

$1,020,000.01 $1,050,000

11.00%

$1,050,000.01 $1,080,000

11.25%

$1,080,000.01 $1,110,000

11.50%

$1,110,000.01 $1,140,000

11.75%

$1,140,000.01 $1,170,000

12.00%

$1,170,000.01 $1,200,000

12.25%

$1,200,000.01

$1,230,000

12.50%

$1,230,000.01 $1,260,000

12.75%

$1,260,000.01

$1,290,000

13.00%

$1,290,000.01 $1,320,000

13.25%

$1,320,000.01 $1,350,000

13.50%

$1,350,000.01 $1,380,000

13.75%

$1,380,000.01 $1,410,000

14.00%

$1,410,000.01

and above

Established

on a case-by-case basis

The

Fixed

Percentage Rent is payable only

if

the monthly Gross Sales exceed the monthly

base

sales

figure

which

is computed by

dividing

the

dollar

amount

of

the

Monthly

Base Rent by the

Fixed

Percentage Rent

rate.

The

Fixed

Percentage Rent

for

new term

franchises

will

not be

lower

than the

Fixed

Percentage Rent in

the previous

franchise

term.

While

the table shown above

references

total

acquisition

and development costs, you should be aware

that

the table is the end resuh of

a

process by

which

McDonald's

gives consideration to many economic

factors

including

the

amounts

of

typical

franchisor

and franchisee investments, the ratio between our

investment and your investment, potential

rates

of

retum on investment, the ratio between what we think

might be our potential retum and yours, and the amount

which

we have at risk.

Varying

Fixed

Percentage

Rent factors have resulted

in

an

average

factor

which

is used

in

Item 19,

which

includes pro

forma

profit

and loss

statements.

The

percentages

used

in

computing monthly payments based on Gross Sales are determined by

McDonald's

management

in

consideration ofthe

rights

being granted by the Franchise Agreement, the

drawing

power

of

the

McDonald's

restaurant,

the value

of

the

McDonald's

System as a whole and

McDonald's

interests

in

obtaining

a

profit

in

fight

of

competifive

condifions.

All

payments

made

by.you

to

McDonald's

constitute a single

financial

arrangement

between

you

and

McDonald's

which,

taken as a

whole

and without regard to any designation or

description,

reflect

the value

of

the rights being

made

available

to

you

by

McDonald's

and the services being rendered by

McDonald's

during

the franchise

term. The

percentages

may vary among franchises depending upon when the

franchise

was

sold

as

well

as other

factors.

In unusual circumstances

that

involve

special costs, the

fees

paid by you may be higher

than

those

oufiined

in this Item 6.

(4)

We

have adopted a

policy

that

allows

co-investment

in

the

building

and site improvements

of

a

new or

relocated

restaurant

for

a reduction

in

the

Fixed

Percentage Rent and

Monthly

Base Rent,

if

certain

ehgibihty

condifions

are met.

You

are not required to participate under this

policy.

If

the

eligibihty

conditions

are met and you elect to co-invest, the co-invested amount is

in

addition

to the

initial

investment described

in

Item 7. The

terms

and criteria

of

this

policy

differ

slightiy

for

new

and relocated

restaurants

and are

listed

below.

We

may

apply,

modify,

or terminate this

policy

at any time at our

discretion.

-20-

Terms:

For

both

new and relocated restaurants, the general terms are as

follows:

(a)

you

have the

ability

to

reduce your stated percentage rent

in

increments

("quarters")

of

.25%,

down

to the applicable

co-investment

minimum

stated rent; (b) the cost to co-invest

is

determined

using

a standardized approach

that

blends the investment tiers and the related percentage rent

rates

ofthe

Fixed

Percentage Rent Chart

and

will

be no less than $30,000 per quarter; (c)

you

must pay the

addifional

investments to us; (d)

you

may

pay the

additional

investments in cash or

you

may

finance

them,

for up

to

10

years,

with

your

own

lender (we do not arrange

for

any

financing

of

these

additional

investments), but

you

may not use the

building

or leasehold improvements as

collateral

for

your

loan;

and (e) we

will

retain

full

ownership of,

and

legal

title to, the

building

and leasehold improvements, but

you will

get the tax

benefits

associated

with

your co-investment amount.

If

our investment is over

$2,310,000,

these

terms

will

be decided on a

case-by-case basis.

Co-Investment

Criteria and Calculation for New

Restaurants:

For

new restaurants, the

following

criteria

apply:

(a) our

real

estate

tenure

at the

location

is at least

20 years; (b) our development costs are more than $1,170,000; (c) the

Fixed

Percentage Rent is over

11%;

(d) your

franchise

for

the

restaurant

is

20

years; and (e)

if

the

restaurant

is

on

property leased by us, we do

not pay any percentage rent to our

landlord.

For new

restaurants, the co-investment

floor

for

the

calculation

(to determine the cost per quarter, number

of

quarters

available,

and

maximum

rent reduction) is

11%.

When

you

select the actual co-investment

amoimt,

the corresponding percentage rent

reducfion

is

applied

to the rent stmcture

that

was established

for

the

restaurant

prior

to the co-investment

decision,

but rent may not be reduced

below

8.50%.

Co-Investment

Criteria and Calculation for

Relocated

Restaurants:

For

relocated restaurants, the

following

criteria

apply:

(a) our

real

estate

tenure

at the

location

is at least

20 years; (b) your

franchise

for

the

restaurant

is

20

years; and (c)

if

the

restaurant

is on property leased by

us, we do not pay any percentage rent to our

landlord.

For

relocated restaurants, the co-investment

floor

(for

the

calculafion

to determine the cost per quarter,

number of quarters

available,

and

maximum

rent reduction)

is

the

existing

restaurant's

stated percentage

rent or

11%,

whichever is

lower,

but not below 8.50%.

When

you

select the actual co-investment

amount, the corresponding percentage rent

reducfion

is

applied

to the rent stmcture

that

was established

for

the

restaurant

prior

to the co-investment

decision,

but rent may not be reduced

below

8.50%.

(5)

Not

payable to

McDonald'sus.

While

the

McOpCo

companies are

voting

members

of

the

local

advertising

funds

and

OPNAD,

they do not have

controlling

voting

power.

(6)

AU

Satellite

restaurants

will

have an

Annual

or

Monthly

Base

Rent.

The rental charged

for

a

Satellite

is

determined on a case-by-case basis by

McDonald'oour

management. The rent

will

vary depending on

McDonald'sour

investment, rent

paid

to the head

landlord,

length of

termj

projected

profitability,

and

retum on investment.

(7) The

following

is

the rent stmcture

for STO

and

STR

locations:

Small Town

Oil

and Small Town Retail

Locations

Fixed

Percentage

Rent

with

Monthly

Base

Rent

Monthly

Base

Rent

All

restaurants

will

have a

Monthly

Base

Rent.

For

STO

and

STR

locations.

Monthly

Base Rent is

calculated

in

the same manner as described

in

this Item, note

3. You

must pay this amount every month

ofthe

franchise

term.

Fixed

Percentage

Rent

The

Fixed

Percentage Rent

for STO

locations is generally

10.5%

of

Gross

Sales. The

Fixed

Percentage

Rent

for STR

locations is generally 9%

of

Gross

Sales.

-21-

(8) The

rent

stmcture for

BFLs

is

geBefally

as desoribed-in-this-ltemrnote-3'determined by us

on

a case-by-

case

basis. A

BFL

franchise

may be

offered

by

McDonald's

after

considering

various

factors,

including

your

personal

financial

net worth and

liquidity,

projected pre-opening and opening expenses at the

proposed

restaurant,

and the projected sales volume and operating expenses at the proposed

restaurant

during

the first

3

years of

operation.

Under a

BFL

you

may have a

conditional

option to purchase the

franchise

and the

restaurant

equipment, signs, and certain other

assets

after the

first

year

of

the franchise

term. The

minimum

option price

for

new and

existing

restaurants

is determined by

McDonald's

on a

case-by-case basis.

(9) The relocation contribution is required

if

you

relocate your

restaurant

to a new site.

(10)

Applies

to

restaurants

that

use the Store System 4.x and 6.x technology platforms.

(11)

Applies

to

restaurants

that

use the Store System 6.x technology

platform.

(12)

Applies

to

restaurants

that

use the Store System 6.5 technology

platform.

(13)

For

new

restaurants,

this fee is paid to our approved

POS

suppliers and they remh payment to us.

(14)

For

new

restaurants,

this fee is not

paid

in

the

first

year.

(15) The one-time $216 license fee is paid to us and we remit payment to a third-party vendor.

After

the first

year, the only recurring fee is a $154 armual maintenance and hosting

fee

that

is paid to us and

that

we

remit to a third-party vendor.

(16)

For

new

restaurants,

this fee is paid

in

the

first

year to our approved technology equipment supphers or

POS

suppliers and they remit payment to us.

Item

7

Estimated

Initial

Investment

YOUR

ESTIMATED

INITIAL

INVESTMENT

Type

of expenditure

Amount

Method

of

payment

When

due

To

whom payment is

to be

raade

Initial

Franchise Fee $45,000(1)

$22,500(1) (2)

$0 to $500 (3) (4)

Lump

Sum

On

opening (1)

McDonald's

Real

Estate and

Building

- 3 Months'

rent(5)

Base Rent $450 to $310,500 (6)

$750 to $30,60011,100

(2) (6)

$1,425 to $16,65047,400

(3) (6)

Percentage Rent 0% to 42.50% (7)

4.00% to

4^?T3O17.50%(2)

4.25%

to

3^TW24.50%

(3)

Monthly

Base:

Before

Opening

Percent:

10th of

following

month

McDonald's

Signs,

Seating,

Equipment,

and

Decor

$791.000707.700 to

$1.129.5001.353.600 (8)

$602.000604.400 to

$84».0QQ819.000

(2) (8)

$50,000 to $396,000 (3) (8)

Lump

Sum

Before

Opening

Vendors

-22-

Type

of expenditure

Amount

Method

of

payment

When

due

To

whom payment is

to be

made

Opening

Inventory

$11.1006.000 to $27.00010.000

$12,000 to $25,000 (2)

$8^0009.000 to $+4^17.000 (3)

Lump

Sum

Before

Opening

Vendors

Miscellaneous

Opening

Expenses

$5^.00060.300 to $57.10061.600

As

Incurred

As

Incurred

Vendors

Utilities

Travel

and

Living

Expenses

While

Traveling

$3,000 to $3%00023,000 (9)

As

Incurred

As

Incurred

Airlines

Hotels

Restaurants

Additional

Funds - 3

Months

$445^182.000 to

$50^^322.000(10)

$444.000120.000 to

$221.000239,000 (2) (10)

%§:ym9\.000

to $91.500112.000

(3)(10)

As

Incurred

As

Incurred

Employee

Suppliers

Utilities

TOTAL

(11) $1.068.8501.004.450 to

$1.892.1002.155.700 (5) (11)

$8^7^250822^10

$1.225.5001.231.200 (2) (11)

$172.125214.725 to

$627.050657.500 (3) (11)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Franchisees who

rebuild

or relocate their

restaurants

will

pay the

initial

franchise

fee on the earlier of

(a) the first ofthe month after the seventh year after the opening

of

the rebuilt or relocated

restaurant;

or

(b) the end

of

the previous

franchise

term.

AppHes

to

STO

and

STR

locations.

Applies

to Satellites.

See Item 5.

McDonald's

acquires real

estate

and

building

and

franchises

the right to

operate

at the

location.

Amounts

shown

as

rent

are

part

of

the

overall

economic package

of

fees

as described

in

Item 6.

Special

site

restaurants

may be higher.

See Item 6,

note

4.

Varies

due to size

of

building,

location,

estimated

sales

volume,

transportation

charges

and

sales

tax. If

you

request

changes

to the

building,

payment

for

the

requested

changes

may be required before signing

the Franchise Agreement. The cost of

our

basic Store System 6.5 computer

platform

ranges

from

$50,000

to $60,000,

which

includes the

POS,

in Store Processor,

Cashless, computer hardware,

software, and related equipment.

(9) Cost varies due to distances from

Regional

Offices

and Oak

Brook,

Illinois,

and

costs

of

living

in

various

areas

of

the country.

(10)

You

may or may not need capital to support

ongoing

expenses, such as employee wages,

utilities,

payroll

taxes, legal and accounting fees,

travel,

advertising,

promotion,

outside services,

linen,

operating supplies,

small

equipment, maintenance and repair,

office

supphes, cash

shortages,

insurance,

debt

service, and

non-product purchases, as

well

as additional opening

capital

for

other

variable

costs. These

figures

are

estimates

and

McDonald's

cannot

guarantee

that

you will

not have

additional

expenses

starting the

business.

Your

costs

will

depend on factors such as how

well

you

follow

McDonald's

methods

and

-23-

procedures; the

sales

volume

of

your

restaurant;

your

management

skill,

experience, and business

acumen;

local

economic conditions; the

local

market

for

our product; the

prevailing

wage

rate;

competition;

your

rent

stmcture; and whether your

restaurant

is an

STO. STR,

or

a

Satellite location.

Restaurants

opening

in

cold

weather months may be more

likely

to need capital in the

initial

3-month

period

because

restaurant

sales

are

typically

lower.

(11) We have relied on the combined 5657

years

of

restaurant

business experience

that

we and our predecessor

have to compile

these

estimates.

You

should review

these

figures

carefully

with a business advisor before

making

any decision to purchase the

franchise.

These

figures

do not include

percentage

rent

or service .

fees.

We

have

offered

and continue to

offer

for

sale

restaurants

owned

by

McOpCo

companies. No

sales

prices

in

20102011 exceeded the high end

of

the

initial

investment range.

Items

Restrictions

on

Sources

of

Products

and

Services

Except

as noted

below,

McDonald's

does

not require

that

you

purchase or

lease

goods, services, supplies,

fixtures,

equipment, inventory, or computer hardware and software

from

McDonald's

or our

designees

in the

establishment or operation

of

your

McDonald's

restaurant

business.

As

described

below,

we require

that

these

items and sources

of

supply

meet

the

specifications,

requirements, and

standards

that

McDonald's

has, in its sole

business judgment, formulated

for

use

in

the

McDonald's

System. Except when an ongoing

restaurant

business is

sold,

or except as otherwise noted, neither

McDonald's

nor any

affiliate

sells

fixtures,

equipment,

food,

or

supphes

to our franchisees; and

none

of

our

officers

own any interest in any

of

our approved supphers.

McDonald's

may

negotiate

with approved suppliers

in

an

effort

to

seek

favorable

offers

for

the benefit

of

the

McDonald's

System

(including

offers

on price and other purchasing terms). However, our franchisees are free to

negotiate

their

own

purchasing

terms

with

approved suppliers at any time. In certain instances,

if

you

participate

in

programs

involving

the

test

or early implementation

of

new products, equipment, software, or other items, we

may

install

these

items

in

your

restaurant

at our cost. If

these

products, equipment, software, or other items are

ultimately

approved

for

use

in

your

restaurant,

you may be required to reimburse us

for

the items and related

costs. These obligations

will

be

specified

in the

test

or early implementation letter signed by you and

McDonald's.

McDonald's

strives

for

the maintenance

of

quality

and

uniformity

throughout the

McDonald's

System

by

identifying

standards

for

the purchasing,

distribution,

preparation, and service

of

goods, services, supplies,

fixtures, equipment, inventory, and computer hardware and software.

We

consider the specifications,

requirements, and/or

standards

for

food,

equipment,

information

technology, purchasing, distribution,

preparation, and service to be

of

critical

importance to the success

of

the

McDonald's

System, and therefore

require

that

you

deal only with suppliers

that

have been approved by us.

If you

desire to use a particular supplier

not already approved by

McDonald's

and

if

that

supplier

meets

the

specifications

and requirements ofthe

McDonald's

System, then

that

supplier

may,

under conditions described

below,

become an approved supplier

for

your

specific

restaurant.

Costs associated with gaiiung approval statiis may be your

responsibility

and/or the

supplier's where existing suppliers are capable

of

providing

an

existing

product. Detailed

food

product

specifications are not generally issued to

franchisees,

but may be

made

available upon your

request

to us and

upon your agreeing to maintain certain

confidentiality

obHgations. Other

food

preparation and equipment

requirements and

standards

are provided to you in our Operations and

Training

Manual

and through other

pubUcations provided to our franchisees.

In

order

for a

supplier to be accepted by

McDonald's

as an approved source of

supply,

a

request

for

acceptance

must be forwarded to our Supply

Chain

Management Department and other appropriate

departments

for

consideration. The designated Supply

Chain

Management

professional

apphes

the

following

general criteria

in

considering whether the supplier

will

be designated as an approved source

of

supply:

(1)

Ability

to consistently make the manufactured product to

McDonald's

standards,

requirements,

and/or

specifications.

-24-

(2) Agreement to protect

McDonald's

confidential

information

and the

secrets

behind the uniqueness

of

McDonald's

products

from

dissemination to others, through production

of

private brand

name

products for

McDonald's.

(3)

Production,

dehvery, and service

capability,

be it

local

or

national,

to

meet

supply and service

commitments as

well

as to insiu-e

safe

food

as

specified

by

McDonald's.

(4) Integrity

of

ownership (to

assure

that

its association

with

McDonald's

would

not

bring

ill will

upon

McDonald's

or

be

inconsistent

with

McDonald's

image).

(5)

Financially

sound

condition.

(6)

Compliance

with

all

federal,

state,

and

local

laws and

McDonald's

Code

of

Conduct

for

Suppliers.

McDonald's

may elect not to accept a supplier as an approved supplier

if

McDonald's

determines,

in

its

sole

judgment,

that

there

are a

sufficient

number

of

approved suppliers at

that

time

for

the

McDonald's

System.

There may be instances

in

which

alternative suppliers cannot be approved

because

the

nature

of

the product or

service requires use

of

one, or a hmited number

of,

suppliers

in

order to realize

efficiencies

or

protect the

interests

of

the

McDonald's

System

overall.

Approved

suppliers must

maintain

standards

in

accordance

with

our

written

specifications

and

requirements.

On

a routine and

continuing

basis,

McDonald's

may

visit

and inspect the operations

of

approved

suppliers and consult

with

them to

ensure

compliance

with

our

standards,

requirements, and

specifications,

as

well

as to

assure

compliance

with

federal,

state,

and

local

laws and

McDonald's

Code

of

Conduct

for Suppliers.

Termination

of a

supplier as an approved source

of

supply

may

occiu"

by

written notice to or personal meeting

with

the supplier. We advise our franchisees as soon as possible when a supplier is disapproved.

Insurance sources are approved upon

submission

of a

policy

meeting our

specifications.

Coverage must

be at least as comprehensive as the

minimum

requirements

of

the Franchise Agreement, and

in

some

cases

may be

higher

if

required by

local

law, landlords, property owners, or other

third

parties.

The

Franchise Agreement

provides

that

all

insurance be placed

with

a reputable insurance company

licensed

to

do

business

in

the

state

in

which

the

restaurant

premises are located, having both a

financial

size category equal to or

greater

than

IX

and a

rating of

"A+"

or

"A"

as determined by

Alfred

M.

Best and

Company,

Inc.

Except

as noted

below,

neither we nor our

affiliates

derive revenue

from

your

purchase or

lease

of

property, goods, services, supplies,

fixtures,

equipment, inventory, or computer hardware and

software

from

approved sources

of

supply.

We

have no purchasing or

distribution

cooperatives.

We

do not provide any

material

benefits to a

franchisee

based on your use

of

approved sources of

supply.

Under

the

franchise

you are required to

lease

the

restaurant

premises

from

us, under an Operator's Lease

that

is incorporated into the Franchise Agreement.

Under

the Operator's Lease, you are required to pay

rent

to

McDonald's,

along

with

the related occupancy costs,

which

include

property taxes, insurance, maintenance, and

stmctural repairs.

McDonald's

derives revenue

from

this leasing

arrangement,

as detailed

in

Item 6.

McDonald's

requires new

restaurants

to use a standard

POS

platform,

NP6,

which

is the current

version

of

NewPOS.

The computer hardware and software

for NP6

is purchased through our approved

POS

suppliers.

The NP6

computer

platform

includes computer software owned by our predecessor and maintained by

RDI

(see

Item 1). Included

in

the payments

you

make to our approved

POS

suppliers

for

the

NP6

platform

is

a one-time

license

fee

that

is paid to us and a payment

for

the

NP6

software and maintenance

for

the

first

year,

which

is

paid

to us and

which

we

will

pay to

RDI.

After

the

first

year, you are

billed

by

McDonald's

for

an annual maintenance

fee

that

is paid to

RDI for

providing

periodic

updates

and

enhancements

to our approved software (see Item

6).

In

addition,

most franchisees use the help desk support services

of

our

affiliate,

RTS,

which

is the only approved

supplier

of

help desk support to the

NP6

platform

(see Item 6).

-25-

McDonald's

may

allow,

but

does

not require,

franchisees

to

offer

customers the

ability

to make

purchases

with

certain credit and debit cards, using a

specified

system (the

"Integrated

Cashless System").

Almost

aU

franchisees participate

in

this program. The

Integrated

Cashless System is designed to work

with

the

POS

platform.

If you

elect to use the

Integrated

Cashless System, it must be installed and

linked

to your

POS

system

by

installers

that

we approve. In addition, your

restaurant

must have required hardware and software purchased

from

and

installed

by

our designated suppliers.

Finally,

you must sign an

agreement

with

our designated

transaction processor and pay the processor certain transaction processing

fees.

We also recommend

that

your

restaiu-ant

have

McDonald's

approved high-speed intemet access.

If you

elect to participate, the detailed

terms

will

be provided to you.

McDonald's

may

allow,

but

does

not require,

franchisees

to

offer

customers the

ability

to buy and make

purchases

with

gift

cards, using a

specified

system (the

"Gift

Card

System"). The

Gift

Card

System is designed to

work

with

the

POS

platform

and the

Integrated

Cashless System. The

Gift

Card

System is provided and managed

by P2W,

Inc.

NFP

("P2W"),

an independent non-profit corporation.

P2W

is not our

affiliate,

but is managed

by

a

board of directors

that

includes our employees and franchisees.

If you

elect to use the

Gift

Card

System,

your

restaurant

must have the

Integrated

Cashless System and use designated equipment

that

is purchased from

designated supphers. In addition, you must sign a subscription

agreement

with

P2W,

purchase training materials,

and sign a contract

with

the

fransaction

processor designated by

P2W,

under

which

you

wiU

be required to pay the

processor certain transaction processing fees.

Currently,

P2W

pays

for

the production

costs

of

the

gift

cards and

certain other expenses.

If you

elect to participate, the detailed

terms

will

be provided to

you.

The

Gift

Card

System is not related to the

gift

certificate

program described in Item 11.

In

coimection

with

implementing the

Integrated

Cashless and the

Gift

Card

systems, we may

negotiate

and

enter

into

agreements

with suppliers, installers, and transaction processing companies under

which

we may

receive certain payments. We may use

these

payments to help support future

technological

innovation.

For

convenience,

these

uses

may be referred to internally as "technology

funds."

However,

we do not

operate

any

actual

legally

segregated,

dedicated,

tmst,

or restricted-use funds

for

technology development.

With

respect

to the

Gift

Card

System, we may also provide certain administrative services (such as accounting services) to

P2W

at

our actual cost.

We

do not derive any revenue from this

arrangement.

In

204^201 L our predecessor received

fees

for

providing

guarantees

on loans

for

U.S.

franchisees

and

affiliates

operating

as

joint

partnerships in certain board-approved loan programs and

for

financial

advisory

services. In the future, our predecessor may continue to provide

these

guarantees

or services and receive

these

types

of

fees.

We do not provide any

of

these

guarantees

or services or receive any

of

these

fees.

In

304^2011.

we and our predecessor received $16.289,69826,491.845 in loan

guarantee

service fees;

Integrated

Cashless and

Gift

Card

system incentives

(which

were, or

will

be, used to offset a variety

of

Integrated

Cashless and

Gift

Card

systems

expenses

incurred by us

for

the benefit ofthe

McDonald's

System); shipping and

distribution

fees: and

beverage

suppHer fees.

In

20W201i,

our total revenue was

about

$8r4-8.5

billion

and revenue

from

the sale or

lease

of

real

estate

and services to

franchisees

was

about

$^T94.1

billion.

This

represents

17.948%

of oiu-

total revenue. These

figiu-es

were derived

from

oiu-

audited

financial

statenients

and other

fmancial

information.

All

of

your

required

purchases

(which

includes items

which

must be purchased

from

us or our approved suppliers and items

which

must be purchased in accordance

with

specifications)

represent

approximately 91

%

to 94%

of

your

total

purchases

in cormection

with

the establishment ofthe

restaurant

and approximately

^1-60%

to

67% of

your

overall

purchases

in operating the

restaurant.

Occasionally,

we may incur additional

costs

and

expenses

to develop or improve certain products or

services

for

the benefit

of

the

McDonald's

System

(including

but not

limited

to, goods, equipment, computer

hardware and software, and support services),

which

ultimately may be provided to

McDonald's

restaurants

by

approved suppliers.

We

may

seek

to recover

all

or a portion

of

these

additional

costs

and

expenses

from

our

-26-

franchisees

and/or

the

approved

suppliers.

If

that

recovery

is

obtained

from

the

approved

suppliers,

it

may

be

reflected

in

the

prices

they

quote

for

these

products

or

services.

See

Item

10 for

disclosure

on

financing

fees

that

may be

received

by McDonald's.

Item

9

Franchisee's Obligations

FRANCHISEE'S OBLIGATIONS

This

table

lists

your

principal

obligations

under

the

franchise

and

other

agreements.

It

will

help

you

find

more

detailed

information

about

your

obligations in

these

agreements

and in

other

items

of

this

disclosure document.

Obligation

Section

in

agreement

Disclosure

document item

a. Site selection and

acquisition/lease

Sections

1

(a) and

1

(b)

of Franchise Agreement and

Sections 2.01 and 2.04

of

Operator's Lease

Items

7

&

1

i

b.

Pre-opening

purchase/leases

Section

12(b)

of

Franchise Agreement and Sections 2.04

and 2.06 of Operator's Lease

Items

7

&

8

c. Site development and other

pre-opening requirements

Sections 12(b), 12(c) and 12(d) of

Franchise

Agreement

Items

6, 7,

&

11

d.

Initial

and ongoing training

Sections

3

and 6 of

Franchise

Agreement

Item 11

e. Opening

Section

12(b) of

Franchise

Agreement and Section 2.06

of

Operator's Lease

Item 7

f

Fees

Sections 8(a) and 9 of Franchise Agreement and

Sections

3.01(A)

and 3.01(B)

of

Operator's Lease

Items

5, 6, 7,

&

11

g.

Compliance

with

standards

and policies/operating manual

Sections 1(c), 1(d), 4, and 12 of

Franchise

Agreement

and Section 2.08

of

Operator's Lease

Item 11

h.

Trademarks and proprietary

information

Sections

2(a)(iii),

4, 11(c), 11(d), 11(e), and 28(g) of

Franchise Agreement

Items

13

& 14

i.

Restrictions on

products/services

offered

Sections 1(c) and I2(i) of

Franchise

Agreement and

Section

2.08 of Operator's Lease

Items

8 &

16

j.

Warranty and customer service

requirements

Sections 1(a), 1(c), 12(a), and 12(h)(iii) of

Franchise

Agreement

Not

Applicable

k.

Territorial

development and

sales

quotas

Not

Applicable

Not

Applicable

1.

Ongoing

product/service

purchases

Sections 12(a), 12(g), 12(i), and 12(j) of

Franchise

Agreement

Item 8

m.

Maintenance,

appearance,

and

remodeling requirements (1)

Sections 12(a), 12(d), and 12(e) of Franchise Agreement

and Sections 2.06, 2.08, 4.02, 4.03, and 6.05 of

Operator's Lease

Item 11

n.

Insurance (1)

Section

17

of

Franchise

Agreement and Section 6 of

Operator's Lease

Item 8

0.

Advertising

Section

5

of

Franchise

Agreement

Items

6

&

11

p.

Indemnification

Section

24 of

Franchise

Agreement and Section 7.02 of

Operator's Lease

Item 9

q.

Owner's participation/

management/staffing

Sections

1

(e),

6, 12(g), and 13 of

Franchise

Agreement

Items

11

& 15

r. Records and

reports

Section

10

of

Franchise

Agreement and Sections 3.02

and 3.03 of Operator's Lease.

Although

not required by

the Franchise

Agreements-McDonald's

strongly

reoommends4hat-you-participate

in

the

McDonald's

Item 11

r. Records and

reports

IItilUillbCfC

r

iIIullvlUI

L^yblOill r*K^'aLlUlCclU'lUUi'U^CLt

Item 11

r. Records and

reports

uj

iviui-'uiiulu

3. rro

iir

u

viiiLixuuot? iimiiiitiiiicu

uy

Item 11

r. Records and

reports

IVIvL^UilUiU

b

ilIiU UbUU

tU

UUULiillUIUlC

ICuluulultt'mtJlll

lillii

loos,

balance

sheet,

and other

finanoial

data

supplied-by

Item 11

-27-

Obligation

Section

in

agreement

Disclosure

document item

franchisees.

s. Inspections and audits

Sections 10 and 12 of

Franchise

Agreement and

Sections 3.03 and 7.01 of Operator's Lease

Items

6

&

11

t. Transfer

Section

15 of

Franchise

Agreementand

Section

4.06 of

Operator's Lease

Item 17

u.

Renewal

Not

Applicable.

Section 28(a)

of

Franchise Agreement Item 17

V.

Post-termination obligations Sections

11

(b)

and 20 of

Franchise

Agreement and

Section

7.04 of Operator's Lease

Item 17

w.

Non-competition covenants Sections 11(a) and 11(b) of

Franchise

Agreement

Item 17

X.

Dispute resolution

Not

Applicable

Item 17

(I)

If

your

restaurant

is located in an

STO

location,

you may be required to maintain the common

areas

within

the shared

building

and

all

extemal common

areas

for

the

fuel

facility

operator and to obtain

certain utilities and insurance

for

the

fuel

facility

operator, subject to reimbursement

for a

portion of

all

such

costs

from

the

fuel

facility

operator.

If

your

restaurant

is located in an

STR

location,

you may be

required to maintain a proportionate

share

of extemal common

areas

and obtain insurance

for

certain

common

areas.

Item

10

Financing

Typically,

no

financing

arrangements

are

offered

by

McDonald's.

As

part

of

the Franchise Agreement,

McDonald's

issues an Operator's Lease for each site owned or leased by

McDonald's.

The Operator's Lease is a

standard commercial

lease

imder

which

you pay

rent

to

McDonald's

for

use ofthe premises. The Operator's

Lease

does

not contain any

financing

terms. For

BFL

franchises, the Operator's Lease provides

for

the

lease

of

the

restaurant's

business

facilities

as

well

as the premises. The

BFL

arrangement

does

not contain any

financing

terms

but may provide a

conditional

option

for you

to purchase certain

restaurant

assets

from

us

for

a lump sum

(see Item 6). In

that

case, a

BFL

Rider

which

contains the option is attached to the Franchise Agreement. The

BFL

Rider is attached as

Exhibit

F,

and the Operator's Lease is attached as

Exhibit

G.

Isoans

to oertainOur predecessor

may,,

at its discretion,

guarantee

loans

made

franchisees

for

the purchase

of

restaurant

businossos

sold

by tho

McOpCo

oompanios and for othor

reasons

are mado by a third party lender.

Lake

Forest Bank and Tmst Company (the "Lender"), to franchisees

for

remodeling existing

restaurants,

working

capital,

delinquent accounts receivable,

refinancing

existing

restaurant

loans, acquiring

restaurant

businesses

from

McOpCo

companies, purchasing

restaurant

assets

by

exercising

the option under a

BFL

Rider,

and

for

other

reasons

approved bv

McDonald's.

The Lender

will

prepare

all

the necessary documents and

will

handle the

processing, payments, customer service, and collections according to

standards

developed by us.

Our

predecessor

will

provide a

guarantee

to the Lender

for

these

obhgations and in retum

will

receive a

guarantee

fee

commensurate with the risk

of

the loans (currently equal to approximately 0.50%

of

average

outstanding balance)

which

is expected to cover our

predecessor's

loan losses and expenses. The

rate

on

these

loans

will

typically

be

1 month

LIBOR

plus ^7253.75% per

aimum

for

floating

rate

loans

which

may be prepaid

with

no

penalty-(ie«is

may

have-an4nterest

rate

floorof

5.50%).

As of

December-31, 2Q10December

30.

2011.

1

month

LIBOR

was

OT26030%.

If

a

fixed

rate

loan is made,

there

may be

a

pre-payment penalty. Loans

typically

will

be

for

a

maximum

term

of

3

years

with a 7-year amortization and

will

be secured by

restaurant

equipment, seating,

signage, decor, and inventory. Loans

will

be extended

for

remodeling

existing

restaurants,

working

capital,

delinquent accounts

rocoivablc,

refinancing

existing

restaurant

loans,

acquiring

rostaurant

businossos

from

McQpGo-

companies, and purchasing

restaurant-assets

by-exeroising

the option under a

BFL

Rider.

The loan

amount

will

vary depending on the purpose

for

which

the loan is to be used. The amount

of

the loan

will

be-a

percent

of cost

betwe6fl-75%

and-100%.

A

personal

guarantee

from

the franchisee and his or her

spouse

will

be

required and, should a legal dispute arise, the franchisee

agrees

to waive the right to

a

jury

trial

and

agrees

not to

consolidate the action with others. A default on

these,loans

will

be considered a default under the Franchise

Agreement, and the

franchisee

will

be required to sign a Guaranteed

Loan

Program Agreement

with

us (see

Exhibit

N). As of

Dooombor

31.

201 ODecember

30.

2011. the annual

percentage

rate

(APR)

was 5.58%

-28-

(considering-the interest rate-floor)4.11

%. All

loan participants

will

be required to permit electronic debiting of

accounts

for

payment. The

financing

documents are

typically

a Promissory Note, Security Agreement,

ACH

Authorization,

and Guaranteed

Loan

Program Agreement

similar

to the documents in

Exhibit

N.

Item

11

Franchisor's

Assistance,

Advertising,

Computer

Systems,

and Training

Except

as

listed

below,

McDonald's

is not

required

to

provide

you

with

any

assistance.

Our

Pre-Opening Obligations:

4-) Constmct or have

others

constmct, remodel, or otherwise

prepare

the premises

for

the

McDonald's

restaurant

in accordance with our

then-current

plans and

specifications

and

with

local

ordinances and

building

codes. We

will

deliver the premises to you when they are

sufficiently

completed to

allow

you

to

install,

at your

sole cost and expense, the signs,

trade

fixtures,

equipment, and other personal property and improvements

necessary to complete the premises

for

operation of

a

McDonald's

restaurant.

If

the

restaurant

has not been

constmcted or

is

not ready

for

occupancy when the Franchise Agreement is executed, we

will

use our

best

efforts

to expedite the constmction.

We

either

own

the premises or

lease

it

from

the owner and

lease

or

sublease

the

premises to you (Franchise Agreement - Section 9, Operator's Lease - Section 2.06).

3) Prescribe detailed

specifications

for

purchasing, preparation, and service, and make available to

you

names

of

approved sources of

supply.

We do not

sell

or

lease

to

you

equipment, signs,

fixtures,

opening

inventories, or supplies or deliver or

install

these

items except as noted

in

Item

8

or when we

sell

or

lease

an

ongoing business to you (Franchise Agreement - Sections 3, 12(b), and

12(i),

Operator's Lease - Section 2.04).

See

Items

8 and 9.

^) Provide our training program to

you,

which

includes your

enrolling

your

managers

at Hamburger

University

or other training

centers.

The training program is more

fully

described

in

this Item (Franchise

Agreement - Sections 4 and 6).

4)

McDonald's

will

allow

you to

view

McDonald's

Operations and

Training

Manual

(the

"O&T

Manual")

before you purchase the franchise (Franchise Agreement - Section 4).

Our

Operational Obligations:

4)

Advise

and consult with

you

periodically

and at other reasonable times upon your

request

in

connection

with

the operation ofthe

restaurant.

We will

communicate to you our knowledge

of

new developments,

techniques, and improvements

in

areas

of

restaurant

management,

food

preparation, and service

which

are

pertinent to the operation

of

a

restaurant

using the

McDonald's

System. The communications

will

be

accomphshed by visits by operations consultants, printed and

filmod

reports, seminars, asd-newsletter

mailings^

emails,

and online resources.

We will

make available to

you all

additional services,

facilities,

rights, and

privileges

relating to the operation

of

the

restaurant

that

we

make generally available to

all

our franchisees

operating

McDonald's

restaurants

(Franchise Agreement - Section 3).

5)

Make

available to you the

O&T

Manual

and any other business manuals prepared and

modified

by us for

use by our franchisees in connection

with

the operation

of

a

McDonald's

restaurant.

These manuals contain

detailed

information

including:

(a) required operations procedures; (b)

methods

of

inventory

control;

(c) bookkeeping and accounting procedures; (d) business practices and

policies;

and (e) other

management

and

advertising

policies

(Franchise Agreement - Section 4).

Advertising

Programs:

We

employ advertising and marketing

consuhants

to participate in the

formulation

and production

of

concepts

and materials

for

production and media placement

of

national programs

for

the

McDonald's

System. Our

-29-

in-house advertising and marketing

departments

develop

overall

direction and

sttategy

for

the national programs

and recommend them to franchisees.

Advertising

and marketing programs are placed

in

national and

local

media

including,

but not

limited

to, print, radio,

television,

outdoor, point

of

sale, direct

mail,

and the

Intemet.

We

do

not maintain an advertising or marketing

fund

nor do we have any

obligation

to make placement

of

programs in

the

media.

You

must advertise and promote your

restaurant

to the general

public

and spend at least

4% of

the

restaurant

Gross Sales each year

for

this purpose.

For new,

rebuilt, end-relocated, and remodeled

restaurants,

we

strongly recommend the use of "grand opening" promotions.

You

must use only advertising and marketing

materials and programs

that

we have provided to you or approved

in

advance

in

writing.

All

advertising and

marketing must also

conform

to the

standards

and

policies

of

the

McDonald's

System relating to the trademarks

and service marks.

Advertising

and marketing by cooperatives are subject to the

same

approval requirements.

Your

expenditures

for OPNAD

and

local

cooperative advertising and/or marketing ofthe

McDonald's

System are

credited to this required expenditure.

You

are not required to participate in

OPNAD

or a

local

cooperative;

however, your consistent involvement

with

OPNAD

and

local

cooperatives is one of

several

factors used to

measure

your compliance

with

the Operator Involvement standard,

which

is one ofthe

National

Franchising

Standards you must

meet

to be

eligible

for

growth and rewrite.

Also,

if

you

decide not to participate

in

a

cooperative,

you

may not gain

access

to

that

cooperative's advertising and marketing programs (Franchise

Agreement - Section 5). See

Items

6 and 9.

OPNAD

and the

local

cooperatives are independent entities

formed

by

franchisees. The

McOpCo

companies

that

operate

restaurants

also participate in

OPNAD

and the

local

cooperatives. These cooperatives carry out programs

to advertise and market cooperative

restaurants.

Each cooperative maintains and administers its own advertising

and marketing

fund,

which

is funded by its members. The funds may be used

for

media placement and to develop

and produce advertising and marketing concepts and materials

for

use by cooperative

restaurants.

Individual

franchisee and

McOpCo-owned

restaurants

contribute to

OPNAD

and the

local

ftinds

on the

same

basis. Each

franchisee member

of OPNAD

pledges the

same

contribution

rate,

currently 1.60% of

sales,

for

a designated

period.

Each

local

cooperative establishes its own

separate

contribution

rate

and time period

for

its

fund.

If you

join

a

local

cooperative, you contribute at the

same

rate

as each other member

of

the cooperative

with

similar

restaurants

or

restaurants

located

in

the

same

general area.

Members of

OPNAD

elect or

designate

regional

representatives

with

operating and

decision

making

powers to

conduct cooperative business.

Local

cooperative members participate in cooperative business according to the

mles and procedures established by each cooperative.

McOpCo

companies

that

operate

restaurants

are members

of OPNAD

and the

local

cooperatives. Neither

McDonald's

nor the

McOpCo

companies can

change

or dissolve

OPNAD

or the

local

cooperatives.

The

OPNAD

fund

is independently audited annually and its

financial

statements

are available

for

review.

The

local

cooperatives generally audit their

fund

and

prepare

financial

statements,

which

are available

for

review;

however, requirements vary among the cooperatives. The cooperative advertising and marketing funds are

intended

for

uses

and allocated in

varying

percentages

designated by each cooperative,

including

production,

media placement, and administrative expenses.

We

provide the services of certain marketing,

legal,

and accounting personnel to the

OPNAD

fund

without

charge. That

fund

administers a

gift

certificate program on

behalf

of all of

its members

for

the issuance and

redemption

of

gift

certificates

sold

to customers at

McDonald's

restaurants.

Charges

for

certain other accounting

persormel who provide services to the

fund

and the

gift

certificate

program are included

in

the direct program

costs

for

the

gift

certificate

program. The

gift

certificate

program

is

not related to the

Gift

Card

System described

in

Item 8.

We

are not required to spend any amount to advertise or promote your

restaurant

in

any maimer. Since we do not

administer or maintain an advertising or marketing

fimd,

there

are no unexpended advertising

fees

used by us.

We

do not use advertising or marketing funds

in

any manner to

solicit

the sale

of

McDonald's

franchises.

-30-

Computer

Systems:

McDonald's

requires new

restaurants

to use a standard

POS

platform,

NP6,

which

is the current

version

of

NewPOS.

The computer hardware and software

for NP6

are purchased through our approved

POS

supphers. The

hardware and software components used

in NP6

have been integrated to the service and

production

systems

of

McDonald's

restaurants.

NewPOS,

including

NP6,

is the proprietary property

of

McDonald's.

Other components of

our

required

computer

platform

include

the In Store Processor

(ISP),

which

is

purchased

through one of

our

approved suppliers,

uses

server computer hardware

that

operates

with

software

that

is the

proprietary property

of

McDonald's

and other

software

applications.

In

addition,

RFM

is a web-based

application

that

enables

you

to

update

price,

product, and

promotion

information

for

the

NewPOS

system,

including

NP6.

McDonald's

Regional

Restaurant

Data

Diagnostics

system

(R2D2)

can

provide

you

with

highly

focused,

actionable reports to help

improve

your

restaurant

operations.

If you

elect to use

R2D2,

we

will

install

software

that

mns on your

McDonald's

approved

ISP

and

which

collects

and transmits your sales

information

to our

servers. In

addition

to

providing

reports

you

request,

we use

R2D2

sales data

in

reports

we

send

you

to

verify

your

sales

information.

The

term "Store Systems" describes the

combined

software

application

suite deployed at the

restaurant.

Enhancements to hardware and software components of

Store

Systems are made

available

by

McDonald's

and

McDonald's

approved suppliers

for

purchase by the

franchisee,

who may

be required to

update

or upgrade the

system

periodically

to

meet

McDonald's

System's standards.

Normal

Store Systems

software

upgrades based

on

an established enhancement

request

process are

included

in

your

aimual

maintenance fee as determined by

McDonald's.

However,

if

the Store Systems

platform

changes

significantly,

a one-time fee must be

paid

by the

franchisee.

You

may choose

from

the approved supplier or approved independent

third

parties

for

installation,

maintenance, repair, and support services at

varying

costs.

In

accordance

with

the Franchise Agreement,

McDonald's

has adopted and is

implementing

a

revised

standard

relating

to Store Systems,

applicable

to

all U.S.

McDonald's

restaurants,

as

stated

below:

Restaurants

that

are currentiy operating

older,

previously

approved

POS

systems (such as Panasonic II+,

PAR

II,

386

based

PcPOS,

PcPOS

without

ISP,

or

PcPOS

with

ISP

but not

mnning

the current

version

of

Store

Systems)

are required to replace or upgrade to the current

version

of

Store

Systems.

McDonald's

will

not approve any

franchise

transfer or grant a new term

franchise

if

the

restaurant

is not

using

the approved Store Systems

technology.

All

new

restaurants

must adopt Store System 6.5 technology.

The

cost

of

our

basic

Store System 6.5 computer

platform

ranges

from

$50,000 to

$60,000,

which

includes the

POS,

In Store Processor, Next

Gen

Cashless,

computer hardware,

software,

and related equipment. See Item

6 for

software-related fees.

The

Store Systems software is generally used

in

the

restaurant

to

efficienUy

and accurately process customer

orders by integrating

production

and service systems in the

restaurant

and to

compile

information

including

sales,

transactions, product

mix,

and cash

control.

It may also be used to

compile

additional

inventory,

labor,

and

payroll

information

used

in

managing the

restaurant.

It may also be used

in

cormection

with

the Integrated

Cashless

and

Gift

Card

systems.

We

have independent access to your sales and other restaurant-level

information,

which

is stored

on

our server, and

there

are no contractual hmits on our

right

to access such

information.

You

must provide us

with

monthly

statements

of

all

receipts

from

the

restaurant

operation; monthly

operating and

financial

-statementsrincluding-e-profit and loss statemen^and balance

sheet;

and

additional

financial,

operating, and other

information

on

forms

and

in

the maimer

we

reasonably

request,

which

may include

independent access to sales,

ttansactions,

product

mix,

and inventory

information.

You

must submit

electronically

each month your

financial

statements,

including

your

consolidated

balance

sheet,

consolidated

general and administrative expense

statement,

consolidated

debt

summary, and

individual

restaurant

profit

and

loss

statement(s).

using our web-based Franchisee

Financial

Svstem

(FFS).

which

is a

database

of

financial

information.

You

must keep and preserve on the

restaurant

premises

full

and complete

written

books and records

-31-

of

the

restaurant's

Gross Sales

for al

least

3

years

in

a.manner

and

form

satisfactory to us. The books and records

include

cash register

tapes,

over-ring

slips,

sales

joumals,

general ledger,

profit

and loss

statements,

balance

sheets,

cash

sheets,

purchase

invoices,

bank

statements

with

canceled checks and deposit

advices,

corporate and

management company books and records, and

federal

and

state

tax retums. We are not

obligated

to provide

assistance to

you

in obtaining

these

items or services (Franchise Agreement -

Section

10,

Operator's

Lease

-

Sections

3.02 and 3.03). See

Items

6 and 7.

The

integrated Cashless

System

can be used to accept credit and debit

card

purchases by customers.

If you

elect

to use the Integrated Cashless

System,

you

must purchase the hardware and

software

that

we

specify

(including

card

readers,

cables, and related hardware)

from

our designated

supplier.

The required hardware and software,

which

is not proprietary to us or any

affihate,

has been used

continuously

in

McDonald's

restaurants

since June

2003.

You

must also sign an

agreement

with

our designated

fransaction

processor (see Item

8),

and we

recommend

that

your

restaurant

have

McDonald's

approved high-speed intemet access. For Store System 6.5, the

cashless system

is

known

as

Cashless and we charge an annual fee

for

maintenance and hosting

of

data

(see Item

6).

Your

POS

system and the transaction processor

will

collect

your cashless

ttansaction

information.

We will

have independent access to aggregated transaction

information

generally,

along

with

information

on

the

number and

dollar

amount

of

specific

cashless transactions

in

any

individual

restaurant.

The

Gift

Card

System can be used to

offer

customers the

ability

to buy and make purchases

with

gift

cards.

If you

elect to use the

Gift

Card

System,

you must

sign

a

subscription

agreement

with

P2W,

Inc.,

which

manages

the

system (see Item

8),

and

you

must purchase

specified

hardware

(including

card

readers,

cables, and related

hardware)

from

a designated

supplier.

This

hardware,

which

is

not proprietary to us or any

affiliate,

has been

used

continuously

in

McDonald's

restaurants

since June

2004.

You

must also

sign

an

agreement

with

a

designated transaction processor (see Item

8). No

other hardware or supphers are currently approved

for

the

Gift

Card

System.

Your

POS

system, the transaction processor, and

P2W will

collect

your

Gift

Card

System

transaction

information.

We will

have independent access to aggregated transaction

information

generally,

along

with

information

on the number and

dollar

amount of

specific

gift

card

ttansactions

in

any

individual

restaurant.

.

With

both the Integrated Cashless and

Gift

Card

systems,

you

may need to upgrade or

update

your

hardware or

software

during

the term

of

your

franchise.

There are no conttactual

limitations

on

the

frequency

or cost

of

these

upgrades or

updates.

Site

Selection:

4)

We

select the site

for

location

of

the

restaurant

premises and negotiate the location's purchase or lease.

You

do not select or approve

restaurant

shes.

You will

not

sign

a

Franchise

Agreement unless we have already

selected the site.

2)

We

utilize

our judgment and experience

in

selecting locations

for

McDonald's

restaurants

based upon

population

density,

traffic

pattems,

market statistics,

proximity

of

shopping

centers, schools, competition,

accessibility

of

utiUty

and

public

services, costs

of

purchasing

or

leasing

the site,

assessment

of

future

demographic developments, our interest

in

developing

an

effective

marketing network

that

will

be convenient to

consumers, and other

factors.

Site locations are

called

to our attention through independent canvassing

of

highways

and

urban,

suburban,

small

town, and other neighborhoods.

Restaurant

Opening:

4^

In the

normal

course

of

business, the Franchise Agreement is submitted to

you for

execution

approximately

30 days

before

the

restaurant

is opened

for

business.

During

this

period,

you

are

receiving

shipments

of

restaurant

equipment. The

initial

franchise

fee,

if

applicable,

is payable on the

opening

of the

restaurant.

No

monthly

fees

accrue

until

the

restaurant

opens

for

business.

See

Items

5

and 6.

2) The

restaurant

opening may

occasionally

be delayed

by

weather

conditions,

delayed dehvery, or

installation

of

equipment,

fixtures

and signs, labor disputes, govemmental

regulation,

or other

causes

beyond our

-32-

reasonable

control.

You

may not open the

restaurant

for

business

until

you

have executed the Franchise

Agreement and have

delivered

the

agreement

to us

with

payment

of

the

initial

franchise

fee,

if

applicable.

Training:

4)

McDonald's

operates

Hamburger

University

(HU).

the intemational

ttaining

center

for

the

McDonald's

System.

The content and duration

of

all

operations courses,

which

are

offered

at

HU

and various

local

sites, are

revised

and reconsidered

from

time to

time

to

meet

the

needs

of

theour

franchisees.

All

courses and leaming

events

are

offered

at

frequent

intervals and are designed to give you

specific

skill

sets

in

the various

facets

of

the

conduct

of

a

McDonald's

restaurant,

including

such

areas

as equipment,

standards,

controls, and

leading

people.

The basic

minimum

core trainings

which

you must be completedcomplete to be considered

qualified

to

operate

a

McDonald's

restaurant^

is

known

as the -Restaurant Department Management

(RDM)

Ccurriculum".

Existing

franchisees

will

not be required to complete the

RDM

curriculum

to acquire an

additional

restaurant.

Training

also occurs at a

Mc-Donald's

restaurant,

including

hands

on and

self

directed

learning,'

and is monitored

by

a-MoDonald's

business-consultant (or other assigned

person)^TypicaHy,

the

ttaining

takes

place on a

part

time basis and

spans

9-to 24 months^ but a 36 month

training-time-

is

not

uncommon.

The-eBttFe-ourrioulum

is

skill

based and-your experience may-vary-depending on the

verification

of

your

skills

in

the restaurantTOur

RDM

curriculum

is deployed through the

Leaming

Management System

(LMS).

which

allows

you

to complete

and track the progress

of

your

assigned learning

online.

You

are assigned a job role

in

LMS

and complete an

RDM

leaming

plan.

You

are also assigned a coach

who

helps

with

your assigned

leaming.

monitors your

training,

approves vou

for

additional

courses, and

verifies

the

skills

acquired. It

takes

approximately two

years

to

complete

all

RDM

leaming

plans,

from

Shift

Manager through General

Manager.

The

time

needed to complete a

leaming

plan may vary due to previous classes you have completed, testing out

of

coursework, and the amount

of

time vou dedicate to training each week.

The complete

training

program and materials include many elements. There are velumes

of

written

material,

fomial-and

informal

classroom and/or computer -based

leaming;

on-site^estaurant-instmction. use

of

audiovarious

pre- and

post-assessments,

formal

and

virtual

collaboration

classes, computer-based

leaming

(e-Ieaming).

coaching

sessions, and

visual

job

aids, practical laboratory

applicationssimulations,

and

verifications

with

rospect

to

all

materialsfor

all

stations and

positions.

The

training

method and manner are tailored to

individual

circumstances.

As

part

of

the

training

program, you must

perform

and

master

all

ofthe crew and

management

functions

at the

restaurant.

This is accomplished by

aotiaally

performing

tho crow and managomont stations at the

restaurant.

You

do not receive compensation during the

training

program.

McDonald's

does

not charge

you

a fee

to complete the basic

minimum

core

ttaining

provided

at our designated

training

centers,

which

you must

complete to be considered

qualified

to acquire a

McDonald's

restaurant.

You

are required to

atteadcomplete

all

curricula,

including

the Rostaurant Operations Leadership Practices course

and theGeneral Manager

(GM)

Business Leadership PracticesCapstone course conducted at Hamburger

Ufliversity.

Both

must

be-oompletedHU.

to

McDonald's

satisfaction

before

you-obtain-a-franchise-fefto

be

qualified

to

operate

a

McDonald's

restaurant.

¥euDuring

the

GM

Business Leadership Capstone course, vou are

instmcted by

experts

experienced in the operation and

management

of

McDonald's

restaurants.

You

must be

fully

trained,

in

McDonald's

sole

judgment, before you acauireoperate a

restaurant.

At

the opening

of

your

restaurant,

an operations consultant

will

spend time

with

you

providing

assistance

and

refinement

of

previous training and instmction.

2)

You

must complete the trainmg program

successfully

before

signing

the Franchise Agreement or

paying

any money to

McDonald's.

3) The experience

of

the instmctors

in

the

McDonald's

restaurant

business

averages

5

or more years.

Instmctors include tho Dean

of

Humburgor

Univorsity,

Hamburgor

UniversitvHU

PprofessorsT

and

Rregional

T^training

Gconsultants.

Diana

Thomas.

U.S.

Vice

President -

Training,

Leaming

&

Development, is the head

of

our

ttaining

program and her business experience is listed in Item 2.

-33-

4)

McDonald's

bears

the cost

of

maintaining

Hamburger

UniversityHU

and other designated

training

centers

associated

with

providing

basic and advanced

instmction

in

the Restaurant

ManagementRDM

Gcurriculum,

including

the overhead cost

of

training,

staff

salaries,

materials, and

all

technical

training

tools.

You

are

responsible

for

the costs

of

traveling,

living,

compensation, and other expenses

incurred

by

you

and your

employees

in

cormection

with

attendance

at Hamburger

UniversityHU

or other

ttaining

facilities.

You

may also

be charged a fee to cover

McDonald's

costs

of

providing

certain

training

and related materials other than

those

associated

with

the Restaurant

ManagementRDM

Ccurriculum.

You

are not an employee

of

McDonald's

and are

not compensated by

McDonald's

for

or

during

any

training

described

in

this Item.

5) There are no

further

mandatory

training

requirements

for you.

However,

annual meetings, conventions,

various

workshops,

and other

training

sessions may be conducted on an

ongoing

basis

within

each

region,

and

McDonald's

may require

you

to pay

for

the costs associated

with

that

ongoing

ttaining

or

participation.

Additionally,

optional

courses may be

offered

to

you

or

your

employees

for

a

fee. You

are responsible

for

the

costs

of

traveling,

Hving,

compensation, and other expenses incurred

by you

and your employees in connection

with

attendance

at

all

ongoing

training.

6) In

addition

to

Hamburger-UniversityHU

and

McDonald's

other designated training centers,

McDonald's

occasionally

may

offer

initial

and

ongoing

training

at temporary remote locations (such as

hotel

conference

rooms)

for

the convenience of

attendees.

These remote locations are not designated

ttaining

centers, but

you

may

attend them

in

lieu

of

designated training centers.

If you

elect to attend

training

offered

at a remote

location,

McDonald's

may require

you

to pay

for

the costs associated

with

that

training.

7)

Before

entering the

training

program,

you

must sign a

Preliminary

Agreement,

which

is attached to this

disclosure

document as

Exhibit

J. The

Preliminary

Agreement contains the

terms

of

our

agreement,

which

allows

you

to participate

in

McDonald's

franchise

applicant

training

program.

It

states,

among other

things,

that

there

is

no

guarantee

that

you will

be

offered

a

McDonald's

franchise,

that

McDonald's

may remove

you

from

the

training

program

for

any reason or

no

reason at

all,

and

you

may withdraw

from

the

ttaining

program at any time.

The

Preliminary

Agreement also

states

you will

not be compensated

during

your

training

and

will

not be an

employee

of

McDonald's

or any

McDonald's

franchisee.

8) The Restaurant

ManagementRDM

Gcurriculum

is

described

in

the

following

tables and

includes,

but is

not

limited

to:

(al)

Self-Study

Modules

and

Coaching:

Self-directed

"hands

on"

modules and

coaching

provide

initial

ttaining,

practice, and

verification.

Performance

objectives and

verification

procedures are

clearly

defined-,-and

videos,-oomputer

based-frainingv

and

workbooks-improve

initial-training-and

practice.

The

components are

self

directed;

however,-the-restaurant-manager and a

McDonald's

business consultant (or other assigned person)

will

monitor

the

training.

(b2) Facihtated

Courses:

Hands-on

training

is supported and

reinforced

by

facilitated

courses

that

emphasize participant

involvement.

Interactive problem

solving,

small

work group, and

skill-building

activities

provide

an opportunity to practice new

skills

and obtain feedback

from

peers

and instmctors.

(e3) Equipment

Training:

Self-directed

equipment

training

and instmctor-led support

is

provided

based on system

needs.

Training

Flow:

The recommended methods and time

frames

for

training,

practice, and

verification

have been

determined to

ensure

that

you

receive the

right

ttaining

at the

right

time. The Restaurant Management

Curriculum

chart shows tho training components and thoir

relationship

to ono another.

Tho

Training

Pprogram

table generally

describes the

minimum

classroom and in-restaurant

training

(for

whioh-you-reoeive-no-c-ompensation)

that

you

must complete to be considered

qualified

to

operate

a

McDonald's

restaurant.

Since

the entire

curriculum

is

skill-

based, the time necessary to complete the

ttaining

varies

from

individual

to

individual.

-34-

Rostaurant Managomont Curriculum

Pre-reqol>ltei

Statlonn"raln«f

Vftrtfiojtioo

T«in«Hlan

la ManaflBmant

at HaOonaltfa

Shift Management

Aran

Managonwnl

Aran

Managomont

Vorifloation

Shift Variflcatlon

S«fvSat>C«

•Wanoging

Pooplo

•

Managing

Cuetomw

-SoliofQalioo

&

Soouiily

'Managing

tho Shift

inio

Owordrivo

Adsiancwl

ShIH

Manaflamant

Coureo

'

Mo

n

oging

the

-Shift

•for.

Prom

Syttoms AHonogoment

Parformani

so

Dovolopmont

Managing Invonlory

Variftoatlon

Improvlns Qporatlonal

Efflcioncy

fiffoctiva Managamonl

Pracbcoa

Courao

•

Qolivoring

QSGAV^hfough

Poreonal

Loadorchip

•

Putting-Peaplo-Ptaotioec

•Conflict

ManagoFTwnl

'Sloro

Day—Dovoloping

Your

Syctams

Kncwwlotlgi

-FOCUS

PractlooB

and Training

Managing RooteuranI

Safaty and Sacurity

'Verifioalion

Plannoct

Mainte

no

noo

'Vorifioalion

Managinfl

SchodulinB

Port

Ofmanco

Pe

volopnwil

Restaurant Manogement

Businegg

Monagement

Building

tho BualnaoB

Building

Bmpiayo*

Maoagtnfl-lof ProlitaWity

Roataufant Managomont

Boetaurant'Opi

Laadofahtp Practtoi

•

Bocoming

a

Loader

•

Golting

to

Know

My

Crooting

o

Posilivo

Wortt

•

Qovoloping

Mycolf

'Quality

and

Sorvico

Latic

'Squipmont

Roliobility

I Dovolopmont

T ranettlon loRoataufanl

Buolnooc

Loodorohip

'Developing

Roclaurant

Tjtonl

•

McOonald'c

Gate

Involved

'

Cfootivo

Thinhing

'Buaneaa

Planning

Pertormonoe Povelopment

fiyptom

I j Solt^twly I I Claeeee at HU I I Claaeoe (oowrtiyr

fogional

training canlortt

TRAINING

PROGRAM

Subject

Classroom

TpatBHig

Training

in

Q

Restaurant

Location

Apea

Management 72

hours

Self

study

Shift

Monasernent 291

hours

Self

smdy

Scr^^Safe

-1-.-5

days

64M>ur5

Regional

Training-Center

Basic

Shift

Manasement

3.Q

days

Regional

Training

Center

Advanced

Shift

Management

3.0

days

Regional

Training

Center

Introduction to Systems Management

12

hours

Self

study

^

IL -

Effective

Management ProcticeG

5.0

days

Regional

Training

Center

Monaeing

People-Practices and Training IS

hours

Self

study

Managing

Inventory

3-5-

houFS

Self

omdy

-

Managing

Restaurant

Safety and Security

58

hours

Self

study

"

B . ^

Managing

Planned Maintenance

26

hours

Self

study

Managing

Scheduling

24-hours

Self

study

Building

the Business

12-heuFS

Self

smdy

Building

Employee Commitment

17

hours

Self

study

-35-

Subject

Training

Training in a

Restaurant

Location

Managing

for Profitabtltty 7 hours

Self

study

Restaurant Management

11 hours

Solf

study

„

, E . ,

Restaurant-Operations Leadership Practices

5.0 days Hamburger

University

Transition

to Restaurant-Manager 15 hours

Self

study

Business Leadership Practices 4:^-days 45 hours Hamburger

University

Subiect

Classroom

Train

ine

Training in

a

Restaurant*

Location

SHIFT

MANAGER

(SM) LearninE Plan

Prerequisites: Crew Station

Verified.

Maintenance

Verified.

Crew

Trainer

Verified

Management Development Program

1,

> SM

Orientation

4 hours (2 weeks)

Self-study

and coaching

>

Area

Management 10 hours (4 weeks)

Self-study

and coaching

>

Shift

Management

10 hours (4 weeks)

Self-study

and coaching

BervSafe

2

hours

d

week)

Self-study/online

course

Introduction to Management ore-work 2-3 hours

Cl

week)

Regional

training

center

Introduction to Management 3 davs

Regional

training

center

Introduction to Management nost-work

I

hour

(1

week)

Self-study

and coaching

5M

Learning Plan

-

Total Time

3 davs 29-30 hours (13 weeks)

DEPARTMENT

MANAGER

(DM) Learning Plan

-atine Svstem Diagnostic

Tool

and

Resnectfiil

Workplace

courses.

Prereauisites:

Completion

of

all SM

courses'

;

-atine Svstem Diagnostic

Tool

and

Resnectfiil

Workplace

courses.

SJote:

Manaeer-snecific

courses are taken between the Ope

-atine Svstem Diagnostic

Tool

and

Resnectfiil

Workplace

courses.

juest

Service Manager

Functional

Training

12

hours (6 weeks)

Self-smdv

and coaching

Kitchen

Manager

Functional

Trainin^

28 hours (14 weeks)

Self-study

and coaching

People Manager

Functional

Training

30 hours (15 weeks)

Self-study

and coaching

Shared courses for

DM

leaming plans

>

Department Manager Orientation 6 hours (3 weeks)

Self-study

and coaching

>

Foundations of

RDM

1

dav

Regional

training

center

>

Operating System Diagnostic

Tool

>

Wage and Hour

8

hours (4 weeks)

Self-study

and coaching

>

Respectfti!

Workplace

>

Performance Reviews

4 hours (2 weeks)

Self-study

and coaching

>

Department Manager Leadership Capstone Course

2

davs

DM

Learnine

Plan

-

Total Time

3 days

88 hours (44 weeks)

GENERAL

MANAGER

(GM)

Learnine

Plan

Prerequisites:

Completion

of all DM

courses

GM

Orientation

12

hours (6 weeks)

Self-study

and coaching

3M

Business Leadership

Curriculum:

1st Semester

28 hours fl4 weeks)

Self-study

and coaching

3M

Business Leadership

Curriculum:

2nd Semester 28 hours (14 weeks)

Self-study

and coaching

3M

Business Leadership Capstone pre-work

6 hours (3 weeks)

Self-snidv

3M

Business Leadership Capstone Course

5 davs

Hamburger

University

GM

Business Leadership Capstone post-work 6 hours (3 weeks)

Self-study

and coaching

GM

Learning Plan

-

Total Time 5

davs 80

hours

(40

weeks)

*Time

estimates

are generally based on spending 2 hours in self-study, development, and coaching per week.

For

example,

if

you

were completing the

Shift

Manager leaming plan,

the

Shift

Manager orientation

will

include

approximately 4 hours

of

self-study and

coaching,

which

generally

will

be completed over

2

weeks. For every

2

hours

of

self-study, development, and coaching, you are required to spend one additional hour

of

walk-through

time

with

managers

at the

restaurant

to

ensure

your understanding

of

the assigned leaming.

-36-

Item

12

Territory

McDonald's

franchises contain a

limited

grant

of

authority to use the

McDonald's

System

in

the

operation ofthe

specific

restaurant

developed by

McDonald's

at

that

address. The Franchise Agreement

does

not

contain

any

exclusive

grant,

exclusive

area,

exclusive

territorial

rights,

protected territory, or any

right

to exclude,

control,

or impose conditions on the

location

or development

of

future

McDonald's

restaurants

at

any

time.

You

will

not receive an

exclusive

territory.

You

may face competition

from

other

franchisees,

from

outlets

that

we

own,

or

from

other chaimels

of

distribution

or competitive brands

that

we

control.

The sales and customer trading

pattems

which

a

restaurant

experiences

at

any particular time are subject to change by reason

of

many factors,

including

our

ongoing

development ofthe marketing network

of

McDonald's

restaurant

locations,

and do not

represent

any continuing franchisee entitlement or expectation.

McDonald's

may establish other

franchisee

or

McOpCo

company-owned outlets

that

may alter customer trading

pattems

and

affect

the sales

of,

and compete

with,

your

location.

McDonald's

reserves the right to use the

Marks

(as

described

in

Item 13)

in

any other

channel

of

distribution

and may

sell

other

similar

goods and sei^ices under other trademarks and service marks.

Intemal

policies

which

McDonald's

may apply and

modify

periodically

in

coimection

with

decisions to develop

new

restaurants

are not

part

ofthe Franchise Agreement and do not

involve

any contract right granted to you.

Item

13

Trademarks

We

grant

you

the

right

to use many

commercially

valuable trademarks,

trade

names, service marks, logos,

and other

commercial

symbols

(collectively

"Marks")

that

are material to the operation

of

your

restaurant.

The

following

Marks

have been registered

with

the

United

States

Patent and Trademark

Office

on

the

principal

register.

All

required

affidavits

of

use and applications

for

renewal

have been

filed

and accepted. Those

Marks

which

have been registered

for

more than 6 years have become incontestable.

We

believe the

following

Marks

are the

principal

marks

you will

use to

identify

your

restaurant.

Trade/Service

Mark

Reg. No. Reg.

Date

.

Class

U.S./Int.

Sec.

8/15

Affid.

THE GOLDEN ARCHES

1,250,082

08/30/83

100/42 08/30/88-89

THE GOLDEN ARCHES LOGO

893,440 06/23/70 100/42 06/23/75-76

MCDONALD'S

(Name)

743,572

01/08/63

100/42

10/22/68-69

MCDONALD'S

and

GOLDEN ARCHES LOGO

(Sign

Design)

1,287,408

07/24/84 100/42 07/24/89-90

The grant

of

rights under the

McDonald's

System includes the non-exclusive

right

to use

all

the

Marks

in

coimection

with

the

operation

of

your

restaurant.

We

do not own the

Marks.

We

are

licensed by our

affiliate,

Restaurant

Brands,

LLC,

to use and license

the use of the

Marks

in

the

U.S. in

connection

with

McDonald's

restaurants.

This

license lasts

for 20

years

from

the

effective

date

of

that

license,

with

automatic renewals, and may be terminated only by

agreement,

if

we

become the subject

of

any

insolvency

proceedings or

if we fail

to use the

Marks

as prescribed by Restaurant

Brands.

Periodically,

additional

Marks

may be adopted and/or registered

that

are considered important to our

business, and we may incorporate some but not

all of

them into the

McDonald's

System.

There currently are no decisions

of

the

United

States

Patent and Trademark

Office,

Trademark

Trial

and

Appeal

Board,

or the trademark administrator

of

any

state

or any court

which

affect

your right to use the

Marks.

-37-

There is currently no pending infringement, opposition, or cancellation proceeding nor any material litigation

involving

such

Marks

the outcome of

which

is relevant to their use

in

the

state

in

which

your

restaurant

is to be

located.

Other than our license

with

Restaurant

Brands,

there

currently are no

agreements

that

significantly

liniit

our

rights

to use or license the use

of

the

Marks

in

the

U.S.

in a manner material to the

franchise.

You

must

follow

our rules when

you

use the

Marks.

You

cannot use our

name

or any

Mark

as

part

of the

name

of

your

operating company, or

with

any

modilying

words, designs, or symbols (except

those

we

approve).

There is no obligation under the Franchise Agreement to

notify

us

of

any use by

others

of

names

or marks

which

are identical or

confusingly

or deceptively

similar

to any

of

the

Marks.

While

there

is no

obligation

imder

the Franchise Agreement to

take

affirmative

action, we consider the

Marks

to be a valuable property right and we

continually

work, in cooperation with our

affiliates,

to protect the

Marks

against infringement by

others

and to

protect your

right

to use the

Marks.

Restaurant Brands or our predecessor has the

right

to control administrative

proceedings or

litigation

involving

the

Marks.

To our knowledge

there

currently are no superior prior

rights

or

infringing

uses

of

the

Marks

that

would

materially

affect

your use

of

the

Marks

in

the operation

of

your

restaurant.

We

have no obligation under the Franchise Agreement to protect you against, participate

in

your

defense

of, or to reimburse you

for,

any

damages

which

you are held liable for in any proceeding arising out

of

your

use

of

the

Marks.

We

may at any time require

you

to

limit

and/or

modify

your use ofthe

Marks.

In this

event,

we are

not obligated under the Franchise Agreement to reimburse you

for

the cost incurred due to the

modification

or

discontinuance

of

use

of

the

Marks.

Item

14

Patents,

Copyrights,

and

Proprietary

Information

No

patents

are required to be disclosed

in

this Item.

We

or our predecessor

claim

copyrights

in

the

O&T

Manual

and various menus, advertising and

marketing materials, and

similar

items used in operating your

restaurant.

These copyrighted materials have not

been registered

with

the

U.S.

Registrar

of

Copyrights,

and do not need to be registered at this time. Currendy

there

are no decisions

of

the

U.S.

Copyright

Office

(Library

of Congress), "and no pending infringement

proceedings or material

litigation

involving

the copyrighted works

that

could

affect

your use

of

them. Any

copyrighted works

that

we do not own are licensed to us by our predecessor.

This

license may be terminated only

by

agreement,

if

we become the subject of

any

insolvency

proceedings, or

if

we breach the

terms

of

our license

agreement

with

our predecessor. Other than our license

with

our predecessor,

there

currently are no

agreements

that

significantly

limit

our rights to use or license the use of the copyrighted works in the

U.S.

You

have no obligation under the Franchise Agreement to

notify

us

of

any

apparent

infringement

of

or

challenge to your use

of

any copyrighted

works,

or

of

any

person's

claim

of

any

rights

in

any copyrighted works.

Ahhough

there

is no obligation under the Franchise Agreement

for

us to

take

affirmative

action, we consider the

copyrighted works to be valuable property and we continually work, in cooperation

with

our predecessor, to

protect against infringement by

others

and to protect your

rights

of

use.

Our

predecessor has the

right

to control

all

litigation

involving

the copyrighted works it licenses to us,

including

the

O&T

Manual.

We

have no

obligation

under the Franchise Agreement to protect you against, participate

in

your

defense

of, or to reimburse

you

for,

any

damages

that

you are held liable

for

in

any proceeding arising out

of

your

use of

any

copyrighted

works.

We

may

modify

or discontinue using any copyrighted

works,

and/or use additional or

substitute

copyrighted

works,

and you must comply with our directions

for

any

modification

or discontinuance after

receiving

notice

from

us.

We

are not obligated imder the Franchise Agreement to reimburse you for any

costs

incurred

due to any

modification

or disconrinuance

of

any copyrighted works.

-38-

McDonald's

O&T

Manual

and other materials

in

the

McDonald's

System contain

trade

secrets

and

confidential

and proprietary

information.

This

information

includes, but is not

limited

to: methods, formats,

specifications,

standards,

systems, procedures,

sales

and marketing techniques, knowledge and experience used in

developing

and operating

McDonald's

restaurants;

real

estate

and development plans; marketing plans, research,

advertising and promotional programs

for

McDonald's

restaurants;

knowledge

of

suppliers,

methods

of

ordering

and specifications

for

products, materials, and supplies; knowledge

of

the operating results,

financial

information,

and

financial

performance

information;

customer communication and retention programs; graphic designs;

intellectual

property; recipes, formulae and

food

preparation processes;

information

generated

by,

or used or

developed

in,

the operation of

a

restaurant;

and any other

information

McDonald's

may

designate

as

confidential

or proprietary.

You

must

follow

our rules when you use the

O&T

Manual

and any other

confidential

and

proprietary

infonnation.

You

must keep them absolutely

confidential

at

all

times, and you must

take

all

reasonable

steps

to prevent improper disclosure to others.

In

addition, you must not disclose (unless approved or required by

McDonald's)

financial

performance,

operating results, or

sales

information

(collectively,

the

"Financial

Information") relating to your

McDonald's

restaurant

where: (a)

McDonald's

has not

publicly

disclosed its

financial

performance

for

the

period;

(b) it is

reasonably foreseeable

that

such

Financial

Information

will

be consolidated

with

the

Financial

Information

of

other

McDonald's

restaurants;

and (c) it is reasonably foreseeable

that

the

Financial

Information or consolidated

Financial

Information

will

be

made

public and/or be used to

influence

investment decisions regarding

McDonald's

common stock.

Using

McDonald's

confidential

and proprietary

information

or the

Financial

Information in an

unauthorized manner is

strictly

prohibited.

Failure to maintain the

confidentiality

of

this

information

and/or the

unauthorized use or disclosure

of

this

information

may lead to

civil

or

criminal

prosecution as

well

as the

termination

of

the Franchise Agreement.

Item

15

Obligation

to

Participate

in the Actual

Operation

of the

Franchise

Business

We

require you to provide

full

time and

best

efforts

to, and personal on-premises supervision

of,

the

day-to-day operation

of

your

McDonald's

restaurant

business.

This

duty is

stated

in

paragraphs

1(e) and

13 of

the

Franchise Agreement.

Item

16

Restrictions

on

What

the

Franchisee

May

Sell

You

may

sell

only products authorized by

McDonald's

and use the premises only as a

McDonald's

restaurant.

In the dispensing and sale

of

these

products, you may use only packaging,

paper

goods, ingredients,

and handling and preparation

methods

that

meet

the

McDonald's

System

specifications

and quality

standards

which

we may

designate

and

modify.

We have the

right

to add, delete, or

change

authorized products

that

you

are

required to

offer.

There are no

limits

on our

right

lo do so. See

Items

8 and 9.

The

McDonald's

System is a comprehensive

restaurant

system

for

the retailing of

a

limited

menu of

uniform

and quality

food

and

beverage

products,

which

McDonald's

may

modify

at any time at its discretion.

You

must

operate

the

restaurant

in

conformity

with

the entire

McDonald's

System at

all

times,

including

serving

at the

restaurant

a designated menu of

food

and

beverage

products;

uniformity

of

food

specifications,

preparation

methods, quality, and

appearance;

and

uniformity

of

facilities

and service. See

Items

8

and 9.

We

impose no limitations on the customers to

whom

you may

sell

goods and services, provided

that

you

adopt

and use the

McDonald's

System

only

at the

specific

restaurant

developed

by

McDonald's

and franchised to

you.

See Item 12.

-39-

Item

17

Renewal,

Termination,

Transfer,

and

Dispute

Resolution

THE

FRANCHISE RELATIONSHIP

This

table

lists

certain

important

provisions

of the

franchise

and

You

should

read

these

provisions

in

the

agreements

attached

to

this

disclosure

document.

You

should

remember

that

the

franchise

consists

of

a

Franchise

Agreement

and Exhibit A to

that

agreement,

known

as an

Operator's

Lease.

The

summaries

which

appear

below

refer

to

each

of

these

documents

separately,

but

they

should

be

read

and

considered

as a

whole.

Provision

Section

in

franchise

or

other

agreement

Summary

a.

Length

of

the

franchise

term

Section

2

Traditional

term is generally 20 years. Satellite

term varies.

STO

and

STR

terms

isare generally

10

years.

BFL

term is generally

3

years.

b.

Renewal or extension

of

the

term

Section

28(a)

See

Exhibit

L for

explanation of

McDonald's

current

Rewrite

(New

Term)

Policy

You

have no

right

to renew or extend. The

Rewrite

(New

Term)

Policy

is not

part

of the

Franchise Agreement. It is subject to change

in

McDonald's

sole

discretion.

Its

application

will

differ

depending upon the facts and

circumstances

involved

and is not a contract right

between you and

McDonald's.

See Notes 2

and

3

and

Exhibit

M.

c. Requirements for franchisee to

renew or extend

Not

Applicable

You

have no

right

to renew or extend.

d.

Termination by franchisee

Not

Applicable

Not

Applicable

e.

Termination

by

franchisor

without

cause

Not

Applicable

Not

Applicable

f

Termination

by

franchisor

with

cause

Sections 18 and 19

McDonald's

can terminate only

if

you

commit

any

1

of

several

listed

violations

or repeatedly

breach the Franchise Agreement.

g.

"Cause"

defined

-

curable defauhs

Not

Applicable

Not

Applicable

h.

"Cause"

defined

-

non-curable

defaults

Sections 18 and 19

Material

Breaches

include:

failure

to maintain

the

restaurant

in

a

good,

clean,

wholesome

maimer and in compliance

with

McDonald's

standards; you become bankmpt; any amount

owing

to

McDonald's

is not

paid

within

30 days

of

due

date;

judgment

in

excess

of

$5,000

outstanding against

you

for

more than 30 days;

right

of

possession

of

restaurant

is lost;

violation

of

franchise

restrictions;

knowing

sale

of

foods

other than

those

approved by

McDonald's

or

which

fail

to

conform

to

McDonald's

standards;

transfer

of

franchise

without

McDonald's

prior

consent;

McDonald's

is denied access to

restaurant;

failure

to make prompt payment

of

undisputed

invoices;

misrepresentation relating to

ownership or

acquisition

of

franchise;

conduct

that

damages

McDonald's

reputation;

conviction

of

felony;

intentional under-reporting

of

Gross

Sales;

repeated other breaches.

-40-

Provision

Section

in franchise or

other

agreement

Summary

i.

Franchisee's obligations on

termination/non-renewal

Section

20

For

30

days and at

McDonald's

request

you

must:

sell

us the

fumiture,

fixtures,

signs, and

equipment for

fair

market value (no payment

for

intangible

assets);

return business manuals and

other

confidential

material;

cease

using the

McDonald's

System and trademarks (also see r).

j.

Assignment

of

contract by

franchisor

Not

Apphcable

Assignable

by

McDonald's

as a

matter

of

common

law;

no

separate

provision

required.

k.

"Transfer" by franchisee -

defined

Sections 15 and 19 Includes direct, indirect, or contingent transfer, in

whole or

in

part,

of

any interest

in

the franchise.

1. Franchisor approval

of

transfer by

franchisee

Not

Applicable

Transfers require

McDonald's

approval, subject

to the

terms

stated

in

the Franchise Agreement,

Assignment

to an

Entity,

and Assignment

Agreement (see

Exhibits

H

and I).

Also

see

Note 2.

m.

Conditions

for

franchisor

approval

of

transfer

Sections 15 and 19

New

fi-anchisee

qualifies;

service fee increases to

the current

fee;

new franchisee

assumes

fiill

and

unconditional

liability;

you remain personally

liable

for

the remainder of

the

term; no current

breach.

n.

Franchisor's right of

first

refusal

to

acquire franchisee's business

Section

15(c)

McDonald's

can match any

offer

for

your

business.

0. Franchisor's option to purchase

franchisee's business

Sections 15(a) and 20 Purchase business only

if

we have been

managing your

restaurant

for

1

year after

your

death

or

disability;

purchase certain

assets

upon

termination.

p.

Death or

disability

of franchisee

Section

15(a) Franchise may be assigned to any approved

purchaser or spouse, heirs, or

nearest

blood

relative who is a quahfied franchisee (see m).

Also

see Note 1.

q.

Non-competition covenants during

the term of the franchise

Section

11

No

involvement

in

competing or

similar

business.

r. Non-competition covenants after the

franchise is terminated or expires

Section

11

No

competing business for 18 months

within""

10

miles

(including

after assignment or sale).

s.

Modification

of

the

agreement

Section

26

No

modifications

generally but

O&T

Manual

subject to change.

t. Integration/merger clause Sections 28(c), 28(e), 28(f),

28(h), and 28(i)

Only

the

terms

of

the

Franchise Agreement are

binding

(subject to

state

law).

No

other promises

have been made, but nothing in the Franchise

Agreement

disclaims

any

representations

made

in

this disclosure document.

u.

Dispute resolution by arbitration or

mediation

Not

Apphcable

Not

Applicable

v.

Choice of

forum

Not

Apphcable

Not

Applicable

w.

Choice of

law

Section

27 The Franchise Agreement is interpreted and

govemed by

Illinois

law (with

specific

exceptions

stated

in

the Franchise Agreement).

Note

1

We are not obligated by the Franchise Agreement to do so, but

if

your

spouse

wishes to train to become

qualified

after your

death

or

disability,

we

will

work with your

spouse

for

up

to

18

months (as long as we

determine

that

adequate

progress is being

made)

so

that

your

spouse

can

attempt

to become approved to

operate

the

restaurant.

Note 2 We are not obligated by the Franchise Agreement to do so, but

if

an existing traditional

McDonald's

franchise is transferred to you (in other

words,

if

you

purchase an

existing

restaurant

from

another

-41-

franchisee)

with our

approval,

there

is

less

than

10

years

left

on the original

franchise

term,

there

is

sufficient

real

estate

tenure,

the

restaurant

has not

been

identified

as a

candidate

for

rebuild

or

relocation,

and you

have

not had

in the

franchise

or

purchased

it from a family

member,

we may

offer

you a new

20-year

franchise

term.

You

also

must

have

fully

completed

any

required

reinvestment

within the

time

frame

established

by us. In

this

case,

a

rent

adjustment

and a

prorated

initial

franchise

fee

may

apply

based

on the new

term.

Note

3

Under

a

BFL

franchise,

if you

have

a

conditional

option

to

purchase

certain

restaurant

assets,

the

conditions

are met, and you

exercise

the

option,

your

franchise

will

be

extended

for up to 20

years

after

the

beginning

ofthe

term

(based

on

available

real

estate

tenure).

This

table

lists

certain

important

provisions

ofthe

Operator's

Lease.

Provision

Section

in

Operator's Lease Summary

a. Length

of

the

franchise

term

Section

1.01

b.

Renewal or extension

of

the

term

Not

Applicable

c. Requirements for

franchisee

to

renew or extend

Not

Applicable

d.

Termination

by franchisee

Not

Applicable

e.

Termination

by

franchisor

without

cause

Not

Applicable

f

Termination

by

franchisor

with

cause

Section

7.04

McDonald's

can terminate

only

if

franchisee

defaults.

g.

"Cause"

defined

- curable defaults

Section

7.04

You

have 10 days to cure default

of

any

covenant

or

agreement

other than

that

listed

in

h.

"Cause"

defined

- non-curable

defaults

Sections 3.03(A) and 7.04

Failure

to pay

rent;

failure

to submit required

reports;

failure

to

comply

with

Franchise

Agreement; abandonment; bankmptcy.

i.

Franchisee's obligations on

termi

nation/non-renewal

Sections 5.02 and 7.04

Subject to the option to purchase contained in the

Franchise Agreement, remove

all

equipment and

fixtures;

continue to pay

rent

on termination.

j.

"Assignment

of

contract by

franchisor

Not

Applicable

Assignable

by

McDonald's

as a

matter

of

common

law;

no

separate

provision

required.

k.

"Transfer"

by

franchisee

-

defined

Not

Applicable

1. Franchisor

approval

of

transfer by

franchisee

Section

4.06

No

assignment without

McDonald's

consent and

only

in

accordance

with

the Franchise Agreement

(see

1

and

m

under Franchise Agreement).

m.

Conditions

for

franchisor

approval

of

transfer

Not

Applicable

See

1

and

m

under Franchise Agreement.

n.

Franchisor's

right

of

first

refusal

to

acquire

franchisee's

business

Not

Applicable

See n under Franchise Agreement.

0. Franchisor's option to purchase

franchisee's business

Not

Applicable

See

0

under Franchise Agreement.

p.

Death or

disability

of franchisee

Not

Applicable

See p under Franchise Agreement.

q.

Non-competition

covenants during

the term

of

the

franchise

Not

Applicable

See q under Franchise Agreement.

r.

Non-competition

covenants after the

franchise

is terminated or expires

Not

Applicable

See r under Franchise Agreement.

s.

Modification

of

the

agreement

Section

8.07

No

modifications,

except

in

writing.

t. Integration/merger clause

Section

8.07

Only

the

terms

of

the

Franchise Agreement and

Operator's Lease are

binding

(subject to

state

law).

Any

other promises may not be

enforceable, but nothing

in

the Operator's Lease

disclaims

any representations made in this

disclosure

document.

-42-

Provision

Section

in

Operator's Lease

Summary

u.

Dispute resolution by arbitration or

mediation

Not

Applicable

v.

Choice

of

fomm

Not

Applicable

w.

Choice

of law

Section

8.06

The Franchise Agreement and Operator's Lease

are interpreted and govemed by

Illinois

law (with

specific

exceptions

stated

in

the Franchise

Agreement).

Item

18

Public

Figures

McDonald's

does

not use any

public

figure

to promote our franchise.

Item

19

Financial

Performance

Representations

The

FTC's

Franchise

Rule

permits a

franchisor

to provide

infonnation

about the actual or potential

financial

performance

of

its

franchised

and/or

franchisor-owned

outlets,

if

there

is a reasonable basis

for

the

information,

and

if

the

information

is included

in

the disclosure document.

Financial

performance

information

that

differs

from

that

included

in

Item 19 may be given only if (1) a

franchisor

provides the actual records of

an

exisfing

oudet you are

considering

buying;

or (2) a

franchisor

supplements the

information

provided

in

this

Item 19,

for

example, by

providing

information

about possible performance at

a

particular

locafion

or under

particular circumstances.

Of

the approximately 12.03512.073 domestic traditional

McDonald's

restaurants

opened at least

1

year as

of

December

31,

20102011, approximately 74% had annual sales volumes

in

excess

of

$2.000.0002.100.000:

approximately

6263%

had armual sales volumes

in

excess of

$2.200,0002.300,000;

and approximately

5051%

had

aimual

sales volumes in excess of $2,^00.0002,500.000 during

20102011.

The average annual sales volume

of

domestic

tradifional

McDonald's

restaurants

open at least

1

year as

of

December

31.

2^4^2011.

was

$2.^60.0002.578.000

during

20^02011.

The highest and lowest annual sales volume

in

20^2011

for

these

domestic

tradifional

McDonald's

restaurants

was $9.815.00010.200.000 and $^S?7000370.000. respectively.

The pro

forma

statements

included

below show annual sales volumes

of

$2.000.0002.100.000,

$2.200.0002.300.000, and $2.400.0002.500.000. These pro

fonna

statements

have been derived from

independent

franchisee

tradifional

restaurant

financial

statements

to provide

informafion

relevant to a prospective

franchisee (see

Note

1).

Specific

assumptions used

in

the presentation

of

these

pro

forma

statements

are indicated

above and below each

statement.

The pro forma

statements

are

based

upon

a

total

of

8,6008.713

independent

franchisee

tradhional

restaurants

open

and

operated

by

a

franchisee

for at

least

1

year.

A

FRANCHISEE'S

INDIVIDUAL

FINANCIAL

RESULTS

MAY

DIFFER

FROM

THE

RESULTS

STATED

IN

THE PRO

FORMA

STATEMENTS

FOR THE

REASONS

DESCRIBED

IN

THIS

ITEM

OR FOR

OTHER

REASONS.

Substantiation

of

the data used

in

preparing the eamings

claims,

including

computafions

of all

actual or average

profit

or eamings,

will

be made available to prospective franchisees upon reasonable

request.

It is anticipated

that

the

informafion

reported

in

these

pro

forma

statements

reflects

the operating results

before occupancy costs for independent franchisee

restaurants

open

for

at least

1

year.

However,

the operating

income

before occupancy cost

figures

appearing

below

should not be construed as the

financial

results or

"profif

before occupancy costs

which

might be experienced by a franchisee

with

a

similar

sales volume or

an

indication

that

any particular sales volume

will

be obtained.

An

individual

franchisee

is

likely

to experience operating

expense

variafions

including,

but not

limited

to, general insurance,

legal

and accounting fees, labor costs, and

store

management benefits

(life

and health insurance, etc.).

Additionally,

market

conditions,

operational and

-43-

management methods employed by a franchisee, different geographic

areas

of the country, and menu price

variations may

significantly

affect operating results. The

nature

of

these

variables makes it

difficult

to estimate

the

financial

results for any particular franchisee or location.

PRODUCT

SALES

(see Note 2)

TOTAL

COST

OF

SALES

GROSS

PROFIT

OTHER

OPERATING

EXPENSES

(excluding

rent,

service fees,

depreciation and amortization

(D&A},

interest, and income taxes)*

OPERATING

INCOME

BEFORE

OCCUPANCY

COSTS

(excluding

rent,

service fees,

D&A,

interest, and

income

taxes) (see Note 3)**

$2,000,000

2.100.000

587,000

650.000

31.0%

1,113,000

1.450.000

69.0%

860,000

43.0%

903.000

553,000

547.000

26.0%

100.0%

$2,200,000 100.0% $2,100,000 100.0%

2.300.000 2.500.000

611,000 29T^ 701,000

710.000 . 30.9% 770.000 30.8%

1,556,000

?0T7%

1,699,000

?0T«%

1.590,000 69.1% 1.730.000 69.2%

928,000 42T2% 995,000 44r§%

969,000 42.1% 1.036.000 41.4%

629,000

2ST6%

701,000

29T3%

621.000 27.0% 694.000 27.8%

Of

the 8^6008.713 independent franchisee traditional

restaurants

included in the pro forma

statements

above, approximately 4544% had operating income before occupancy costs

greater

than $553.000547.000;

approximately 32% had operating income before occupancy costs

greater

than $629.000621.000; and

approximately 22% had operating income before occupancy costs

greater

than $704.000694.000.

*

OTHER

OPERATING

EXPENSES

— Includes, but is not

limited

to, the

following

costs: labor,

franchisee's salary as manager,

payroll

taxes, advertising fee (as described in Item 6), promotion, outside services,

linen,

operating supplies, small equipment, maintenance and repair,

utilities,

office

supplies, legal and accounting

fees, insurance, real

estate

and personal property taxes, business operating licenses, and non-product income or

expense. This is a combination of the Total Controllable Expenses and Other

Operafing

Expenses excluding

rent,

service fees,

D&A,

and interest included in our

typical

store

financial

statements.

**

OPERATING

INCOME

BEFORE

OCCUPANCY

COSTS

— Represents Operating Income

excluding

rent,

service fees,

D&A,

interest, and income taxes. The

rent

paid to

McDonald's

will

vary based upon

sales and

McDonald's

investment in land, site improvements, and

building

costs. Refer to Item 6 for

information

regarding franchise

fees

(including

rent

and service

fees

paid to

McDonald's).

D&A

and interest

will

vary based

upon the purchase price and required reinvestment of the

specific

restaurant

acquired.

Refer

to Item 7 for a

description

of investment costs.

Additionally,

organization overhead costs such as salaries and benefits of

non-restaurant

persormel (if

any), cost of

an

automobile used in the business

(if

any),

and other discretionary expenditures may

significantly

affect profits realized in any given operation. The

nature

of

these

variables makes it

difficult

to estimate the

performance for any particular

restaurant

with

sales of any given volume.

THESE

SALES,

PROFITS,

OR

EARNINGS

ARE

AVERAGES

OF

SPECIFIC

RESTAURANTS

AND

SHOULD

NOT BE

CONSIDERED

AS

THE

ACTUAL

OR

POTENTIAL

SALES,

PROFITS,

OR

EARNINGS

THAT

WILL

BE

REALIZED

BY

ANY

OTHER

FRANCHISEE.

McDONALD'S

DOES

NOT

REPRESENT

THAT

ANY

FRANCHISEE

CAN

EXPECT

TO

ATTAIN

THESE

SALES,

PROFITS,

OR

EARNINGS.

Note

1

— Data for

McOpCo

company

restaurants

is not included in the pro forma

statements

because

of

certain expenses

that

are

typically

incurred by a

McOpCo-operated

restaurant

that

are not incurred by

restaurants

franchised to

individuals.

If data for

McOpCo-operated

restaurants

open for at least I year were included along

with

franchised

restaurants,

the percent of

total

restaurants

in each category

would

not be statistically different

and the

range

of

Operafing

Income Before Occupancy Costs

would

be $566.000564.000 to $718.000712.000.

-44-

Note

2

—

The

description

of

this

line,

"Product

Sales,"

is to

clarify

that

only

product sales

are

included.

Non-product

sales and associated costs are

included

in

Other

Operating

Expenses.-In-addition,

each

restaurant's

product

Galea

is menu

prico

adjusted

before

the pro

forma

statomonts aro

produood

to

factor

out the impact of

different-

menu

prices on

restaurant

results.

Note

3

—

We

are not presenting average occupancy costs

in

the above

calculation

because a

wide

variety

of

rent charts and ownership options exist. In

addition,

the

effective

rent

paid

by

a

franchisee

may be more

in

any

particular

month than the stated percent rent indicated

in

the

franchisee's

lease because a

portion

of

the rent may

be

fixed

regardless

of

the sales

level

for

a

given

month.

The range

of

effective

rent percentages

in

20102011

for

franchised

restaurants

was

0%

to

37%.

Refer

to Item 6

for

a

description

of

rents.

Item

20

Outlets

and

Franchisee

Information

Tables

1

through 4 have been updated to delete 2008 and add 2011.

Table No.

1

Systemwide

Outlet

Summary

For

years

20082009

to

20402011

Outlets

at the

Outlets

at the

Outlet

Type

Year

Start

of

the

Year

End

of

the

Year

Net

Change

Franchised

2009 12,127

12,381

-H254

2010

12,381 12,469 -(•88

2011 12,469

12,544 +75

Company-Owned

2009 1,777 1,576

-201

Company-Owned

2010

1,576 1,547 -29

2011 1.547 1,549

+2

Total

Outlets

2009

13,904 13.957

+53

2010 13,957

14,016 +59

2011 14,016 14,093 +77

Table

No.

2

Transfers of

Outlets

from

Franchisees

to

New

Owners

(other

than

the

Franchisor)

(1)

For

years

20082009

to

20102011

State

Year

Number

of

Transfers

Alabama

2009 6

2010 5

2011

8

Alaska

2009

0

2010

2

2011 0

Arizona

2009 5

2010 25

2011 13

Arkansas

2009

9

2010 5

2011

8

Califomia

2009 59

2010 51

2011 55

-45-

State

Year

Number

of

Transfers

Colorado

2009

16

2010

2

2011 8

Connecticut

2009

0

2010 6

2011

2

Delaware

2009

0

2010 0

2011 0

District

of

Columbia

2009

3

2010

2

2011 0

Florida

2009

60

2010 22

2011 7

Georgia

2009

5

2010

46

2011 14

Hawaii

2009

0

2010

0

2011 0

Idaho

2009

4

2010 0

2011 1

Illinois

2009

36

2010 27

2011 17

Indiana

2009

3

2010

4

2011 20

Iowa

2009

2

2010

17

2011 25

Kansas

2009

7

2010 10

2011 5

Kentucky

2009

11

2010 7

2011 7

Louisiana

2009

0

2010 12

2011 29

Maine

2009

10

2010 9

2011 8

Maryland

2009

0

2010 14

2011

3

Massachusetts

2009

6

2010

19

2011 26

Michigan

2009

21

2010 16 .

2011 22

-46-

State

Year

Number

of

Transfers

Minnesota

2009

10

2010 8

2011 7

Mississippi

2009

1

Mississippi

2010 6

2011 8

Missouri

2009

11

2010 13

2011 3

Montana

2009

3

2010 0

2011 0

Nebraska

2009

0

2010 3

2011 0

Nevada

2009

11

2010

2

2011 1

New

Hampshire

2009

1

New

Hampshire

2010 0

2011 30

New

Jersey

2009

2

New

Jersey

2010 3

2011

2

New Mexico

2009

0

2010

2

2011.

4

New York

2009

20

2010 32

2011

39

North

Carolina

2009

17

2010 28

2011 14

North

Dakota

2009

0

2010

0

2011

0

Ohio

2009

16

2010 19

2011 6

Oklahoma

2009

1

2010 9

2011 19

Oregon

2009

2

2010

2

2011 0

Pennsylvania

2009

35

Pennsylvania

2010 23

2011 16

Rhode

Island

2009

3

2010 0

2011

0

South

Carolina

2009

20

2010 15

2011

2

-47-

State

Year

Number

of

Transfers

South

Dakota

2009 0

2010

3

2011

0

Tennessee 2009 9

2010 26

2011 10

Texas 2009 125

2010 94

2011 25

Utah

2009

8

2010 5

2011

8

Vermont

2009

3

2010 0

2011

14

Virginia

2009 5

2010 10

2011 4

Washington

"

2009

3

2010 7

2011 7

West

Virginia

2009

1

2010

3

2011

2

Wisconsin

2009

14

2010

8

2011 13

Wyoming

2009

1

2010

1

2011

2

Guantanamo Bay

2009

0

2010 0

2011 0

Northem

Mariana Islands

2009 0

2010 0

2011 0

Total

2009

585

2010 623

2011 514

(1) Included

are

"spin"

transacfions

in

which

we or an

affiliate

acquired the

restaurant

from

one franchisee

and immediately

sold

the

restaurant

to another

franchisee

without our ever

having

operated

the

restaurant.

Table No.

3

Status

of

Franchised

Outlets

For

years

20082009

to

2O4O2011

Outlets

Reacquired

Ceased

Oufiets

at

Start

by_

Operations

- at

End

ofthe Outlets

Non-

Franchisor

Other

ofthe

State

Year

Opened Terminations

(I)

Renewals

(2)

(3)

Reasons

(4)

Year

Alabama

2009 231 11 0 0 0 0 242

2010 242

4

0

1

0 0

245

2011 245 6 0

1

0 0 250

-48-

Outlets

Reacquired

Ceased Outlets

at

Start

by

Operations - at End

of

the Outlets

Non-

Franchisor

Other

ofthe

State

Year Year

Opened

Teiminations

(1) Renewals (2)

(3)

Reasons

(4)

Year

Alaska

2009

30 1 0 0 0

0 31

2010 31 0

0 0 0 0 31

2011 31

1 1 0 0

0 31

Arizona

2009

249

10 0 0 0

1

258

2010 258

4

1

0 0

1 260

2011 260

3 1 0 0

0 262

Arkansas

2009

160 3

1

0

0 0 162

2010

162

5

0 0 0

1 166

2011

166

2

0 0

0 166

Califomia

2009

1,226 17

5

2

0 0 1,236

2010 1,236

10 6 3 0

2

1,235

2011 1,235

11 1

2

0 1 1,242

Colorado

2009

185 8

0 0 0 0 193

2010 193

7

2

0 0

0 198

2011 198

4 0

2

0

1

199

Connecticut

2009

140

1 0 1 0

1

139

2010 139

1

2

1 0 0 137

2011 137

0 0 0 0 0

137

Delaware

2009

32 0 0 0

0 0 32

2010

.

32 1

0 0 0 0 33

2011 33

0 1 0 0

0 32

District

of

Columbia

2009

31

0

0 0 31

2010 31 0

0 0 0 0 31

2011 31 0

1 0 0 0 30

Florida

2009

675

9

4

0 0

0 680

2010

680 7

0

0 0 687

2011 687

14 1 3 0 3

694

Georgia

2009

366

20 0 1 1 0

384

Georgia

2010 384 12

3 0

0

0 393

2011 393 8

0 0 0

2

399

Hawaii

2009

45

8 0 0 0 0 53

2010 53

1

0

1 0 52

2011 52

1 1 0 1 0 51

Idaho

2009

58 0

0 0 0 0 58

2010 58

1 0 0 0

0

59

2011 59

I

0 0 0

0 60

Illinois

2009

538 22

2

1 5 1 551

2010 551 6

0 0 0 0 557

2011

557 6

2

0 0

1

560

Indiana

2009

268

14 0 0 1

1 280

2010 280

7 0 0 1

1 285

2011

285 4

1

0

5 0 283

Iowa

2009

138 1 0

0 0 0 139

2010 139

2

0 0 0

1

140

2011 140

2

0 0 0 0

142

Kansas

2009

142 1 0 0 0

0 143

2010 143

1

:

1

0 0

0 143

2011 143 0

0 0 0 0 143

Kentucky

2009

207

4 0 0 0 0 211

Kentucky

2010

211 3 0 0 0

0 214

2011

214 1 0 0

0 0 215

-49-

Outlets

Reacquired

Ceased Outiets

at

Start

by

Operations -

at

End

ofthe

Outlets

Non-

Franchisor

Other

ofthe

State

Year Year

Opened Terminations (1) Renewals (2)

(3)

Reasons

(4)

Year

Louisiana

2009 220 8

1

0

1 1

225

2010 225 6 0 0 0 0 231

2011 231

2

0 1 0 0

232

Maine

2009 59

1 0 0 0 0 60

2010 60

2 2

.1 0 0 59

2011 59

2

0 0 0 0 61

Maryland

2009

212 9 0 0 0 0 221

2010 221

2

0

0 0 223

2011 223

11

2

0

0 5 227

Massachusetts

2009 216 7

2

0 0 0 221

2010 221 1 3

2

0

0 217

2011 217

4 1 0 18 0 202

Michigan

2009

423 20 0 0 0

2

441

2010 441 9

2

0 0

0

448

2011 448

4 0 1 0 1 450

Minnesota

2009

177 0 1 0 0 0 176

2010 176 5 0 0 0

0

181

2011 181 3

0 1 0 0 183

Mississippi

2009

127 1 0 0 0 0 128

2010 128 5 0 1 0

2

130

2011 130

5 0 0 0

2

133

Missouri

2009 283

4

2

1 0 1 283

2010 283 5 0 0 0

0 288

2011 288 5

1

0

2

290

Montana

2009

48 1 1 0 1 0 47

2010 47 1 0 0 0

0

48

2011 48

1 0 0 0 0 49

Nebraska

2009

46 12 0 0 0 0 58

2010 58

1 0

0

0 0 59

2011 59

0 0

0

0 0 59

Nevada

2009 125

2

0 0 0 0 127

2010 127

4

0 0

0 1 130

2011 130 1 0 1 0 0 130

New

Hampshire 2009 61 0

2

0 0

0

59

2010 59

1 1 0 0 0 59

2011 59 0 0 0 0 0 59

New

Jersey

2009 247

4

3 0

3 0 245

2010 245 5

6

2

0 0 242

2011 242 0 1

2

0

239

New Mexico

2009 95 3

0

0 0 98

2010 98

1 0

0

0 0 99

2011 99 0 1 0 0

0

98

New York

2009

664 11

3

2

0

2

668

-

2010 668 1 0 1 0 0 668

2011 668 4

4

0 0

2

666

North Carolina

2009

373 13 1 0 0

1

384

2010 384 7

2

0 0

1

388

2011 388 10 0 1 0

1

396

North

Dakota 2009 23 0 0 0 0

0 23

2010 23 1 0 0 0

0 24

2011

24

0 0 0

0 0 24

-50-

Outlets

Reacquired

Ceased

Outlets

at

Start

by

Operations -

at End

ofthe

Outlets

Non-

Franchisor

Other

ofthe

State

Year Year

Opened

Temiinations

(I) Renewals (2)

(3)

Reasons(4)

Year

Ohio

2009

534 14

0 3

1

2

542

2010 542 6

0

2

0 0

546

2011 546

5

1

2

0

2

546

Oklahoma

2009

156

20 3 0

0 0

173

2010 173

9

3 0 0

0 179

2011 179

6 0

0 3

0 182

Oregon

2009

167

2

0

I

0

0 168

Oregon

2010 168

0 3

0 0

0 165

2011

165 0

1 0

0 0

164

Pennsylvania

2009

472

6 3

0 0

I

474

Pennsylvania

2010

474 6 3

2

0

0 475

2011 475 3

0 0

478

Rhode

Island

2009

32

1 1 0

0

0 32

2010

32 0 0

0 0

0

32

2011 32 0

0 0

32

South

Carolina

2009

187 24 0

1 0

2

208

2010 208 5

0 0

0

1 212

2011 212

4 0

0 0

1 215

South

Dakota

2009

30 0

0 0

30

2010 30 0

0 0

30

2011 30

0 0

0 30

Tennessee

2009

296 3

1 0 0

0 298

2010.

298

2

1 0

0 0

299

2011 299 3

1 0

0 0

301

Texas

2009

1,037 32

6

I

0

I

1,061

2010

1,061 28

7 0 29

0 1,053

2011 1,053

27 7

1 0

1 1.071

Utah

2009

107 3

1 0 0

0 109

2010 109

1 0 1 0

0 109

2011 109 3

0 0

112

Vermont

2009

28

0 0

0 28

2010

28 0

0 0 0

0 28

2011 28 0

0 0

0 0 28

Virginia

2009

372

2

6 0

0 0

368

Virginia

2010

368 7 0

5 0

0 370

2011

370 4

1 0 0

1 372

Washington

2009

222 8

1 0

0 0 229

Washington

2010 229 3

2

1

0 0 229

2011 229

1 0

0 0

0 230

West

Virginia

2009

83

1 0

0 0

0

84

2010

84 3 0

0 0

1 86

2011 86

2

0 0 0

0 88

Wisconsin

2009

255 7

0 0

0 1 261

2010 261

6 0 0

0

1 266

20II. 266 5

0 0

0

1 270

Wyoming

2009

26 0

0 0 0

0 26

Wyoming

2010

26 1

0 0 0

0 27

2011 27

1 0 0

0 0

28

Guantanamo

Bay

2009

1 0 0 0

0 0

1

Guantanamo

Bay

2010

1 0 0

0 0

0 1

2011 1 0

0 0 0

0

1

-51-

Outlets

Reacquired

Ceased Outiets

at

Start

by

Operations - at End

ofthe Outlets

Non-

Franchisor

Other ofthe

State

Year Year

Opened Terminations (1) Renewals (2)

(3)

Reasons (4)

Year

Northem

Mariana Islands 2009

2

0 0 0 0 0

2

2010

2

0 0 0 0 0

2

2011

2

0 0 0 0 0

2

Total

Outlets

2009 12,127 349 50 14

13 18 12,381

2010 12,381 206 51 23 31 13

12,469

2011 12,469

180

33 18 27 27

12,544

(1) Substantially

all

of

the

Terminafions

are as a result

ofclosings

of

restaurants

by mutual

agreement

during

the

franchise

term.

(2) Franchisees are not

given

the

right

to renew or extend the

franchise

at the end

of

the

term.

At

McDonald's

sole

discretion,

a

franchisee

may or may not be

offered

a new term

franchise.

If

we do not

grant

a new term

franchise,

the franchisee has the opportunity to

sell

the

franchise

during the remaining

term, and a

qualified

purchaser

is

allowed

to

enter

into a new term Franchise Agreement. These

transacfions are not

included

as

Non-Renewals.

Substanfially

all

of

the

Non-Renewals

are as a result

of

closings

of

restaurants

by mutual

agreement

at the end

of

the

franchise

term.

(3) Reacquired by Franchisor

does

not include

"spin"

transactions,

in

which

we or an

affiliate

acquired the

restaurant

from

one franchisee and immediately

sold

the

restaurant

to

another

franchisee without our ever

having

operated

the

restaurant.

(4) Ceased Operations includes Franchise Agreements

that

were

mumally

terminated

because

the franchisee

relocated the

restaurant

to a new site. The

exisfing

Franchise Agreement was terminated, and we

entered

into

a Franchise Agreement

for

the new site

with

the franchisee.

Table

No. 4

Status

of

Company-Owned

Outlets

For

years

20082009

to

20402011

Outlets Outiets Outlets

at

Start

Reacquired

Outlets

Sold

at End

of

tiie Outiets

From

Outiets

to ofthe

State

Year Year

Opened Franchisee (1)

Closed

Franchisee

Year

Alabama

2009

12 0 0

0 11 1

Alabama

2010

I

1 0 0 0

2

Alabama

2011

2

0 0 0 0

2

Arizona

2009 18 0 0 0 1

17

Arizona

2010 17 0 0 0 0 17

Arizona

2011

17 0

0

1

0 16

Califomia

2009 111 0 0 1

10 100

Califomia

2010 100 1 0 0 0 101

Califomia

2011 101

0 0

0

I

100

Colorado

2009 25 0 0 0 5 20

Colorado

2010 20 0 0 0 1 19

Colorado

2011 19 0 0 0 0

19

Connecticut

2009 6 0 0 0 0 6

Connecticut

2010 6 0 0 0 0

6

Connecticut

2011 6 0 0 0 0 6

Delaware

2009 5 0 0 0 0 5

Delaware

2010

5 0 0

0

0 5

Delaware

2011 5 0 0

0

0 5

-52-

Outlets Outlets

Outiets

at

Start

Reacquired

Outlets

Sold

at End

ofthe

Outlets

From

Outlets to

ofthe

State

Year Year

Opened

Franchisee (1)

Closed

Franchisee

Year

District

of

Columbia

2009

2

0 0

-1 0 3

2010 3 0

0 0 0

3

2011 3

0 0 0

0 3

Florida

2009

.

175

1 0 1

2

173

2010 173 1 0

2 2

170

2011 170

3 0 1 5

167

Georgia

2009

77 0

1 0 16

62

Georgia

2010

62 0 0 1 3

58

2011

58 3 0 0

2

59

Hawaii

2009

29 0

0 0 8

21

2010

21 1 1 0

0 23

2011 23 0

1 0 0

24

Illinois

2009

127 0

5 0

17 115

2010 115

1

•

0

1 5 110

2011

no

1 0 0 3

108

Indiana

2009

80

0 1

1

9

•

71

2010 71 0

1 1 6

65

2011 65

1 5 0

0 71

Iowa

2009

6 0 0

0 0 6

2010 6 0 0

0 0

6

2011 6

0 0 0

0 6

Kansas

2009

10 0 0

1 0 9

2010 9 0

0 0 0

9

2011 9 0

0 0 0

9

Kentucky

2009

43 0 0 0

3 40

2010 40 0 0

0 1 39

2011 39 0

0 0

1 38

Louisiana

2009

22 1 1 0 5

19

2010 19 0 0

0 3 16

2011 16 0

0 0 0 16

Maryland

2009

88

0 0

1 8 79

Maryland

2010 79

I

0 0

2

78

2011 78 0 0

0

4 74

Massachusetts

2009

36 0

0 0 6

30

2010 30

0 0 0

0 30

2011

30 0 18 0

0 48

Michigan

2009

130 0 0

3 15

112

2010 112 0 0

0 6

106

2011 106

0 0 0 3

103

Minnesota

2009

41 0 0 0

0 41

2010

41 0 0 0

3 38

2011 38 0 0

2

0 36

Mississippi

2009

13 0 0

1 0

12

Mississippi

2010 12 0

0 0 0

12

2011 12

1 0 0 0

13

Missouri

2009

34 1 0 0

3 32

2010 32 0 0 0

2

30

2011 30 0

0 0 0

30

Montana

2009

0 0

1 0

2010

0 0 0

2011

0 0 0

-53-

Outlets Outlets Outiets

at

Start

Reacquired

Outiets

Sold

at

End

of

tiie

Outiets

From

Outiets

.

to

ofthe

State

Year Year

Opened Franchisee (1)

Closed

Franchisee

Year

Nebraska

2009

33 1 0 0 11 23

2010 23 0 0 0

0

23

2011 23 0 0 0 0 23

Nevada

2009

26 0 0

0

2

24

2010 24 0 0 0 1 23

2011 23 0 0 0

•

0

23

New

Jersey

2009

27 0

3

2

3 25

2010 25 0 0 1 3 21

2011

21

0 0 0 0 21

New

York

2009

22 0 0

I

6 15

2010 15 0 0 0 0 15

2011

15

0

0 0

2

13

North

Carolina

2009

60 4 0 0

0

64

2010 64

2

0 0

0

66

2011 66

2

0 0

I

67

Ohio

2009

101 1 1

0 10 93

2010 93 0 0 0 5 88

2011 88 1 0 1 3 85

Oklahoma

2009

47 0 0 1 14 32

2010 32 0 0 0 6 26

2011 26 0 3 0 1 28

Pennsylvania

2009

62

0

0 5 57

2010 57

I

0 0 4 54

2011 54 0 0

I

0 53

Rhode

Island

2009

1 0 0

0

1 0

2010 0 0 0 0 0 0

2011 0 0 0 0 0 0

South

CaroUna

2009

19 1 0 0 17

3

2010 3 1 0 0 0 4

2011

4

0 0 0 0

4

Tennessee

2009

30 0 0 0 0 30

2010 30 0 0 0 0 30

2011 30 0 0 0

0

30

Texas

2009

95 0 0 1 10 84

2010

84

3 29 0 8 108

2011 108 3 0 0

3

108

Virginia

2009

49 0 0 0 0 49

2010 49 0

0 1 1

47

2011 47 0 0

2 2

43

Washington

2009

52

-

0 0

I

7

44

2010

44

0 0 1 0 43

2011 43 0 0 0 0 43

West

Virginia

2009

15 1 0 0 0 16

2010 16 0 0 0 0 16

2011 16 1 0 0 1 16

Wisconsin

2009

40 0

0

5

35

2010 35 0 0 0 3 32

2011 32 0 0

0

1

31

Guam

2009

8 0 0 0 0 8

2010 8 0 0 0 0 8

2011 8

•

0

0 0 0 8

-54-

Oufiets Outlets Outiets

at

Start

Reacquired

Outiets

Sold

at End

ofthe

Outlets

From

Outlets to

of

tiie

State

Year Year

Opened

Franchisee (1)

Closed

Franchisee

Year

Total

Outlets

2009 1,777 11 13 14 211 1,576

Total

Outlets

2010 1,576

13

31

8 65

1,547

Total

Outlets

2011 1,547 16 27 8 33 1,549

(1) Reacquired

from

Franchisee

does

not include

"spin"

transacfions, in

which

we or an

affiliate

acquired the

restaurant

from

one

franchisee

and immediately sold the

restaurant

to

another

franchisee without our ever

having

operated

the

restaurant.

Table

No.

5

Projected

Openings

As Of

December

31,20402011

(1)

State

Franchise Agreement

Signed

But Outiet

Not

Opened .

Projected New

Franchised Outiet

in

the Next

Fiscal

Year

Projected New

Company-Owned

Outlet

in

the Next

Fiscal

Year

Alabama

0

?5

0

Alaska

0 +0 0

Arizona

0

37 02

Arkansas

0 28 0

Califomia

0 4417 0

Colorado

0 42 0

Connecticut 0 1 0

Delaware 0 03 0

District

of

Columbia

0

0 0

Florida

0 4017

2

Georgia

0 ^8 40

Hawaii

0

2

0

Idaho

0 4-2

•0

Illinois

0 210 20

Indiana 0 32 01

Iowa

0 ^1

0

Kansas

0 0 0

Kentucky

0 02 0

Louisiana

0

44

0

Maine

0

40

0

Maryland

0 ?3 0

Massachusetts

0 02 01

Michigan

0

34

0

Minnesota

0

37

0

Mississippi

0 62

0

Missouri

0 31

0

Montana 0 40 0

Nebraska 0 1 0

Nevada 0

44

01

New

Hampshire 0

1

0

New

Jersey

0 5 0

New

Mexico

0 1 0

New

York

0 #8 0

North

Carolina 0 429 02

North

Dakota 0 0 0

Ohio

0

&S

40

Oklahoma

0

34

"

0

Oregon 0 23 0

-55-

Franchise Agreement

Projected New Projected New

Signed

But Outiet

Franchised

Outiet

Company-Owned

Outlet

State

Not

Opened

in

the Next

Fiscal

Year

in

the Next

Fiscal

Year

Pennsylvania

0 32 0

Rhode

Island

0 01 0

South

Carolina

0

28 0

South

Dakota

0 1 0

Tennessee

0

7 0

Texas

0

3430

42

Utah

0 3

0

Vermont

0

0 0

Virginia

0 35 0

Washington

0

1 0

West

Virginia

0

40 40

Wisconsin

0 21 0

Wyoming

0

42 0

Guam

0

0 0

Guantanamo Bay

0 0 0

Northem

Mariana

Islands

0 0

0

Total

0

46S215 911

(1)

Reflects

projections

of

gross

restaurant

openings.

McDonald's

anticipates

closing

approximately 424164

restaurants

in

20112012.

Attached

to this disclosure document as

Exhibit

R

is a

list

of

U.S.

franchised

restaurants

as of

December 31,20402011.

Attached

to this disclosure document as

Exhibit

S

is a

list

ofthe 249263

franchisees

who had a

restaurant

franchise

terminated, canceled, not renewed, or otherwise

voluntarily

or

involuntarily

ceased to do

business

under

the Franchise Agreement during the most

recent

completed

fiscal

year or

who

have

not communicated

with

us

within

10

weeks

of

the

application

date.

If you

buy this

franchise,

your contact

information

may be

disclosed

to

other

buyers when

you

leave the

franchise

system.

In

some

instances, current and former

franchisees

sign

provisions

restricfing

their

ability

to

speak

openly

about

their experience

with

McDonald's.

You

may

wish

to

speak

with

ciurent and

former

franchisees,

but be

aware

that

not

all

such

franchisees

will

be able to communicate

with

you.

Trademark-specific

franchisee organizations created, sponsored, or endorsed by

McDonald's:

1.

National

Leadership

Council

(NLC)

Address:

2111

McDonald's

Plaza

Oak

Brook,

IL 60523

Telephone #: (214) 707-1843

E-Mail

Address:

[email protected]m

NLC

is endorsed by

McDonald's.

2.

Asian

McDonald's

Operators

Associafion

(AMOA)

Address:

Telephone #:

E-Mail

Address:

135

W 52"'^

Avenue

P.O. Box

51060

Eugene,

OR

97405

(541) 726-9866

[email protected]m

AMOA

is endorsed by

McDonald's.

-56-

McDonald's

Hispanic

Operators

Associafion

(MHOA)

Address:

Telephone

#:

E-Mail

Address:

Web

Address

7105 West

Higgins

Avenue

Chicago,

IL

60656

(469) 287-2302

leonardo. lopez@partners

.mGdroemphi

lip

.fuentes@parmers.

mcd. com

www.mhoa-usa.com

MHOA

is endorsed by

McDonald's.

National

Black

McDonald's

Operators

Association

(NBMOA)

Address:

Telephone

#:

E-Mail

Address:

Web

Address:

P.O. Box

820668

South

Florida,

FL

33082-0668

(954) 389-4487

[email protected]m

www.nbmoa.org

NBMOA

is endorsed by

McDonald's.

5. Women Operators Network

(WON)

Address:

CHAR,

Inc.

811 Gunter

Avenue

P.O. Box

878

Guntersville,

AL

35976-0878

Telephone #: (256) 582-2849

Ext.

1

E-Mail

Address:

[email protected]m

WON

is endorsed by

McDonald's.

Item

21

Financial

Statements

Attached

to this disclosure document as

Exhibh

A

are the consolidated balance

sheets

of

McDonald's

USA, LLC

as of December

31,

2^2011. and December 31,20092010. and the related consolidated

statements

of

income,

member's

equity, and cash

flows

for

the

years

ended December

31,

20102011. December 31,

20092010. and December

31,

20082009.

Item

22

Contracts

All

agreements

used by us regarding the

offering

of

a franchise are

attached

to this disclosure document

as

Exhibits

B, C, D, E, F, G, H,

I, J,

K,

and

M.

Item

23

Receipts

See the Receipts

at

the end

of

this disclosure document.

-57-