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Ronald McDonald on Trial

The Lawsuit Shaking America's Premier Fast-Food Chain

By James A. Star

You, you're the one

You are the only reason

You, you're the one

We take pride in pleasin'

The crowded courtroom fell silent as Richard G. Schultz, attorney for the McDonald's Corporation, approached the bench. Schultz, everyone there knew, was to defend his multi-million dollar client against charges of unfairly revoking the license of one Raymond Dayan, owner and operator of McDonald's franchises in Paris. Five hundred million dollars in damages was at stake. So was the entire French fast food market--one of the fastest-growing and most profitable such markets in the world. Reporters from the New York Times and the Wall Street Journal scribbled furiously as Schultz addressed the Hon. Richard Curry, a solemn and conservative judge, even by the standards of his fellow magistrates.

"Your Honor," Schultz began, "the evidence will show that the plaintiff's french fries are greasy."

Although the entire Chicago courtroom--even Curry-laughed, Schultz and McDonald's take the matter very seriously. They say Dayan's operations are irreparably damaging the image of McDonald's around the world because of their failure to maintain strict standards of quality, service, and cleanliness-what McDonald's calls "QSC. In short, they contend Dayan's stores, particularly his highly visible outlets on the Champs Elysee, are "a blight on the system." "At stake here is the good McDonald's name that it took more than a quarter of a century for Ray Kroc (McDonald's founder) and the company to establish," Schultz told the Court.

McDonald's charges against Dayan range from dirty floors and long service times to allowing dogs (and their byproducts) to lounge in food preparation areas. Schultz also charged at the trial that "Dayan cooked his hamburger patties 180 degrees too high; french fries 50 degrees too high; fish 55 degrees too high; and apple pie 67 degrees too high." To make matters worse, he added, "Customers waited for service for more than three minutes." The net result of Dayan's peccadilloes: "His mismanagement has destroyed the McDonald's image."

You're why we serve the best

That's McDonald's style

You're why we keep it clean

You're what makes us smile

Dayan, sitting in the front of the courtroom, found many of the charges hard to bear. He nearly had to be forcibly restrained when another McDonald's attorney, Thomas Foran, alleged that the restauranteur had ordered one of his guard dogs to attack a customer in a demonstration of restaurant security for a visiting McDonald's executive. In fact, it was Foran's theatrics which provided most of the drama in the early stages of the trial. While examining one of Dayan's French store managers, Foran displayed melodrama that even Perry Mason would have shunned. He turned away from the witness and walked slowly towards the councilor's desk. Wheeling around suddenly, he whipped off his Kennedyesque half-glasses and shouted, "Is that the basement where you beat up one of your employees?" Since the restaurant in question didn't have a basement, the judge, with a disapproving glance at Foran, ruled the question irrelevant.

Unlike the McDonald's attorneys, the lawyers for the plaintiff were cautious and businesslike, possibly a strategy designed to offset the flamboyant brashness of their French-Moroccan client. A loud but affable man, Dayan is known around his attorney's rather sterile law offices for his booming voice and harmless flirtations with secretaries. At heart, he considers himself a Frenchman.

A former interior decorator, Dayan became involved with McDonald's while decorating Ray Kroc's Des Plaines home. Kroc soon granted Dayan rights to franchise a huge area on Chicago's North side, where the Frenchman successfully peddled burgers and fries until the early 1970s. Kroc then persuaded Dayan to swap his Chicago empire for the French market. It is here where our story starts.

When McDonald's, perhaps seeing the potential of the French market, refused to deliver France, Dayan sued and won the Paris market and a lucrative 30-year license that requires Dayan to return a mere 1 per cent in revenues to the parent company. Some franchises now pay as much as 12 per cent. But unlike McDonald's other franchise owners, Dayan wasn't given access to McDonald's advice and support systems under the agreement. He was to develop the French market on his own. In effect, "He was the Ray Kroc of France," Fred Turner, president and chief executive officer of McDonald's, testified.

Although Dayan faced formidable problems in starting a string of McDonald's stores in France, the hamburger finally took off in Paris in 1976. Dayan's outlets became some of the busiest restaurants in the world, and his 14 stores netted annual sales revenues of more than 30 million. Until the French began to ditch escargot for Egg McMuffins, McDonald's home office in Oakbrook, Illinois had left Dayan virtually alone. But as profits increased, Dayan argues, so did the desire on the part of company executives to repossess his suddenly prosperous market. In 1977, McDonald's began to send inspectors to Paris. After several attempts to buy the operation went nowhere, McDonald's terminated Dayan's license, on the grounds that he failed to maintain QSC.

You, you're the one

That we've been lookin' for

You, you're the one

We've got it cookin' for

Although Epton, Mullin, Segal, and Druth, LtD., the Chicago-based law firm representing substandard, no one contends that his restaurants are models of cleanliness. In fact, Dayan's lawyers hoped to base their case on what they felt was selective enforcement of QSC standards by McDonald's. The crux of this argument was not that Dayan's operations were acceptable, but that they were no worse than many other McDonald's throughout the world.

To prove this contention, researchers at Epton, Mullin, Segal, and Druth attempted to document every rat, roach, and mouse ever seen in a New York City, Chicago, or Washington D.C. McDonald's between 1977 and the present. As Dayan's attorney's have noted, that adds up to a lot of health and safety violations. But that strategy failed when Judge Curry ruled that violations by outlets outside of France were irrelevant to the case--thus forbidding Dayan's attorneys from entering four boxes of illegible city health reports into evidence.

Curry, however, did allow Gerald B. Mullin, Dayan's senior attorney, to introduce as evidence letters among top McDonald's executives referring to Dayan as a "son of a bitch" who should be removed "at all costs" from "the McDonald's system." Mullin used that correspondence to allege that McDonald's is trying to screw Dayan out of a hamburger empire which could include 166 McDonald's worth billions of dollars.

You're why we're always near

Close by right on your way

You're why we keep our prices low

'Cuz you deserve a break today

So far, Judge Curry seems to agree. In a terse ruling issued in response to McDonald's motion--that the Court drop Dayan's case for lack of evidence, Curry sided strongly with the French entrepreneur. "Given the high level intrigue and high level entry within this major corporation that the Dayan suit provoked, I am satisfied that a prima facie case has been made. With the sanction of termination so extreme and heavy, the court should not deny the fullest range of testimony."

Dayan v. McDonald's, then, will continue to be tried in Curry's court for at least several months. With appeals from one side or the other almost certain, the case could drag on for several years if the lawyers don't settle out of court. One attorney expressing exasperation over what she considers to be a glorified debate over greasy french fries says she hopes the case ends differently: Wouldn't it be great to see Ronald McDonald stand up in the back of the courtroom and yell, "I confess! I did it!"

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