Legal Environment of Business 8th Edition by Henry Cheeseman

Exercise 1

Liability of a Franchisor McDonald's Corporation (McDonald's) is a franchisor that licenses franchisees to operate fast-food restaurants and to use McDonald's trademarks and service marks. One such franchise, which was located in Oak Forest, Illinois, was owned and operated by McDonald's Restaurants of Illinois, the franchisee.
Recognizing the threat of armed robbery at its franchises, especially in the time period immediately after closing, McDonald's established a corporate division to deal with security problems at franchises. McDonald's prepared a manual for restaurant security operations and required its franchisees to adhere to these procedures.
A McDonald's regional security manager visited the Oak Forest franchise to inform the manager of security procedures. He specifically mentioned these rules: (1) No one should throw garbage out the backdoor after dark, and (2) trash and grease were to be taken out the side glass door at least one hour prior to closing. During his inspection, the security manager noted that the locks had to be changed at the restaurant and an alarm system needed to be installed for the backdoor. McDonald's security manager never followed up to determine whether these security measures had been taken.
One month later, a six-woman crew, all teenagers, was working to clean up and close the Oak Forest restaurant. Laura Martin, Therese Dudek, and Maureen Kincaid were members of that crew. A person later identified as Peter Logan appeared at the back of the restaurant with a gun. He ordered the crew to open the safe and get him the money and then ordered them into the refrigerator. In the course of moving the crew into the refrigerator, Logan shot and killed Martin and assaulted Dudek and Kincaid. Dudek and Kincaid suffered severe emotional distress from the assault.
Evidence showed that Logan had entered the restaurant through the backdoor. Trial testimony proved that the work crew used the backdoor exclusively, both before and after dark, and emptied garbage and grease through the backdoor all day and all night. In addition, there was evidence that the latch on the backdoor did not work properly. Evidence also showed that the crew had not been instructed about the use of the backdoor after dark, the crew had never received copies of the McDonald's security manual, and the required warning about not using the backdoor after dark had not been posted at the restaurant.
Martin's parents and Dudek and Kincaid sued McDonald's to recover damages for negligence. Is McDonald's liable for negligence? Martin v. McDonald's Corporation, 572 N.E.2d 1073, Web 1991 Ill.App. Lexis 715 (Court of Appeals of Illinois)