This article is written by Aishwarya Divate who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.

Introduction 

A service level agreement used to be a part of service agreements to specify the technical specifications of the services. SLA describes the nature, quality, and other scopes of the service to be provided. Each specific area of the service scope should be subjected to the same degree of scrutiny.

McDonald’s is a globally successful fast-food restaurant.   It has gained enormous success, growth and expanded the business and the services at the international level.  It makes a powerful entry through the franchise system. The strategy of standardization and adaptation plays an important role in gaining growth and a successful McDonald’s brand.

What is Service Level Agreement

A service level agreement (SLA) is defined as a contract between a service provider and a customer. It details the nature, quality and scope of the services to be provided to the customer. 

 In other words, a service level agreement is a legally binding contract between the owner and the service provider, to deliver a quality service, particularly with an agreed price. Service level agreement also incorporates 

The aspirations, aims, goals and objectives of the owner along with the corresponding strategies and technical Solutions as guaranteed by the service provider. 

Types of service level agreement

There are two major types of service level agreement in recent times:

B2C

This type of service level agreement is the announcements made by the various telecom companies, for example, IT, ISP’s and non-technology service providers that announce the service level guaranteed by the company to the public including their customers. The reason these companies make SLAs’ are to convey the prospective and their current customer, what is level of service they are able to guarantee and what kind of compensation shall be paid to the customer if these companies fail to maintain their guaranteed service level.

For Example some telephone service providers announce their SLA’s:

Connection in 24 hours, complaint, resolution in 12 hours, shifting in 12 hours and in case of any failure, 1 month rent is free.

These types of service level agreement is not negotiated and signed between the Parties as these agreements are unilaterally announced by the service providers to impress the customers at large. In case of failure by the service providers they are voluntarily adhered to the penalties/credits to the affected customers.

B2C

These agreements are between the two business houses that is service providers and the commercial customers. These SLA’s have substantial financial impact on the business of the customer in case of any breach by the service provider. These types of agreements have necessarily negotiated between the Parties signed and registered also. The companies follow the recommendation to follow the process of SLA for effective business management.

Why Service Level Agreement

1. . The advantage of SLA will make commitments that a company makes to a customer very clear and ensure that the customer service that is provided is satisfactory and maintain the goodwill of the company.
2. SLA creates performance indicators very clearly and these indicators essentially create benchmarks that need to be met in order for a company to meet their customer satisfaction level.
3. SLA clearly defines the parameters of a relationship between the customer and the service provider, ensuring the services are received and paid for their services.

Main components of an SLA 

The main components of an SLA as follows:

Negotiation 

Negotiation between the Parties is confined in order to ensure the optimum service provision agreements in all the aspects including the responsibilities that will be undertaken between both the Parties.

Agreement

   Establishing on all aspects of the agreement is fundamental for its successful implementation. It includes the service scope, which looks at the specific service offered by the agreement, for example, telephone support. service provider requirements are also a part of the service agreement.

Quantifying service levels

All the service outcomes will quantify through the performance indicators defining wat the customer will receive. Quantifying service levels involves examining the customer’s requirements to establish the benefits and cost justification of various service levels.

The statues, Goals and Objectives

The purpose of the agreement including the ability to obtain a mutual agreement between the Parties will be outlined.

Service Management

The final level of the service level agreement is service management. It includes both service availability and service requests.

Essential Clauses of the Agreement

Agreement Parties

There are two Parties to the Agreement: Customer who buys goods and services and Service Provider is a company that provides its subscribers access to the internet.

For example, McDonald’s. The Service Provider is McDonald’s where the company has its head office as American Fast Food which provides the access to online services is Service Provider, and the individual who gains the service satisfaction and online access is the Customer.

Recitals

• It is considered to be the world’s leading food service retailer with more than 30,000 restaurants in 118 countries serving 46 million customers increasing each day.
• McDonald’s expanded the chain by selling Franchises, and the number of restaurants grew rapidly and capitalize the global opportunities.
• It is outstanding brand recognition, experienced management, expertise in the development of the site,  operational systems advanced and has unique global infrastructure over the world.
• McDonald’s operates and controls the online services accessing or using any websites, mobile apps, email newsletters, subscriptions and other digital properties.

Purpose of McDonald’s

The purpose of McDonalds is to specify the requirements of their service as defined herein with regards to:

• McDonald’s aims to provide chances to its customers and its employees not only with money but by providing them with help and support.
• The service provided to customers to reach their satisfaction levels such as hygienically clean place or high-quality food.
• McDonald’s’ try to offer opportunities to its employees by providing them with the superior training and higher equal opportunities to its employees and great satisfaction levels for its customer.
• It aims to increase the growth and expand its business capacity to produce more stock and provide better or greater service.
• It also aims at helping the poor with their needs and has always been their concern towards charity grown into their disaster Relief organisation, fundraising organisation etc.
• It also aims to promote and sustain a working environment and to achieve a global strategy called “Plan to Win”, which focus on creating an extraordinary customer experience.
• It is a publicly-traded company maintaining constituent profits for its shareholders, it aims to Plan to win encompasses all the factors that are essential to the company’s growth and dominance in the market.

Grant and Scope of McDonald’s License

1. In consideration by agreeing to abide by the Terms, McDonald shall grant a non-transferable, non-exclusive license to use the App on any devices, subject to the Terms its Privacy Policy and the App store Rules which is incorporated into the Terms by reference. All the other rights are reserved.
2. It shall:

• Download a copy of the App on any device for an unlimited number in any device to view, use and display the App on the devices for personal purposes. and
• The Documents are to be used for personal purposes only.

Copyright and IPR

• McDonald’s copyright infringement that complies with the Digital Millennium Copyright Act (“DMCA”).
• All the rights in the app shall remain the exclusive property of Premier restaurants or their licensors.
• The App is licensed and is not allowed to sold, in case of transfer of any such rights to, or to vest any such rights shall take action of jeopardise, limit or interfere with Premier restaurants or its licensor’s rights.
• Trademarks, service marks and all graphical elements appearing on the App are distinctive and protected.

Terms and Conditions of McDonald’s

The terms and conditions to be applied by the McDonalds using online or electronic access:

• By accessing, installing or using the App on which the terms and conditions are referred and enter into a binding agreement with Premier Restaurants.
• The Privacy Policy describes how to collect, use and share the information and incorporated it into, a considerable part of this Agreement.
• The App is not intended to be used, or targeted to, any minor under the age of years old. 
• In case if the terms are not agreed by a major he/she shall immediately stop using the App access and request to close the App account.
• The App users must provide true and honest information by providing the users with proof identification.

Employee Responsibilities

Employees to perform their responsibilities to the highest standards set by the company.

 Employees must treat fellow workers, supervisors and all the customers with respect and cooperate with them.

An employee shall not harass anyone or intimidate any customers and their Abusive behaviour is not allowed.

It is the employee’s responsibility to create a healthy environment and does not cause any offence.  

Employees cannot utter offending words or actions. An employee must practice safety at all times to ensure not only his well-being but that of others. Alcohol or illegal drugs are forbidden.

Limitations on liability and disclaimers

The Limitations on McDonald’s liability as follows:

• McDonald nor any other members of the McDonalds system, direct or indirect shall be liable for the lost profits or any business damages.
• It shall not be held liable for lost data, personal damages or any other property damages related to or arising out of the online services.
• To limit its liability for the damages caused by McDonald’s own gross negligence or any unlawful conduct.
• It reserves all legal rights to recover damages and compensation as per the terms and conditions as allowed by the law.
• In case of any events beyond the control, McDonald’s nor any other members of its system shall not be held responsible for the failure of its performance of any of its obligations.
• McDonald’s provides online services without any warranties and disclaims the warranties of merchantability for a particular purpose.
• Premier Restaurants reserves all legal rights to recover damages or other compensation under the Terms or as allowed by law.
• In the event of the damages or loss caused by the third party, it shall not take any responsibility.

Advertising and Marketing

• McDonald’s is widely recognised as being a leader in projecting its brand through marketing and advertising through many agencies for co-operative advertising.
• McDonald’s maintains the approach, investing in the online and offline marketing strategies that promote the brand-centric messaging to broad customers using through other channels such as a mobile app to reach large numbers and retain loyal customers.

Termination Clause

The App shall terminate immediately by written notice:

• In case if a person commits a material or any kind of persistent breach of the terms and conditions which fail to remedy.
• In the event of a breach of any of the license restrictions or the acceptable use is restricted.
• All rights granted under the terms shall cease.
• The customer shall be instructed to delete or remove the App from all devices and to destroy all the copies of the App and documents which controls and certify the terms.

Acceptable uses and Restrictions

• Not to use the App or any Service in any unlawful manner and for any unlawful and fraudulent purpose and use it maliciously. for example by hacking the devices or inserting malicious code, creating viruses, or harmful data into the App or any Service in the operating system.
• Any person shall not infringe Intellectual Property Rights or any third party in relation to the use of the App or any Service which includes the submission of any material to the extent such use is not licensed by the Terms.
• Shall not be allowed to transmit any material which causes defamatory, offensive in relation to the use of the App or any Services.
• Not to use the App or any Service in a way that causes damage, overburden and compromises the systems and interfere with the others use.

Advantages of SLA’s

The advantages of SLA’s as follows:

• The specific services of customers and providers are clearly identified. For all the outsourced services it is important to specify the minimum acceptable service levels and to establish the procedures to ensure the agreed levels are met.
• Customers are aware of what kind of services they receive and what additional service and levels is offered by the service provider.
•  It is clear that what are the real needs and level of service required by the customer and whether these can be modified at a possibly reduced cost.
• Customers have heightened awareness of what a service or level of service costs and then evaluate the service level on the cost/benefit basis.

Disadvantages of SLA’s

The disadvantages of SLA’s as follows:

• The installation of measurement procedures and negotiation of SLA’s are costly to both the customers and providers.
• There is a potential increase in bureaucracy.
• Staff training may be needed in the working of SLAs and to overcome possible initial resistance to their introduction.

Reasons for SLA failure

The various reasons for the failure of SLA are as follows:

• Tendency to include everything.
• Tendency to have too much in detail.
• To include the thing which are not measurable.
• Tendency to not to be honest and to set the unrealistic targets.
• Lack of commitment by the customers and service providers.
• Lack of an adequate support structure.
• Inadequate staff training.
• Some SLA’s are not detailed enough.

Sample draft of SLA

SERVICES AGREEMENT

This Services agreement (the “Agreement”) is made on this ________ (“Effective Date”)

BY AND BETWEEN

________, son of ________, resident of ________ (hereinafter referred to as the “Service Provider”

which expression shall unless excluded by or repugnant to the subject or context be deemed to include its legal heirs, administrators and permitted assigns) of the ONE PART

AND

________, son of ________, resident of ________ (hereinafter referred to as the “Client” which

expression shall unless excluded by or repugnant to the subject or context be deemed to include its legal heirs, administrators and permitted assigns) of the SECOND PART

(The Service Provider and the Client shall hereinafter individually referred to as “Party” and collectively as “Parties”)

WHEREAS

1. The Service Provider is in the business of providing the Services (as defined hereunder) and has the skills, qualification and expertise required to perform the Services.
2. The Client desires to engage the Service Provider to provide the Services and the Service Provider has agreed to do the same.
3. Pursuant to the above, the Parties seek to enter into this Agreement to confirm and record the terms and conditions on which the Service Provider shall provide the Services to the Client and other agreements in connection therewith.

• DEFINITIONS AND INTERPRETATION

(a) “Applicable Law” shall include all applicable (i) statutes, enactments, acts of legislature or parliament, laws, ordinances, rules, bye-laws, regulations, listing agreements, notifications, guidelines or policies of any jurisdiction; and (ii) judicial quasi-judicial and/or administrative decisions, interpretations, directions, directives, licenses, permits, judgments, writs, injunctions, arbitral awards, decrees, orders, terms and conditions of governmental or regulatory approvals or agreements with any governmental or regulatory authority.

(b) “Approvals” shall mean sanctions, permissions, consents, validations, confirmations, licenses, and other authorizations obtained and/or required to be obtained from any Government Body.

2. SERVICES

(a) The Client agrees to avail the Services from the Service Provider and the Service Provider agrees to provide the Services to the Client on the terms and conditions specified in this Agreement.

(b) The Service Provider shall:

 (I) Provide the Services in compliance with this Agreement and Applicable Laws. If any Approvals are to be obtained for the provision of Services the same shall be obtained by the Service Provider. 

(II) Retain and utilize a sufficient number of qualified personnel to perform the Services.

(lll) Ensure that all personnel who are deputed to perform the Services are appropriately trained and qualified to perform such Services.

(c) The Service Provider shall keep the Client promptly informed of all material matters which come to Service Provider’s attention relating to or affecting the business of the Client or any matters concerning the provision of Services hereunder by the Service Provider.

(d) The Service Provider shall work for a minimum of: ________ for providing Services to the Client during the Term of the Agreement.

(e) The Service Provider shall keep the Client informed regarding the time spent on provision of Services and in the event, the time spent exceeds: ________ the fee payable shall only be increased if prior written approval is obtained from the Client regarding time in excess of: ________.

(f) In the event the Service Provider does not spend at least: ________, the fee payable shall be reduced proportionately based on the actual time spent or otherwise as may be agreed between the Parties.

(g) The Service Provider shall complete the Services on or before the ________. In the event of delay in completion of Services by the Service Provider, the Service Provider shall be liable to pay an amount of Rs. ________ (________) per day of delay.

3. REPORTS

The Service Provider shall from time to time provide information and reports in relation to the performance of the Services as may be requested by the Client.

 

• REPRESENTATIONS AND WARRANTIES

 

(a) Each Party hereby warrants and represents to the other Party that:

(I) It has full power and authority to enter into this Agreement and perform its obligations hereunder;

(II) This Agreement has been duly executed by it and this Agreement constitutes its legal, valid and binding obligation enforceable in accordance with the terms contained herein;

(III) The execution, delivery and the performance by it of this Agreement does not and will not (i) breach or constitute a default under its constitutive documents, or (ii) result in a breach of, or constitute a default under, any agreement to which it is a party or by which it is bound.

(b) The Service Provider hereby represents and warrants to the Client:

(I) It will provide the Services in compliance with the provisions of this Agreement;

(II) It will act in good faith and use reasonable skill and care in the provision of Services under this Agreement;

(III) It will comply with all Applicable Laws in the provision of the Services;

(IV) It has all requisite corporate and other approvals, licenses and permits from relevant governmental authorities to provide the Services.

• Terms and Termination

This Agreement may be terminated as follows:

(I) By either Party upon providing a written notice of ________ (________) days prior written notice to the other Party; or

(II) By the Client, in the event a material breach of any provision hereof is committed by the Service Provider, by providing 15 (fifteen) days written notice to the Service Provider with reasons of termination stated thereunder; or

(III) By the Service Provider, in the event a material breach of any provision hereof is committed by the Client, by providing 15 (fifteen) days written notice to the Service Provider with reasons of termination stated thereunder.

• Indemnity

The Service Provider hereby agrees to indemnify and hold the Client harmless from all damages, costs, attorney’s fees or other losses arising out of or relating to:

(a) breach of this Service Agreement by the Service Provider.

(b) breach of any representation or warranty by the Service Provider.

• Dispute Resolution 

1. a) Any dispute(s) arising out of this Agreement shall, as far as possible, be settled amicably between the Parties hereto failing which the following shall apply:

(b) The courts in ________ shall have exclusive jurisdiction over any dispute, differences or claims arising out of this Agreement.

(c) If either Party employs attorneys to enforce any rights arising out of or relating to this Agreement, the prevailing Party shall be entitled to recover reasonable costs and attorneys’ fees.

8. GOVERNING LAW

This Agreement and all issues arising out of the same shall be construed in accordance with the laws of India

Conclusion

McDonald makes the main purpose to attribute by providing the large number of customers with fast and friendly services. The world’s largest restaurant companies, McDonald’s has the responsibility to take on some of the most pressing challenges and embrace the opportunity to lead by example and effect meaningful change.

Good governance is critical to managing the impact on the world. The governance structures help to prioritize ESG issues effectively and guide actions and performance across issues.

Reference

1. https://www.mcdonalds.com/us/en-us/mccafe.html
2. https://corporate.mcdonalds.com/corpmcd/terms-and-conditions.html
3. https://www.pocketpence.co.uk/mcdonalds-code-ethics-employees-
4. https://www.slideshare.net/dankjohn/project-report-and-market-survey-of-mcdonalds
5. https://www.slideshare.net

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