McDonald's (MCD) 10-K risk factor changes: FY2018 vs FY2017

For the fiscal year ended December 31, [removed: 2017][added: 2018]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ [removed: (do not check if a smaller reporting company)]

The aggregate market value of common stock held by non-affiliates of the registrant as of June [removed: 30, 2017] [added: 29, 2018] was [removed: $124,038,758,906.][added: $121,530,450,454.]

The number of shares outstanding of the registrant’s common stock as of January 31, [removed: 2018] [added: 2019] was [removed: 794,497,880.][added: 765,317,332.]

Part III of this Form 10-K incorporates information by reference from the registrant’s [removed: 2018] [added: 2019] definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2017.][added: 2018.]

| | Item 1 | [removed: [Business](#s5D4A98DF0FFE5432BF096C950D1EFF0B)] [added: [Business](#s4AFAC6B6965E59589F3C2FF73A6DB7FE)] | [removed: [1](#s5D4A98DF0FFE5432BF096C950D1EFF0B)] [added: [1](#s4AFAC6B6965E59589F3C2FF73A6DB7FE)] |

| | Item 1A | [Risk Factors and Cautionary Statement Regarding Forward-Looking [removed: Statements](#s0E9B935C877C5753AADB971C7085AAA9)] [added: Statements](#s2850B108E1815A9A8B765483BE90BC3B)] | [removed: [3](#s0E9B935C877C5753AADB971C7085AAA9)] [added: [3](#s2850B108E1815A9A8B765483BE90BC3B)] |

| | Item 1B | [Unresolved Staff [removed: Comments](#sF39B87E9C8135EA3AA35857C648EBCD4)] [added: Comments](#sFA5FE41EA0705915B56664233E831CAB)] | [removed: [8](#sF39B87E9C8135EA3AA35857C648EBCD4)] [added: [9](#sFA5FE41EA0705915B56664233E831CAB)] |

| | Item 2 | [removed: [Properties](#s2F6390EEB0195234A27F2177ECF215B1)] [added: [Properties](#sC68A9C9A83ED511D9182E8A5BE8D08E2)] | [removed: [8](#s2F6390EEB0195234A27F2177ECF215B1)] [added: [9](#sC68A9C9A83ED511D9182E8A5BE8D08E2)] |

| | Item 3 | [Legal [removed: Proceedings](#sC286C40A95A451F0BC38DF9878403D53)] [added: Proceedings](#s7D1F0596A86E59B3896A6F7FF5F00A93)] | [removed: [8](#sC286C40A95A451F0BC38DF9878403D53)] [added: [9](#s7D1F0596A86E59B3896A6F7FF5F00A93)] |

| | Item 4 | [Mine Safety [removed: Disclosures](#sEBD15E43AB6C51D78A480E1E660D6D74)] [added: Disclosures](#s80D3E01AC6E655BDBEA564EB93673620)] | [removed: [9](#sEBD15E43AB6C51D78A480E1E660D6D74)] [added: [10](#s80D3E01AC6E655BDBEA564EB93673620)] |

| | Additional Item | [Executive Officers of the [removed: Registrant](#s5736859FB5E5538DB622281EABB76681)] [added: Registrant](#s2E1E3BE376E05B4D8C050FA14529B09E)] | [removed: [10](#s5736859FB5E5538DB622281EABB76681)] [added: [11](#s2E1E3BE376E05B4D8C050FA14529B09E)] |

| | Item 5 | [Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#s71DC8BF3044B5FAFB868B42D4F0DE90A)] [added: Securities](#s1E99EC6BE88D5760AA06C9D055B83604)] | [removed: [11](#s71DC8BF3044B5FAFB868B42D4F0DE90A)] [added: [12](#s1E99EC6BE88D5760AA06C9D055B83604)] |

| | Item 6 | [Selected Financial [removed: Data](#sD6686947A7CC5CDBA457E2CE188E852D)] [added: Data](#sA0FBBA9CF54B5868BB5EE9FE89FA2BB3)] | [removed: [13](#sD6686947A7CC5CDBA457E2CE188E852D)] [added: [14](#sA0FBBA9CF54B5868BB5EE9FE89FA2BB3)] |

| | Item 7 | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s46711CAF3254573CBD22ECC5286911C8)] [added: Operations](#sF0A22E92643651EBA0366AD831BF2DF0)] | [removed: [14](#s46711CAF3254573CBD22ECC5286911C8)] [added: [15](#sF0A22E92643651EBA0366AD831BF2DF0)] |

| | Item 7A | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s48FEEA39F59754548C4D296D2628D810)] [added: Risk](#sEBE2C4D7381D56718A037CB8D3EF5BA7)] | [removed: [30](#s48FEEA39F59754548C4D296D2628D810)] [added: [31](#sEBE2C4D7381D56718A037CB8D3EF5BA7)] |

| | Item 8 | [Financial Statements and Supplementary [removed: Data](#sF6ADE4E94B7D577285F382EE50239002)] [added: Data](#sC1088762024556CFBE18A4A1A544A0C0)] | [removed: [30](#sF6ADE4E94B7D577285F382EE50239002)] [added: [31](#sC1088762024556CFBE18A4A1A544A0C0)] |

| | Item 9 | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s5E7D35EB80CE5709A4C6B88486D23C47)] [added: Disclosure](#s4D8FD24B84F55318A26FCE7EFBEB6E1D)] | [removed: [54](#s5E7D35EB80CE5709A4C6B88486D23C47)] [added: [56](#s4D8FD24B84F55318A26FCE7EFBEB6E1D)] |

| | Item 9A | [Controls and [removed: Procedures](#sAE4B1C9DD69E5B238FD38AD385287194)] [added: Procedures](#s189EE9AB19ED56BC9D3ADC29A14F6272)] | [removed: [54](#sAE4B1C9DD69E5B238FD38AD385287194)] [added: [56](#s189EE9AB19ED56BC9D3ADC29A14F6272)] |

| | Item 9B | [Other [removed: Information](#s3D0291C99C925290ADDC880AED61FF45)] [added: Information](#s28CC1201015057E09EA7EA1F681D45ED)] | [removed: [54](#s3D0291C99C925290ADDC880AED61FF45)] [added: [56](#s28CC1201015057E09EA7EA1F681D45ED)] |

| | Item 10 | [Directors, Executive Officers and Corporate [removed: Governance](#s350FFC40E75359A9B9AE93CFD7500B58)] [added: Governance](#s27E7447E6A655451A4E1FCC3250B44C8)] | [removed: [54](#s350FFC40E75359A9B9AE93CFD7500B58)] [added: [56](#s27E7447E6A655451A4E1FCC3250B44C8)] |

| | Item 11 | [Executive [removed: Compensation](#sF1E3FDDAF7B2504999E74F8E661989A0)] [added: Compensation](#s8887CD695E955561BEF6A48186E88C34)] | [removed: [54](#sF1E3FDDAF7B2504999E74F8E661989A0)] [added: [56](#s8887CD695E955561BEF6A48186E88C34)] |

| | Item 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder [removed: Matters](#sCF6E63A9D60E5836AABF685B4CB606C7)] [added: Matters](#sA92B0280EF425B17A88192BDA96C0A0B)] | [removed: [54](#sCF6E63A9D60E5836AABF685B4CB606C7)] [added: [57](#sA92B0280EF425B17A88192BDA96C0A0B)] |

| | Item 13 | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s52B5AA170DAE5EEF81A4C23ACC14C857)] [added: Independence](#s3545C03EA2035F4D9B13A69702E082E0)] | [removed: [55](#s52B5AA170DAE5EEF81A4C23ACC14C857)] [added: [58](#s3545C03EA2035F4D9B13A69702E082E0)] |

| | Item 14 | [Principal Accounting Fees and [removed: Services](#s79037E6240A35EA3A66FE1F09524DE9C)] [added: Services](#s28EC042F439F56ADB14CF3804E82996E)] | [removed: [55](#s79037E6240A35EA3A66FE1F09524DE9C)] [added: [58](#s28EC042F439F56ADB14CF3804E82996E)] |

| | Item 15 | [Exhibits and Financial Statement [removed: Schedules](#sBF8E1764E58E5523BF48CD6AE1A5C6C4)] [added: Schedules](#s123200BECCE85BC1A70C46BCEA06EBB8)] | [removed: [55](#sBF8E1764E58E5523BF48CD6AE1A5C6C4)] [added: [58](#s123200BECCE85BC1A70C46BCEA06EBB8)] |

| | Item 16 | [Form 10-K [removed: Summary](#s6A48D4E122415D27B87999051398BBC8)] [added: Summary](#sDD1F4998C5A9516DB55D90394851E2D1)] | [removed: [57](#s6A48D4E122415D27B87999051398BBC8)] [added: [60](#sDD1F4998C5A9516DB55D90394851E2D1)] |

McDonald’s Corporation, the registrant, together with its [removed: sub-sidiaries,] [added: subsidiaries,] is referred to herein as the “Company.”

[removed: During 2017,] [added: For the year ended December 31, 2018,] there were no material changes to the Company's corporate structure or in its method of conducting business.

The business [removed: is] [added: was] structured with segments that combine markets with similar characteristics and opportunities for growth.

Significant reportable segments [removed: include] [added: included] the United States ("U.S."), International Lead Markets and High Growth Markets.

[removed: Segment data for] [added: Refer to] the [removed: years ended December 31, 2017, 2016,] [added: Segment] and [removed: 2015 are] [added: Geographic Information section] included in Part II, Item 8, page [removed: 47] [added: 49] of this Form [removed: 10-K.][added: 10-K for additional information.]

The Company operates and franchises McDonald’s restaurants, which serve a locally-relevant menu of quality food and beverages [removed: sold at various price points] in more than 100 countries.

The business relationship between McDonald’s and its independent franchisees is [added: supported by adhering to standards and policies and is] of fundamental importance to overall performance and to [added: protecting] the McDonald’s brand.

The Company is primarily a franchisor, with [removed: more than 90%] [added: approximately 93%] of McDonald's restaurants currently owned and operated by independent franchisees.

Franchising enables an individual to be [removed: their] [added: his or her] own employer and maintain control over all employment related matters, marketing and pricing decisions, while also benefiting from the strength of McDonald’s global brand, operating system and financial resources.

One of the strengths of [removed: this] [added: the franchising] model is that the expertise [removed: gained] from operating Company-owned restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants.

Having Company-owned [added: and operated] restaurants provides Company personnel with a venue for restaurant operations training experience.

These investments, developed [removed: with input from McDonald’s] [added: in collaboration] with [removed: the aim of improving] [added: franchisees are designed to cater to consumer preferences, improve] local business performance, [added: and] increase the value of our brand through the development of modernized, more attractive and higher revenue generating restaurants.

| 110 North Carpenter Street Chicago, Illinois (Address of principal executive offices) | | 60607 (Zip code) |

| [Signatures](#s78AB2925C88652038691FAE3A604BFF0) | | | [61](#s78AB2925C88652038691FAE3A604BFF0) |

As detailed in the Company's Form 8-K filed with the U.S. Securities and Exchange Commission ("SEC") on September 24, 2018, the Company announced changes to its global operating structure, effective January 1, 2019.

*Conventional Franchise*

*Developmental License or Affiliate*

The Company generally does not invest any capital under a developmental license or affiliate arrangement, and it receives a royalty based upon a percent of sales and generally will receive initial fees upon the opening of a new restaurant or grant of a new term.

on-site supplier visits.

We have ongoing programs to educate employees about food safety practices, and our suppliers and restaurant operators participate in food safety trainings where we share best practices on food safety and quality.

In addition, the Company launched its Scale for Good framework in 2018, which includes the environmental-related pillars of climate action, packaging and recycling, and sustainable sourcing.

These include goals and initiatives to reduce System greenhouse gas emissions, responsibly source ingredients and packaging, and increase the availability of recycling in restaurants to reduce waste.

Such reports may be obtained by visiting the SEC's website at www.sec.gov.

The Company uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

Copies of these documents are also available free of charge by calling (800) 228-9623.

To drive operating income growth, our business strategies must be effective in maintaining and strengthening customer appeal, delivering sustainable guest count growth and driving a higher average check.

| • | Utilize our new organizational structure to build on our progress and execute against our business strategies; |

| • | Accelerate our existing strategies through growth opportunities, investments and partnerships. |

Our long-term business objectives depend on the successful Systemwide execution of our strategies.

Our continued success depends on our System’s ability to retain, regain and convert customers.

As the Company's business model has evolved to a more heavily franchised structure, our success relies to large degree on the financial success and cooperation of our franchisees, including our developmental licensees and affiliates.

Business risks affecting our operations also affect our franchisees.

If our franchisees are unwilling or unable to invest in major initiatives or are unable to obtain financing at commercially reasonable rates, or at all, our future growth and results of operations could be adversely affected.

Challenges with respect to labor availability and cost could impact our business and results of operations.

Claims of non-compliance with these regulations could result in liability and expense to us.

Further, the General Data Protection Regulation (“GDPR”) requires entities processing the personal data of individuals in the European Union to meet certain requirements regarding the handling of that data.

Failure to meet GDPR requirements could result in substantial penalties and materially adversely impact our financial results.

Regardless of whether any claims against us are valid or whether we are found to be liable, claims may be expensive to defend and may divert management's attention away from operations which could have a material adverse effect on our business and financial condition.

In addition, the Company owns and leases real estate in connection with its corporate headquarters and field offices.

The Company is occasionally

involved in litigation or other proceedings regarding these matters.

Prior to that, Mr. Borden served as President - Foundational Markets, from July 2015 through December 2018.

*Francesca A.

DeBiase*, 53, is Corporate Executive Vice President - Worldwide Supply Chain Sustainability, a position she has held since April 1, 2018.

Prior to that, Ms. DeBiase served as Corporate Senior Vice President - Worldwide Supply Chain and Sustainability, from March 2015 through March 2018.

From August 2007 through February 2015, Ms. DeBiase served as Corporate Vice President - Worldwide Strategic Sourcing.

Prior to that, Ms. DeBiase served as Europe Vice President - Supply Chain, from January 2006 through July 2007.

Prior to that, Mr. Erlinger served as President - High Growth Markets, from September 2016 through December 2018.

*Daniel Henry*, 48, is Corporate Executive Vice President - Chief Information Officer, a position he has held since May 1, 2018.

Prior to that, Mr. Henry served as Vice President of Customer Technology and Enterprise Architecture at American Airlines from April 2012 to October 2017.

| October 1-31, 2018 | | 1,696,789 | | | 168.75 | | | 1,696,789 | | | | $ | 7,694,783,993 | |

| November 1-30, 2018 | | 1,483,658 | | | 182.15 | | | 1,483,658 | | | | 7,424,533,360 | | |

| One McDonald’s Plaza Oak Brook, Illinois (Address of principal executive offices) | | 60523 (Zip code) |

| [Signatures](#sC3AC5B5775C5548BA648A95EBA8D11F9) | | | [58](#sC3AC5B5775C5548BA648A95EBA8D11F9) |

Financial information about segments

McDonald’s global system is comprised of both Company-owned and franchised restaurants.

This business relationship is supported by an agreement that requires adherence to standards and policies essential to protecting our brand.

The Company generally does not invest any capital under a developmental license arrangement.

We use the developmental license ownership structure in over 80 countries with a total of approximately 6,900 restaurants.

The largest developmental licensee operates approximately 2,200 restaurants in 19 countries in Latin America and the Caribbean.

In 2017, the Company completed the sale of its businesses in China and Hong Kong, while retaining a 20% ownership in the entity that now owns the business.

There are approximately 5,800 restaurants in foreign affiliated markets, the largest of which are Japan and China, where there are about 2,900 and 2,600 restaurants, respectively.

| ▪ | Research and development |

The Company performs research and development activities in the U.S., Europe and Asia.

While research and development activities are important to the Company’s business, these expenditures are not material.

Independent suppliers also conduct research activities that benefit the Company, its franchisees and suppliers (collectively referred to as the "System").

At this time, the Company has already begun to undertake its own initiatives relating to preservation of the environment, including the implementation of more energy efficient equipment and management of energy use and more sustainable sourcing practices in many of its markets.

d.

Financial information about geographic areas

e.

Such reports may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, DC 20549, or by calling the SEC at (800) SEC-0330.

In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and other information.

Copies of these documents are also available free of charge by calling (800) 228-9623 or by sending a request to McDonald’s Corporation Shareholder Services, Department 720, 711 Jorie Boulevard, Oak Brook, Illinois 60523.

They reflect our expectations, are

To drive future results, our business strategies must be effective in delivering increased guest counts to drive operating income growth.

| • | Utilize our more adaptive organizational structure to execute against our initiatives at an accelerated pace; |

In order to deliver a relevant experience for our customers amidst a highly competitive, value-driven operating environment, we must implement initiatives to adapt at an aggressive pace.

There is no assurance

Activities relating to our refranchising and cost savings initiatives remain ongoing and entail various risks.

Our previously announced refranchising and cost saving initiatives remain ongoing.

As we continue on those initiatives, the existing risks we face in our business may be intensified.

Our efforts to reduce costs and capital expenditures depend, in part, upon our refranchising efforts, which, in turn, depend upon our selection and integration of capable third parties.

Our cost savings initiatives also depend upon a variety of factors, including our ability to achieve efficiencies through the consolidation of global, back-office functions.

If these various initiatives are not successful, take longer to complete than initially projected, or are not well executed, or if our cost reduction efforts adversely impact our effectiveness, our business operations, financial results and results of operations could be adversely affected.

If pricing, promotional and marketing plans are not effective, our results may be negatively impacted.

Further, the promotion of menu offerings may yield results below the desired levels.

If we are not

Recognizing these dependencies, we have intensified our focus in recent periods on strategies to achieve these goals, and we will likely continue to modify our strategies and implement new strategies in the future.

franchisees or us.

Our success increasingly relies on the financial success and cooperation of our franchisees, including our developmental licensees and affiliates, yet we have limited influence over their operations.

Our refranchising efforts will continue to increase that dependence and the potential effect of those factors.

Our ability to achieve the benefits of our refranchising strategy, which involves a significant percentage of franchised restaurants, including an increased number of restaurants run by developmental licensees and affiliates, depends on various factors.