no. b-000119-c melinda matthews, individually ) in the district court ...

NO. B-000119-C
MELINDA MATTHEWS, INDIVIDUALLY ) IN THE DISTRICT COURT OF
AND ON BEHALF OF THE ESTATE )
OF TYLER SHANE MATTHEWS, )
DECEASED MINOR; and )
MICHAEL MATTHEWS )
)
VS.
) ORANGE COUNTY, TEXAS
)
)
)
WESLEY HOWARD, INDIVIDUALLY )
AND D/B/A DAIRY QUEEN
) 163RD JUDICIAL DISTRICT
*********************************************
ORAL AND VIDEOTAPED DEPOSITION OF
ROBERT A. GAPPA
August 30, 2002
Volume 1 of 16
*********************************************
ORAL AND VIDEOTAPED DEPOSITION of ROBERT A. GAPPA,
produced as a witness at the instance of the Plaintiff, and
duly sworn, was taken in the above-styled and numbered cause
on August 30, 2002, from 10:02 A.M. to 6:50 P.M., before
Kelly L. Bigham, RPR, CSR in and for the State of Texas,
reported by machine shorthand at the offices of Stevens,
Baldo & Freeman, L.L.P.; 550 Fannin, Suite 400; Beaumont,
Texas; pursuant to the Texas Rules of Civil Procedure and
the provisions stated on the record or attached herein.

2
1 A P P E A R A N C E S
2
3 FOR THE PLAINTIFFS:
Mr. Rocky Lawdermilk
4 Mr. Dru Montgomery
THE FERGUSON FIRM
5 1122 Orleans
Beaumont, Texas 77701
6
FOR THE DEFENDANTS INTERNATIONAL DAIRY QUEEN AND
7 AMERICAN DAIRY QUEEN CORPORATION:
Mr. Don F. Lighty
8 STEVENS, BALDO & FREEMAN, L.L.P.
550 Fannin, Suite 400
9 Beaumont, Texas 77701
10 VIDEOGRAPHER:
Mr. Kenneth Gartner
11 COMPLETE LITIGATION SUPPORT
398 Pearl, Suite 1010
12 Beaumont, Texas 77701
13
14
15
16
17
18
19
20
21
22
23
24
25

3
1 I N D E X
2 Page
3 Appearances ................................... 2
4 ROBERT A. GAPPA
5 Examination by Mr. Lawdermilk ............ 5
6 Examination by Mr. Montgomery ............ 168
7 Re-Examination by Mr. Lawdermilk ......... 183
8 Examination by Mr. Lighty ................ 190
9 Re-Examination by Mr. Lawdermilk ......... 256
10 Re-Examination by Mr. Lighty ............. 261
11 Signature and Changes ......................... 266
12 Reporter's Certificate ........................ 263
13 EXHIBITS
14 NO. DESCRIPTION PAGE
15 1 A box of documents reviewed by 12
Mr. Gappa.
16
2 Three pages of handwritten notes 17
17 from Mr. Gappa's blue notebook.
18 3 Mr. Gappa's hours and charges 17
to Brian Swift.
19
4 Mr. Gappa's International Dairy Queen 17
20 log.
21 5 A copy of Mr. Gappa's expert report. 20
22 6 A list of depositions reviewed by 20
Mr. Gappa.
23
7 A copy of Mr. Gappa's expert report. 49
24
8 Mr. Gappa's curriculum vitae. 49
25

1 9 List of Depositions reviewed by 75
Mr. Gappa with checkmarks by the
2 ones Mr. Gappa read.
3 10 Document entitled "What is 200
Franchising?"
4
11 Document entitled "The purposes of 202
5 franchising are:"
6 12 Document entitled "What are the 205
Elements of Franchising?"
7
13 Document entitled "Franchisees Enter 206
8 Into a License Agreement with the
Franchiser:"
9
14 Document entitled "What is Granted?" 209
10
15 Dairy Queen Franchise and License 212
11 Agreement.
12 16 Document entitled "Purposes of 217
Systems."
13
17 DQ Freez'R Participation Agreement. 225
14
18 Addendum to Dairy Queen Franchise 225
15 and License Agreement.
16 19 Store Operations Manual. 235
17 20 Document entitled "ADQ's Franchiser 246
Duty."
18
21 Document entitled "Compliance to 247
19 Recommendations."
20 22 Document entitled "Summarizing 248
the Actions taken after the
21 Surveys."
22 REQUESTED DOCUMENTS/INFORMATION
23 NO. DESCRIPTION PAGE
24 1 A copy of Mr. Gappa's blue notebook. 15
25 Stipulation Page............................... 268
4

5
1 P R O C E E D I N G S
2 THE VIDEOGRAPHER: We are on the record.
3 The time is 10:02 A.M., August 30th, 2002, beginning of
4 Tape 1.
5 ROBERT A. GAPPA,
6 having been first duly sworn, testified as follows:
7 EXAMINATION
8 BY MR. LAWDERMILK:
9 Q Please state your name for the record.
10 A Robert Anthony Gappa.
11 Q Mr. Gappa, what is your physical address?
12 Where do you live?
13 A 15434 Walkwood Drive in Houston.
14 Q Do you know your Social Security number?
15 A Yes.
16 Q What is it?
17 A 516-46-7872.
18 Q Do you know your driver's license?
19 A No.
20 Q Do you have your driver's license with you
21 here today?
22 A Yes.
23 Q Would you take it out for me?
24 A (Procuring)
25 Q May I see it?

6
1 A Yes (Tendering).
2 Q I'm showing a Texas driver's license, Driver's
3 License No. 06466289, expires on 7-19-03 for Robert
4 Anthony Gappa. Does that look correct?
5 A Yes.
6 Q Have you ever been arrested?
7 A Yes.
8 Q When?
9 A About six years ago.
10 Q What for?
11 A DWI.
12 Q Where at?
13 A Houston.
14 Q What was the disposition of that?
15 A There was - not guilty.
16 Q Did you go to trial?
17 A Yes.
18 Q With a jury or a judge?
19 A Jury.
20 Q Did you testify?
21 A Yes.
22 Q The jury found you not guilty?
23 A Yes.
24 Q Have you ever been arrested for anything else?
25 A No.

7
1 Q Have you ever been to AA meetings?
2 A No.
3 Q Have you ever sought counseling for alcohol
4 abuse?
5 A No.
6 Q Have you been drinking today?
7 A No.
8 Q Are you under any type of medication which
9 would affect your mental capabilities today?
10 A No.
11 Q Are you on any type of medication whatsoever
12 today?
13 A No.
14 Q Where did you live prior to living in Houston?
15 A Des Moines, Iowa, probably before that.
16 Q How long have you lived in Houston?
17 A About 30 years.
18 Q How long did you live in Des Moines?
19 A Maybe seven years.
20 Q Where did you live prior to living in
21 Des Moines, Iowa?
22 A Florida.
23 Q Where at in Florida?
24 A Tampa mostly, and then in a rural area outside
25 of St. Leo.

8
1 Q What years would that have been?
2 A '67 to '71 -- No. I'm sorry. In between
3 Florida and Des Moines, the University of Iowa,
4 Iowa City. So, '67 to '71 - like '67 to '70 would have
5 been Florida and only a year in Iowa City until, like,
6 '81 and Des Moines, moved to Houston for like three
7 years, back to Des Moines for a year and a half, and
8 then to Houston again.
9 Q Prior to living in Florida, where did you
10 live?
11 A I was in graduate school.
12 Q Where at?
13 A St. John's University in Collegeville,
14 Minnesota.
15 Q In Minnesota?
16 A Uh-huh, yes.
17 Q What did you get your graduate degree in?
18 A I didn't get the graduate degree. I did
19 graduate work in German Existential Systematic Theology.
20 Q And what is that?
21 A Study of systems of thinking related to how
22 dogmatic explanations and moral explanations are made
23 within the Catholic church.
24 Q And you have to get even more layman for me.
25 Is that philosophy within a certain Catholic theology?

9
1 A When you add philosophy to God, you get
2 theology. So, that's what it is.
3 Q So, it is adding philosophy to God - is what
4 you did your graduate work in?
5 A And particularly with the way the Germans
6 approach the answer to those questions.
7 Q And how did you choose to do that?
8 A It was very interesting to me because I was -
9 undergraduate was philosophy with a minor in psychology.
10 Q Where did you do your undergraduate work at?
11 A St. John's in Collegeville.
12 Q What type of grades did you graduate with from
13 undergraduate school?
14 A A+.
15 Q Do you get grades doing graduate work?
16 A Yes, but you don't stay if you don't get As.
17 Q And are you telling me that you got As, or are
18 you telling me that you didn't get to stay?
19 A No, I got As and Bs. I just ...
20 Q But you did not get a graduate degree?
21 A I did not finish the thesis.
22 Q Why did you not finish your thesis?
23 A Time got away from me, and job offers got
24 ahead of me.
25 Q How far away were you from finishing your

10
1 thesis?
2 A Probably halfway through it.
3 Q How old a man are you?
4 A 60.
5 Q What is your date of birth?
6 A July 19, 1942.
7 Q Are you married?
8 A Yes.
9 Q To who?
10 A Pam, Pamela Jo.
11 Q How long have y'all been married?
12 A Four years.
13 Q Where were you -- Is this your first marriage?
14 A No.
15 Q How many marriages have you had?
16 A Two.
17 Q Including Pamela or two prior to Pamela?
18 A Including Pamela.
19 Q Who were you married to prior to Pamela?
20 A Her name was Margaret.
21 Q How long were you married to Margaret?
22 A Just short of 30 years.
23 Q And did that marriage end, or did she pass?
24 A Divorced.
25 Q It ended in a divorce. Were there any court

11
1 proceedings regarding the divorce?
2 A There was no court, no. It was just a
3 settlement offer, and I was divorced.
4 Q Was it an uncontested divorce?
5 A Yes.
6 Q And what was the reason for the divorce?
7 A Who knows. She still works for me.
8 Q So, y'all are still friends?
9 A Yes.
10 Q Have you brought anything with you here today?
11 A Yes.
12 Q Can I see it?
13 A It is in the box over there, and this is
14 the -- All this here is is the report.
15 MR. LIGHTY: He brought his entire file.
16 A All the materials I reviewed are over there.
17 Q Which box?
18 A The one in - attached to that gray --
19 MR. LIGHTY: Do you want him to walk over
20 there and show you?
21 MR. LAWDERMILK: No, I'll just look.
22 Q (By Mr. Lawdermilk) Everything attached to the
23 gray --
24 A No, the box.
25 Q Everything in that box?

12
1 A And that legal file on top of it.
2 MR. LIGHTY: Attached to the dolly, I
3 think he said.
4 A Yeah, the dolly.
5 Q And that's your complete file?
6 A Yes.
7 MR. LAWDERMILK: Can I mark that entire
8 thing as Exhibit 1?
9 (EXHIBIT NO. 1 MARKED.)
10 THE WITNESS: Help me to remove those two
11 personal items.
12 MR. LIGHTY: Yeah.
13 Q (By Mr. Lawdermilk) I have marked the box that
14 contains all your entire file as Exhibit 1, correct?
15 A Yes.
16 MR. LIGHTY: Is this part of it?
17 THE WITNESS: No.
18 MR. LIGHTY: And this isn't part of it?
19 THE WITNESS: No.
20 MR. LIGHTY: But the rest is?
21 THE WITNESS: Right.
22 Q And what is this in the Redwell?
23 A Those are the materials that are on that
24 additional sheet.
25 MR. LIGHTY: Deposition copies.

13
1 Q Okay. And nothing is in here besides the
2 depositions that you have reviewed?
3 A I don't know. Let me see --
4 MR. LAWDERMILK: Can I see the blue?
5 A -- so I can answer that.
6 MR. LIGHTY: Does this have to do with
7 the file?
8 THE WITNESS: No, that's my personal
9 stuff. That does not have to do with my file.
10 MR. LAWDERMILK: He brought it with him.
11 I still get to look at it.
12 MR. LIGHTY: If he didn't -- Did you
13 review this in preparation for any testimony?
14 THE WITNESS: No, no.
15 MR. LIGHTY: It has nothing to do with
16 this file.
17 A It has nothing to do with anything.
18 Q What does it have to do with then?
19 A My business, not this case.
20 MR. LAWDERMILK: I can get into his
21 business.
22 MR. LIGHTY: You don't get business
23 records. I'm not going -- It is not part of it.
24 MR. LAWDERMILK: Can I see what is in the
25 blue folder that he brought with him today for this

14
1 deposition?
2 MR. LIGHTY: Is this part of your file
3 material for this case?
4 THE WITNESS: No.
5 MR. LIGHTY: Is there anything about this
6 case located within this file?
7 THE WITNESS: The notes I took when you
8 and I met just on preparing for --
9 MR. LIGHTY: Show him those.
10 A Where did I put those? Let me see here.
11 There are three pages - well, two pages and --
12 MR. LAWDERMILK: I'm still going to mark
13 the entire thing as Exhibit 2.
14 A Does that mean I have to leave it here because
15 I can't do that? I can't do that.
16 MR. LIGHTY: Can you remove the pages
17 because --
18 Q (By Mr. Lawdermilk) Awhile ago there was
19 nothing in there, and now all of a sudden there are a
20 few pages. I'm going to get the whole thing. We can
21 have it sent out today and copied, and you can take it
22 with you while we conclude this deposition.
23 A There are proprietary business notes in here
24 that have nothing to do with this case that are
25 confidential.

15
1 Q Well, awhile ago there was absolutely nothing
2 to do with this case; and now all of a sudden there are
3 a few things. You brought it with you. You came to
4 this deposition, and you brought it with you. It has
5 something to do with your business, and it has some
6 stuff in there to do with the case. I'm going to mark
7 the whole thing as an exhibit. He can get the Court to
8 prevent me from ever getting it - anything that is
9 proprietary, if he wants to - but today I'm going to
10 mark the whole thing as an exhibit. We will have it
11 sent out right now to be copied, and you can take that
12 home with you.
13 MR. LIGHTY: What I'm going to instruct
14 the witness to do is to remove the pages that you have
15 written from - the notes that have to do with this case.
16 I want you to go page by page and make
17 sure you get everything and I'm not going to turn over
18 anything else and we can take it up with the judge and
19 let him look at it before we turn it over because once
20 we turn it over, proprietary information is lost.
21 Go through the other pages and make sure
22 there is nothing else to do with anything else in this
23 case.
24 THE WITNESS: This page is not part of
25 this case.

16
1 MR. LIGHTY: Is that proprietary
2 information?
3 THE WITNESS: Yes, it is - extremely so.
4 My notes on time line.
5 MR. LIGHTY: He can have those.
6 MR. LAWDERMILK: So, now there is more in
7 that notebook than what y'all told me. I'm going to
8 mark the whole notebook and have it sent out.
9 MR. LIGHTY: I'm not going to give you
10 the whole notebook. I'm going to give you the
11 information that has to do with this case. I'm going to
12 have everything, but this last page --
13 MR. LAWDERMILK: I'm not going to sit
14 here and trust him to tell me that when he has already
15 told me that there wasn't stuff and now there is and now
16 there is even more than what he told me the first time.
17 He brought it with him to the deposition.
18 I have a right --
19 A Okay. Then I'm misunderstanding you because
20 this is simply an invoice.
21 Q (By Mr. Lawdermilk) I asked you -- I'm not
22 going to argue with you what I asked you for.
23 MR. LAWDERMILK: I'm going to mark the
24 whole thing.
25 If you want to stop it right now, we will

17
1 go call the Judge and we will ask him what he wants to
2 do and --
3 MR. LIGHTY: We'll do that right now.
4 MR. LAWDERMILK: Let's do it. Go off the
5 record.
6 THE VIDEOGRAPHER: Going off the record
7 at 10:15.
8 (DISCUSSION OFF THE RECORD.)
9 THE VIDEOGRAPHER: Back on the record,
10 the time is 10:26.
11 Q Mr. Gappa, I'm going to mark as Exhibit 2 some
12 notes that you have taken out of a notebook that you
13 brought with you here today; is that correct?
14 A Yes.
15 Q And there is -- You have given me three pages
16 out of probably about a 120-page notebook; is that
17 right?
18 A All of which are not full, yes.
19 (EXHIBIT NO. 2 MARKED.)
20 Q I'm going to mark as Exhibit 3 notes or, I
21 guess, a billing statement that came from - also from
22 that notebook; is that correct?
23 A Except it is not a billing statement. It is a
24 draft billing statement because it contains errors.
25 (EXHIBIT NOS. 3 AND 4 MARKED.)

18
1 Q And Exhibit 4, I guess, is another draft
2 billing statement; is that correct?
3 A Let me look at it. What does it say at the
4 top? It is a time log. It is not a billing statement.
5 Q So, Exhibit 4 is a time log; but it has money
6 amounts over to the right. Is that correct?
7 A That's correct.
8 Q And is it a time log you keep time of the
9 hours that you are charging International or American
10 Dairy Queen for your expert opinion in this case?
11 A Yes.
12 Q And to date -- I guess is this updated? Is
13 Exhibit 4 updated?
14 A I can't speak to that because it is not the
15 one we sent out from the office. That's what I said. I
16 don't know if it is accurate or not.
17 Q Well, do you have the one you sent out from
18 the office?
19 A No.
20 Q Okay. But the one that you have given me
21 today is - shows total due from International Dairy
22 Queen is $32,263.16 for your expert testimony; is that
23 correct?
24 A If that's what it -- No, I can't say that's
25 correct. I'm saying I don't know if that statement is

19
1 correct.
2 Q I asked you if that's what this says?
3 A That's what that document says, yes.
4 Q So, the document Exhibit 4 says that the
5 amount due from International Dairy Queen for your
6 expert testimony in this case is $32,263.16; is that
7 correct?
8 A That's what that document says.
9 Q Okay. And Exhibit 3 says the amount due from
10 International Dairy Queen or American Dairy Queen for
11 your expert testimony is $28,763.16; is that right?
12 A That's what that document says.
13 Q And does that document also have some
14 handwriting on the bottom of it?
15 A Yes.
16 Q Is it in red and underlined?
17 A Yes.
18 Q And what does that say?
19 A "Correct."
20 Q Okay.
21 A But I don't know that it is.
22 Q Exhibit 2 - what are these notes from?
23 A A meeting that Mr. Lighty and I had in my
24 office.
25 Q When was that meeting?

20
1 A I can't exactly tell you - a couple of weeks
2 ago.
3 Q Did you bring anything else with you today?
4 A No, I did not.
5 Q What is that right there in front of you?
6 A This, as I referenced before -- I already
7 mentioned this. That's the file that has my report in
8 it.
9 Q Okay. Can I see that?
10 A (Tendering)
11 (EXHIBIT NO. 5 MARKED.)
12 Q I'm going to mark as Gappa Exhibit 5 the file
13 with your -- Is this your current expert report on this
14 case?
15 A As far as I know, it is.
16 (EXHIBIT NO. 6 MARKED.)
17 Q And I'm also going to mark as Exhibit 6 -- I'm
18 going to ask you what is Exhibit 6?
19 A The depositions I have read since I wrote the
20 report or reviewed since I wrote the report.
21 Q Okay. Have you made any changes to that
22 report since you last wrote it?
23 A No, I have not.
24 Q Have you made any draft changes to that report
25 since you last wrote it?

21
1 A No, I did not.
2 MR. LAWDERMILK: Can we go off the
3 record?
4 THE VIDEOGRAPHER: Going off the record
5 at 10:30.
6 (DISCUSSION OFF THE RECORD.)
7 THE VIDEOGRAPHER: Back on the record,
8 the time is 10:31.
9 MR. LAWDERMILK: Don, we just received a
10 phone call from Donna in Judge Powell's court informing
11 us that he does not settle discovery disputes from
12 depos. Do you agree with that?
13 MR. LIGHTY: I didn't hear the
14 conversation.
15 MR. LAWDERMILK: But that's what I told
16 you, right?
17 MR. LIGHTY: Yes.
18 MR. LAWDERMILK: Can we mark that - not
19 mark it -- Can we have a copy of that made while we are
20 here today to stay in your possession pending us talking
21 with the Judge about it?
22 MR. LIGHTY: Do you mind if I keep a copy
23 of this?
24 MR. LAWDERMILK: You can seal it up.
25 THE WITNESS: I don't mind.

22
1 MR. LIGHTY: I'll do that.
2 I will say one thing, Rocky, when I was
3 paging through this - I'm not going to read this -
4 obviously the overwhelming majority of this notebook is
5 not filled in. I do not plan to make copies of blank
6 pages, if that's okay with you. In fact, I'm not going
7 to count; but it looks like there are only about 20
8 pages that are filled in.
9 MR. LAWDERMILK: That's fine.
10 MR. LIGHTY: Okay.
11 Q (By Mr. Lawdermilk) Okay. Mr. Gappa, I want
12 to talk to you a little bit about -- We have already
13 talked a little bit - a little more about your
14 education. You graduated in undergraduate from
15 St. John's in Minnesota, correct?
16 A Yes.
17 Q And you majored in philosophy?
18 A Yes.
19 Q Now, you did postgraduate work at St. John's
20 in Minnesota majoring in German Existential Systematic
21 Theology, correct?
22 A Yes.
23 Q But you did not receive a degree in that?
24 A Yes, that's correct.
25 Q Do you hold any other degrees?

23
1 A No.
2 Q Do you hold any certifications?
3 A No.
4 Q Have you taken any other advanced training or
5 academic courses?
6 A I enrolled in a doctoral program at the
7 University of Iowa School of Theology, but left after --
8 I didn't finish the first semester.
9 Q Why did you leave?
10 A Because I didn't like the program. It
11 disappointed me.
12 Q What disappointed you about it?
13 A I thought it was -- I thought it was like
14 being in undergraduate school.
15 Q Not challenging enough for you?
16 A I had different expectations of what the
17 courses would be. It was like undergraduate work.
18 Q I want to talk to you about your work history.
19 You left your postgraduate work, and where did you go
20 work at?
21 A St. Leo College.
22 Q What did you go to work doing for them?
23 A Teaching at the undergraduate school.
24 Q What did you teach?
25 A Philosophy, theology, and ethics.

24
1 Q What about your next job after that? I'm
2 sorry. What years was that?
3 A That's four years. So, it would be '67 to
4 '70.
5 Q And after that where did you go?
6 A University of Iowa for that stint.
7 Q What did you do at the University of Iowa?
8 A Went to graduate school until I dropped out
9 before I was - before you couldn't get any tuition
10 reimbursement.
11 Q After dropping out of graduate school, what
12 job did you take?
13 A A job with the diocese of Des Moines to be the
14 director of the St. Joseph Educational Center in
15 Des Moines.
16 Q And what was your job description or job
17 duties at that?
18 A It was an experimental educational outreach
19 program for adults in the Catholic churches surrounding
20 the greater Des Moines area, and it was dedicated to
21 just that - helping adults understand better the
22 theological concepts that would help them as people and
23 help them raise their families.
24 Q What years did you work there?
25 A I think 1971, maybe, to '6 - 1971 to maybe

25
1 '75, '76.
2 Q Why did you leave that job?
3 A Because the Bishop told me that when he died
4 or retired, he wanted to help me make a transfer into
5 the business world from the world of church work and
6 thought I would be good at it.
7 Q And where did you go after that?
8 A A Lutheran friend of his, Joe Batten who had a
9 management consulting company, gave me an interview; and
10 I was employed by them.
11 Q What was the name of that company?
12 A Batten, Batten, Hudson & Swab.
13 Q What did you do for Batten, Batten,
14 Hudson & Swab?
15 A Started out at as a consultant, then I headed
16 the marketing department, then I headed the education
17 department, and then I opened the Houston office, and
18 then I went back and - after that and was the
19 vice-president of education.
20 Q What is it that Batten, Batten, Hudson & Swab
21 did?
22 A It was a consulting company that consulted
23 mostly to Fortune 1000 companies on business management,
24 organizational development, training, human resource
25 needs.

26
1 Q And so far -- And you worked for them until, I
2 guess, 1981?
3 A Yes.
4 Q Did you have any responsibilities regarding
5 the franchise or franchisee relationship in that job
6 position?
7 A No.
8 Q Prior to 1981, did you have any training,
9 education, or job experience regarding the
10 franchisor-franchisee relationship?
11 A I did, but I didn't know it until I got into
12 franchising and saw that past experience was relevant.
13 Q Where did you get that past experience prior
14 to 1981?
15 A At the St. Joseph Educational Center and at
16 Batten, Batten, Hudson & Swab - both.
17 Q Were either one of those places franchisees or
18 franchisors?
19 A Well, interesting point: The Catholic church
20 can be called a franchise with the Bishop being the area
21 developer and the individual units being franchisees.
22 It fits the criteria in retrospect.
23 Q So, in your expert opinion, the Catholic
24 church is run like a franchise?
25 MR. LIGHTY: Objection. Form.

27
1 A Yes, as a matter of fact. When -- I think the
2 major newspaper in Toronto is the STAR - I'm not sure -
3 but it's the equivalent of the NEW YORK TIMES. They
4 have a magazine section. One time I was working in
5 Toronto. By coincidence, the magazine had the Cardinal
6 Archbishop of Toronto on front; and it said CEO of a
7 billion-dollar franchise.
8 MR. LAWDERMILK: I need to object to the
9 nonresponsive portion.
10 Q (By Mr. Lawdermilk) What did you do in 1981?
11 A Started Management 2000.
12 Q What is Management 2000?
13 A It is a consulting company that specializes in
14 multiunit retailing with a particular focus on multiunit
15 retailing as it pertains to the franchise business
16 strategy.
17 Q And you have to dumb it down for me. What
18 does that mean? What do you do?
19 A We help companies that already are franchised
20 that might be billion-dollar companies do a better job
21 at that. We help mid-range companies rewrite their
22 operations manuals, write business plans, marketing
23 plans, figure out who the best candidate would be for
24 their franchise to operate it, do various communication
25 strategies, and we help and assist people who have never

28
1 franchised before to understand and execute that
2 process.
3 Q So, do you help -- Are you hired by the
4 franchisor or the franchisee?
5 A Franchisor.
6 Q Have you ever been hired by a franchisee?
7 A No.
8 Q Now, I see on - in what has been marked as
9 Gappa Exhibit 7, your resume?
10 A Yes.
11 Q You said was a fran - was of franchisee of
12 Sport Clips, Inc.
13 A Yes.
14 Q What does that mean?
15 A It means that a partner and I were once
16 franchisees of that concept.
17 Q When was that?
18 A I'm probably not going to get this accurate
19 because I didn't manage it on a day-to-day basis. I'll
20 just say six years ago.
21 Q Where was it at?
22 A Houston.
23 Q What happened to it?
24 A We sold it.
25 Q For a profit or loss?

29
1 A Don't remember.
2 Q Don't remember?
3 A Don't remember. It was that close. I mean, I
4 don't ...
5 Q Was a franchisee of J. D. Byrider, Inc.
6 A Yes.
7 Q What does that mean?
8 A Same as with Sport Clips. I was a franchisee
9 of that concept.
10 Q Where was that?
11 A Houston.
12 Q When?
13 A I'd say that was like five years ago, also.
14 Q What happened to that business?
15 A We closed it.
16 Q Why did you close it?
17 A Too much competition in Houston.
18 Q So, that business failed?
19 A We closed it.
20 Q Well, did it fail?
21 A That wouldn't be my term. We just got out of
22 the business.
23 Q Well, was it a success?
24 A I wouldn't say that either.
25 Q Okay. It says: Am a franchisee of three

30
1 Texaco Star Marts. What does that mean?
2 A It means that currently, with some partners,
3 we are franchisees of three Texaco Star Marts.
4 Q Where at?
5 A Phoenix.
6 Q Arizona?
7 A Yes.
8 Q What are their addresses?
9 A I don't know.
10 Q How long have you been a franchisee of three
11 Texaco Star Marts?
12 A I believe four years.
13 Q Is it profitable for you?
14 A For me personally, no.
15 Q Who is it profitable for?
16 A Well, the way the investment is set up, it is
17 an LLC and I'm the general partner and they are limiteds
18 that get a disbursement of funds before anybody else in
19 the general partnership gets any.
20 Q Has it been profitable for Texaco?
21 A I don't know. I can't speak for Texaco.
22 Q Do you pay them royalties?
23 A On the gas side it comes out of -- The gas
24 license agreement is different than royalties.
25 Q Does Texaco come out and inspect your

31
1 franchises?
2 A The franchise is called Star Mart. It is a
3 convenience store. And, yes, they do.
4 Q How often?
5 A I don't know.
6 Q Does Texaco ever require changes to meet their
7 standards at your Star Marts?
8 A I don't know.
9 Q It says you are a franchisee of three Church's
10 Chickens; is that right?
11 A That's right.
12 Q Where at?
13 A Inside each of the convenience stores at the
14 Star Marts.
15 Q And, so, you wouldn't know the address of any
16 of your Church's Chicken franchises either, would you?
17 A No.
18 Q Well, does Church's Chicken ever come out and
19 inspect any of those franchises?
20 A Yes.
21 Q Does Church's Chicken franchisors ever force
22 changes for standards at any of those franchises?
23 A Of personal knowledge, no. I don't know that
24 they do, but I know historically that they do.
25 Just as an aside, our company wrote the

32
1 manuals for the Star Marts and I have personal knowledge
2 of Church's and America's Favorite Chicken and I know
3 that in the last years because we work with them, that
4 they, in fact, do make changes to their operating
5 systems and standards. I'm just not involved in the
6 daily management of any of the franchises that I belong
7 to.
8 And, so, I'm answering your question. Of
9 personal knowledge I'm not aware if they do and when
10 they do because my function in the limited liability
11 partnership doesn't require that I know if those changes
12 are being made.
13 Q But Church's Chicken franchisor will make
14 changes in their standards. You know that?
15 A Ask me that again, please.
16 Q Church's Chicken franchisor will make changes
17 in their standards?
18 A Yes - as will Texaco.
19 Q It says you are a franchisee of one Logan
20 Farms Honey Glazed Farms And Deli.
21 A Yes.
22 Q Where is that?
23 A Webster, Texas.
24 Q Do you know the address of that?
25 A I just know it is on Bay Area Boulevard.

33
1 Q Have you ever been to it?
2 A Yes.
3 Q Do Logan Farms Honey Glazed Farms and Deli
4 come inspect those stores?
5 A Yes.
6 Q Do they require changes to meet their
7 standards when they come and inspect those stores?
8 A That's not the way changes are made.
9 MR. LAWDERMILK: Object as nonresponsive.
10 Q When the franchisor for Logan Farms Honey
11 Glazed Farm and Deli inspects the stores, do they
12 require that that franchise meets its standards?
13 A Yes.
14 Q And do they enforce changes to meet those
15 standards?
16 A I don't -- The way you are asking that
17 question is not the way I understand franchising.
18 Q Well, do they have -- Does Logan Farms have
19 the right to enforce their standards on the franchise?
20 A Yes, just like Texaco does and just like
21 Church's does.
22 Q And do they -- Does Logan Farms ever enforce
23 changes in the day-to-day operations to meet their
24 standards?
25 A If you are asking when they come to a store

34
1 and they notice a deviation from standards, do they
2 require that the person comply, the answer is if that
3 were to happen hypothetically, they would write you a
4 letter and say, "Here is what we found as a deviation
5 from standard. Please comply."
6 Q And what would happen if you didn't comply?
7 A It would depend on the seriousness of the
8 standard.
9 Q Well, who decides what the seriousness is?
10 A Franchisor.
11 Q And what if the franchisor decided it was
12 serious?
13 A Then they would have a process in-house to
14 deal with it.
15 Q What is the Logan Farms Honey Glazed process
16 to deal with it?
17 A I don't know what it is. So, it would be
18 different processes.
19 Q Because each franchise or each franchisor has
20 different processes, right, to deal with noncompliance
21 of their standards?
22 A Yes, depending on what they consider to be the
23 seriousness of the deviation.
24 Q But that's decided by the franchisor?
25 A Yes, it is.

35
1 Q Are you saying that you are a franchisee of
2 three Two men and A Truck?
3 A Yes.
4 Q Where are those located?
5 A Houston.
6 Q Do you know their addresses?
7 A No.
8 Q Does Two men and A Truck franchisor have
9 standards with which your franchises have to comply?
10 A Yes.
11 Q And do they have an enforcement procedure?
12 A It is a -- Enforcement is after noncompliance,
13 but what every franchise company does is it gives you an
14 economic model to operate on. The reason you become a
15 franchisee is because you trust that by fully and
16 completely and consistently implementing their economic
17 model, the business will perform.
18 So, a franchisee doesn't normally go into
19 business to be out of compliance. If they are out of
20 compliance, they usually like to know that so they can
21 get back in compliance because they forgot something.
22 So, most of the time the franchisor does not come in as
23 a cop inspector. They come in as a consultant to that
24 person helping them understand that following the system
25 is the better way to operate.

36
1 If that particular franchisee chooses not
2 to listen to them and not to comply, then you have got a
3 standoff; and then the franchisor will say, "Okay. Then
4 here is what happens."
5 MR. LAWDERMILK: Object as nonresponsive.
6 Q (By Mr. Lawdermilk) Does Two men and A Truck
7 have a procedure to deal with noncompliance of its
8 franchisees?
9 A I'm sure they do.
10 Q Do you know what that is?
11 A I don't because I didn't read the manuals, but
12 our company wrote the manuals and I'm sure that they do.
13 MR. LAWDERMILK: Object as nonresponsive.
14 Q (By Mr. Lawdermilk) Do you know what the
15 procedure for Two men and A Truck is?
16 A No.
17 Q Will you admit that every franchisor's policy
18 and procedures in dealing with noncompliant franchisees
19 is different --
20 MR. LIGHTY: Object to the form.
21 Q -- as far as you know?
22 A No. There is a lot of similarity in the way
23 they operate.
24 Q Are they exactly the same?
25 A No.

37
1 Q So, then they would be different --
2 MR. LIGHTY: Object to the form.
3 Q -- right?
4 A I can't agree with that statement. They are
5 not all different. There are many the same.
6 Q Are they all exactly the same?
7 A No.
8 Q Then they are different?
9 MR. LIGHTY: Object to the form.
10 A Comparing one to another, they may or may not
11 be different.
12 Q Do you know?
13 A I know of examples, yes.
14 Q Tell me what two franchisors are exactly the
15 same.
16 A I cannot tell you that sitting here today.
17 Q Okay.
18 A We have worked with over 850 franchise
19 companies.
20 Q That's what I figured.
21 MR. LIGHTY: Object to the side-bar.
22 Q You write operation manuals for franchisors?
23 A Our company does.
24 Q Have you ever written an operations manual?
25 A I have not.

38
1 Q What is it that you do personally for your
2 company?
3 A I'm the president. So, I oversee the
4 projects; and I do personal consulting projects of
5 various kinds.
6 Q Would you know how to write an operations
7 manual?
8 A Yes.
9 Q Where would you have gained that knowledge?
10 A Because I've done a lot of writing in my life
11 and I know how to organize and do research and document.
12 Q But you have never written an operations
13 manual?
14 A No, but I have overseen the process and the
15 projects of operations manuals. I have been part of the
16 entire process; but I have never texturally written one,
17 no.
18 MR. LAWDERMILK: Objection.
19 Nonresponsive.
20 Q (By Mr. Lawdermilk) You have never written an
21 operations manual for a franchisor?
22 A No, but I have supervised the project from
23 beginning to end.
24 MR. LAWDERMILK: Objection.
25 Nonresponsive.

39
1 Q (By Mr. Lawdermilk) You have never written an
2 operations manual for a franchisor, correct?
3 MR. LIGHTY: Object to the form.
4 A Do you mean by that created the actual text
5 and put it into a word processor?
6 Q Sure.
7 A No.
8 Q Have you ever been the decision-maker on what
9 goes into an operations manual?
10 A That in every case is the franchisor's area of
11 accountability.
12 Q So, it is the franchisor who decides what goes
13 into its operations manual?
14 A Yes.
15 Q Are the franchisors -- Who for the franchisor
16 typically oversees that?
17 A It would be the Operations Department. The
18 head of the operations department might delegate that,
19 but that's where the expertise would lie.
20 Q And do you find you are dealing with a lot of
21 lawyers a lot of times, too, for the franchisors?
22 A No.
23 Q Never dealing with lawyers?
24 A Very seldom.
25 Q Is one function of the operations manual to

40
1 limit the liability for a franchisor in your opinion?
2 A Yes.
3 Q Now, you have written publications; is that
4 correct?
5 A As listed.
6 Q As listed in Exhibit 7?
7 A Yes.
8 Q And you have also formed opinions in this
9 case, correct?
10 A Yes, in the report.
11 Q Anything written in any of your publications,
12 would it be contrary to the holding of your opinions in
13 this report?
14 A No.
15 Q Specifically anything you wrote in "How, when,
16 and why to default a franchisee," in July of 1994, there
17 would be nothing in there that would be contrary to your
18 holdings in this report on this case where this little
19 boy died?
20 A No, it would support it.
21 Q Have any of your publications or articles been
22 subject to peer review?
23 A I don't know what you mean by "peer."
24 Q Do you know what I mean by "peer review"?
25 A I do not know what you mean by "peer review."

41
1 Q So, I'm going to take it that you don't know
2 whether any of them have been subject to peer review or
3 not. You just don't know because you don't know what it
4 means, right?
5 A That's correct.
6 Q Now, you were an expert witness in Snelling &
7 Snelling?
8 A Yes.
9 Q What was that case about?
10 A I don't recall.
11 Q Okay. Do you know who you were an expert
12 witness for? The franchisor?
13 A We only do expert witnessing for franchisors.
14 Q That was my next question. The only expert
15 witnessing you do is for franchisors, correct?
16 A That's correct.
17 Q So, is it fair to say you have never seen a
18 franchisor that has had responsibility for something
19 that happens at the franchisee's location when you have
20 been hired as an expert witness?
21 A I don't understand your question.
22 Q Okay. In all the times you have been hired as
23 an expert witness, you have never had the opinion that
24 the franchisor was responsible for what had gone on that
25 was wrong at the franchisee's location.

42
1 MR. LIGHTY: Object to form.
2 Q Is that an accurate statement?
3 A I don't - I can't -- The way the question is
4 asked is unclear to me. So, I can't answer.
5 Q In this case it is your opinion that the
6 franchisor cannot be held responsible for Tyler's death,
7 right?
8 MR. LIGHTY: Object to the form.
9 A Yes.
10 Q Have you ever in being an expert witness
11 determined that the franchisor had any responsibility
12 for what had gone wrong at the local level?
13 MR. LIGHTY: Object to the form.
14 A I still -- I'm still unclear as to what you
15 are asking me.
16 Q Well, you have always testified - been an
17 expert witness for the franchisor, correct?
18 A Yes.
19 Q In those cases have you ever determined - has
20 it ever been your opinion that the franchisor did
21 anything wrong?
22 A Anything wrong? Have I ever determined that
23 the franchisor --
24 Q Has that ever been your opinion?
25 A No.

43
1 Q Let me just clean it up for the record. You
2 have been an expert witness and you are always an expert
3 witness for the franchisor, correct?
4 A Yes.
5 Q Has it always been your opinion as an expert
6 witness hired that you have never -- Strike that.
7 Has it always been your opinion as a
8 hired expert witness that the franchisor did nothing
9 wrong?
10 MR. LIGHTY: Object to the form.
11 A I still do not, from my point of view, like
12 the way that question is being asked.
13 Q As an expert witness, have you ever found
14 fault with the franchisor's actions?
15 MR. LIGHTY: Object to the form.
16 A I still don't like the way that question is
17 asked.
18 Q Well, as an expert witness, has it ever been
19 your opinion that you found fault with the franchisor's
20 actions?
21 A The reports deal with the facts of the case.
22 My opinions deal with the cases at hand. The opinions
23 that I have given in those cases support the
24 franchisor's position.
25 MR. LAWDERMILK: Object as nonresponsive.

44
1 Q (By Mr. Lawdermilk) I'm really asking a simple
2 question.
3 A Simple questions often have great
4 implications.
5 Q Well, just because you don't want to answer
6 it, doesn't mean --
7 MR. LIGHTY: Object to the form. Object
8 to side-bar.
9 Q As an expert witness for franchisors, have you
10 ever had an occasion to have the opinion of finding
11 fault with the franchisor's actions?
12 A My reports don't often deal with just actions.
13 Q But as an expert witness for the franchisors,
14 have you ever found fault with the franchisors?
15 MR. LIGHTY: Object to the form.
16 A I can't answer that question the way it is
17 asked.
18 Q In any case that you have been an expert
19 witness, have you ever not found that it was the
20 franchisee's responsibility?
21 A The way I can answer that statement - and I
22 think possibly get at what you are asking - is to say
23 that my opinions in my expert reports that are listed on
24 that document, No. 7 - Exhibit 7 - have supported the
25 position of the franchisor.

45
1 Q That's all I'm trying -- I'm trying to clean
2 it up.
3 Every time you have been hired as an
4 expert, your opinions and reports have always supported
5 the position, whatever it is, of the franchisor?
6 A Yes.
7 Q Thank you. Tell me about Marble Slab
8 Creamery.
9 A What would you like to know?
10 Q What -- What was that case about?
11 A It was a case about a franchisee in Dallas who
12 was being defaulted by the franchisor because of
13 cleanliness and the procedures and standards dealing
14 with cleanliness and the procedures and standards
15 dealing with the necessity to be a hands-on operator.
16 Q And you testified for the franchisor?
17 A Yes.
18 Q Who won that case?
19 A The franchisor.
20 Q And did you give a deposition in that case?
21 A You know, I'm not sure. That was so long ago.
22 I don't really remember.
23 Q Did you do a report in that case?
24 A You know, I don't remember. I think I did,
25 but I don't remember.

46
1 Q Would you still have that report on your
2 computer?
3 A I don't think we had computers. I don't know.
4 Q Do you remember any of the attorneys involved?
5 A I do not.
6 Q But it was in Harris County?
7 A It was in Dallas. It was a suburb of Dallas.
8 So, I'm not even sure what county it was in.
9 Q I'm talking about Marble Slab. You have it
10 listed as 269th Judicial District Court of
11 Harris County.
12 A Then it was. The location was in Dallas.
13 Q What about Lyons versus Southland Corp.? What
14 did you do for them?
15 A I believe that was a case where the franchise
16 candidate was going through the required training, the
17 satisfactory completion of which is part of the granting
18 of the franchise, and toward the latter part of that
19 training, they had decided - if I'm remembering this
20 correctly - to reject the franchise candidate in
21 training and a lawsuit resulted from that.
22 Q So, it was an employment case?
23 MR. LIGHTY: Object to the form.
24 A No, it was not an employment case because we
25 are talking about a franchisee in training who was not

47
1 an employee.
2 Q So, this was when - where the franchisor was
3 training the employee - I mean, the franchisee?
4 A Yes.
5 Q This wasn't a case where the franchisor was
6 training an employee --
7 A Right.
8 Q -- of a franchise?
9 A Correct.
10 Q Do franchisors train employees of franchisees?
11 A Sometimes they do. Sometimes it is required.
12 Q Who requires it?
13 A The franchisor.
14 Q Because the franchisor is the one that sets
15 the standards and requirements, right?
16 A Oftentimes franchisors have certification
17 programs for employees of the franchise depending on the
18 position that is certified. Oftentimes they require a
19 certified employee at all times, and sometimes they
20 require backup employees be certified.
21 Q But the people who decide that is the
22 franchisor?
23 A The people who decide the standard are the
24 franchisor.
25 Q The franchisor always sets the standards and

48
1 requirements?
2 A Yes.
3 MR. LIGHTY: Rocky, when you get a chance
4 for a break, we have been going about an hour.
5 MR. LAWDERMILK: We can take it right
6 now.
7 THE VIDEOGRAPHER: Going off the record
8 at 11:07.
9 (RECESS FROM 11:07 TO 11:17.)
10 THE VIDEOGRAPHER: Back on the record,
11 the time is 11:17.
12 Q (By Mr. Lawdermilk) And, Mr. Gappa, if you
13 would make sure I'm doing this right, but will you hand
14 me what we have been referring to as Exhibit 7 -- And it
15 is actually Exhibit 5, isn't it?
16 A Yes.
17 Q But you and I have been referring to it as
18 Exhibit 7, which is your report, haven't we?
19 A What do you refer to as the CV? What is that
20 one?
21 Q The CV is part of your report.
22 A Okay. Then yes.
23 Q Because it is in here.
24 A Okay.
25 Q I'm going to also go ahead and put an

49
1 Exhibit 7 on it.
2 MR. LIGHTY: 5 and 7.
3 (EXHIBIT NO. 7 MARKED.)
4 Q So, it will be 5 and 7 - everything within
5 this notebook which is a list of the documents that you
6 have reviewed, your report, and your CV, correct?
7 A Yes. Well, I don't -- In this file I don't
8 think my CV is here.
9 MR. LIGHTY: Why don't you just open it
10 up and look at it?
11 A (Reviewing documents) My CV is not part of
12 this particular file.
13 Q Well, then we will go make --
14 A Make it whole?
15 Q No, I'm not going to put anything into your
16 file; but we will make Exhibit 8 your CV and after I do
17 that, I want you to confirm that for me.
18 (EXHIBIT NO. 8 MARKED.)
19 Q What is Exhibit 8?
20 A Exhibit 8 is my CV.
21 Q And is that accurate as far as you know?
22 A Yes.
23 Q In preparation for this case or in doing your
24 report, did you have an occasion to go from Alabama to
25 Raleigh Durham?

50
1 A Did I have an occasion -- I was going down
2 there for a client. So, it might have been, yeah.
3 Q And was that for American Dairy Queen?
4 A No.
5 Q Do you have any drafts of your report?
6 A No.
7 Q Why not?
8 A I get too confused with drafts. So, I get rid
9 of them after I do a new - the latest version.
10 Q What you say you get rid of them, what do you
11 mean?
12 A Delete, delete, get rid of them.
13 Q Now, you actually completed your report on
14 August 12th of 2001; is that right?
15 A I don't have that.
16 Q (Tendering) Exhibit 4?
17 A Well, again, since -- As I say, this document
18 I can't attest to being accurate. So, when is this
19 signed -- Yeah, this is signed the 12th.
20 Q So, you completed your report on August 12th,
21 2001; is that correct?
22 A Yes, yeah, yes.
23 Q And then Exhibit 4 shows that you faxed a
24 report to Brian - is that Brian Swift on August 13th of
25 2001?

51
1 A Brian Swift is the name. As I said, I can't
2 attest that this is accurate. What are you referring
3 to?
4 Q August 13th of 2001.
5 A Ah. I assume that's accurate. As I say, I
6 can't attest that that document is a valid document.
7 That would make -- I assume that's correct.
8 Q Okay. Now, you testified in a case called
9 Nursefinders, Inc., versus Nursefinders of Northern
10 Virginia?
11 A Yes.
12 Q Just briefly, what was that case about?
13 A I don't remember.
14 Q But you were hired by the franchisor?
15 A Yes.
16 Q And you gave an opinion?
17 A I don't remember. Something in the back of my
18 mind says it never got to that.
19 Q By the way, what was your opinion in the
20 Marble Slab Creamery case?
21 A That the evidence supported the default
22 procedure be administered.
23 Q And the default procedure is when the
24 franchisee is not in compliance with the franchisor's
25 standards, correct?

52
1 A Actually it is a little bit broader than that.
2 The standards are a reflection and a documentation of
3 the operating system. So, they are a subset of the
4 operating system; and what is really happening -
5 particularly in the Marble Slab case - is the
6 standards - the lack of following the standards
7 reflected that the operating system itself was not being
8 implemented, damaging the customer experience and,
9 therefore, the purpose of being in business.
10 The philosophy of default - which you
11 would find if you had to read that article - is that the
12 franchisor makes decisions after the franchisee makes
13 theirs so that the franchisee in the philosophy of that
14 article and our company, the franchisee is really by
15 their actions or inactions requiring and asking that
16 they be defaulted.
17 The franchisor really has no choice often
18 in the matter because a franchise relationship is not
19 linear. It is contextual and an individual franchisee
20 can't go after another franchisee who is out of
21 compliance. That's the function and role and
22 responsibility of the franchisor to the rest of the
23 community of either company-operated stores or franchise
24 locations.
25 Q So, in fact, a franchisor - not just for

53
1 themselves, but for their customers - has an obligation
2 to make sure that the franchisee is in compliance with
3 the franchisor's standards, right?
4 A Particularly as they - as they - yes, and as
5 they relate to the operating system, yeah, because they
6 could have other nonoperating standards.
7 Q What about Servpro Nyquist Enterprises?
8 A Servpro Nyquist Enterprises?
9 Q It is in Montana.
10 A Yes. I don't really recall the particulars of
11 that case.
12 Q Okay. How about the Physicians Weight Loss
13 Centers of America?
14 A And I don't really remember the particulars of
15 that case.
16 Q Okay. Steaks To Go?
17 A I don't remember that one either.
18 Q How about the Hooters case?
19 A Ah.
20 Q Do you remember that one?
21 A The Hooters case. Ah.
22 Q Do you remember that one?
23 A I do.
24 Q Tell me what that was about.
25 A The franchisor had operated and established

54
1 company restaurants in a number of states and they had
2 decided that they were going to grant a master license
3 agreement to one person for basically the rest of the
4 United States and that master license agreement allowed
5 that particular individual entity to also issue
6 franchise agreements within their master license
7 agreement.
8 And under their direction and leadership,
9 it was the opinion of the franchisor that they were
10 operating below the standards of - Hooters expected from
11 the operations and, so, that lawsuit had to do with the
12 revocation of the master license agreement.
13 Q That would pretty much be similar to a large
14 scale franchisee. Would you agree with that?
15 A Not really. That would be a multiunit
16 agreement, and there would be very seldom - very -- I've
17 never seen or been involved - I've never been involved
18 in a multi default - multiunit default.
19 Because you are dealing with individual
20 license agreements, my guess is there would be a number
21 of lawsuits dealing with each particular license
22 agreement rather than sort of a blanket approach.
23 That's why this particular case dealt with one license
24 agreement.
25 Q This case had one license agreement with many

55
1 subsets below it, right?
2 A The particular entity operated under license
3 agreements for individual restaurants as well as issued
4 them.
5 Q But the bottom line was that Hooters didn't
6 feel that the people they had given their licensing
7 agreement to were living up to their standards - to the
8 Hooters standards, right?
9 A The master license agreement, right. Yes.
10 True.
11 Q And because of that, Hooters wanted to revoke
12 that master licensing agreement, right?
13 A Yes.
14 Q And who won that case?
15 A Ah. That case ended up with the master
16 licensee buying the franchisor company.
17 Q Did it go to trial?
18 A No.
19 Q So, was that sort of a settlement?
20 A I suppose it was -- Yeah, that's a good term -
21 sort of a settlement.
22 Q Did you testify in that case?
23 A It didn't go to trial.
24 Q Did you give a deposition?
25 A No.

56
1 Q Did you do a report?
2 A I don't recall if I did or not. I think I
3 might have, but I don't recall.
4 Q When was that case?
5 A Oh, time passes so fast. I'm going to say
6 maybe three years ago. I'm not sure.
7 Q Where was it at?
8 A I know where I was. I was in Florida. I
9 think the headquarters, if I remember correctly, of
10 Hooters is in St. Petersburg or Clear Lake - maybe Clear
11 Lake - Clearwater - Clearwater.
12 Q Do you remember any of the attorneys in that
13 case?
14 A No.
15 Q What have you reviewed just in preparation for
16 your opinions today?
17 A My report.
18 Q Okay. Who have you talked to in preparation
19 for your opinions today?
20 A No one.
21 Q Not even your attorney?
22 A Not even my attorney.
23 Q Who hired you?
24 A I would -- That's an interesting question.
25 Does Dairy Queen hire you? Does -- I know where I send

57
1 the invoice. I don't -- I assume I was retained by the
2 original attorney on behalf of the client.
3 Q So, it is your belief that you were hired by
4 ADQ's lawyers?
5 A That's my belief.
6 Q And when they hired you, what did they tell
7 you?
8 A That they wanted me to be an expert witness.
9 Q Do you know when you were hired?
10 A Probably a few months before that August 12th
11 date.
12 Q Would that be reflected in what we have marked
13 as Exhibit 1? Would there be a letter from the attorney
14 here?
15 A It would be reflected here most likely.
16 Q Well, I thought those were wrong?
17 A I didn't say they were wrong. I said I
18 couldn't testify this is the accurate - totally accurate
19 document, but it would have been - it would have been
20 somewhere in that July/August time frame.
21 Q But what is reflected on Exhibit 4 is that you
22 were - reviewed your first letter from Brian Swift on
23 August 4th; is that correct?
24 MR. LIGHTY: Object to the form.
25 A Again, I'm sure that it is; but I just -- I

58
1 know that isn't the final document. So ...
2 Q And where is the accurate document?
3 A I don't know. It might be -- Most likely it
4 is residing on my computer; or if it somehow got
5 deleted, then it is in someone's office that paid the
6 invoice.
7 Q But that's a document that you would have sent
8 to your attorneys - or IDQ'S attorneys - ADQ's
9 attorneys?
10 A I don't think I would have sent the time log.
11 I might have. I don't really know. I don't remember.
12 Q Well, when you first received the letter from
13 Brian Swift in getting a grasp on the case, you have -
14 at least on Exhibit 4 - that it was six hours?
15 A Okay.
16 Q So, there would have been more than just a
17 letter, wouldn't there? Wouldn't there have been
18 documents with that?
19 A Yes.
20 Q Were you contacted prior to that by telephone?
21 A Probably. It usually happens that way.
22 Q And if you know, how did Mr. Swift come upon
23 you?
24 A I believe that the Gray, Plant, Mooty people
25 know of our work with other of their franchise clients

59
1 in nonlegal-related areas, and they know the reputation
2 of the company.
3 Q So, have you ever done work for Gray, Plant,
4 Mooty?
5 A No. No. Are they the lawyers in this case?
6 Q Other than this case, have you ever done any
7 work for Gray, Plant, Mooty?
8 A No.
9 Q Other than this case, have you ever done any
10 work for American Dairy Queen?
11 A They have attended some of our seminars; and
12 we might have done -- 15, 20 years ago we might have
13 done a day or two of consulting, nothing substantial.
14 Q What kind of consulting?
15 A It would have had to do with their system for
16 finding, qualifying, and granting franchises.
17 Q Do you remember yourself personally working
18 for ADQ?
19 A I remember, yes.
20 Q When and where?
21 A Years ago, Minneapolis, and they attended a
22 seminar that we have - a two-day seminar on structuring
23 a system to generate and qualifying and grant franchises
24 and I think there was a day or two of follow-up with
25 them in Minneapolis. I mean, we are talking a long time

60
1 ago.
2 Q Would that have had anything to do with the
3 control a franchisor has over a franchisee?
4 A Only to the extent that it would be part of
5 the explanation that you make to a franchisee of the
6 relationship - of a potential franchisee to the
7 relationship.
8 Q But your limited experience of working with or
9 for Dairy Queen didn't have anything to do with the
10 actual what goes on on a day-to-day basis type of
11 control ADQ has over its franchisees, right?
12 A No. Or actually my "no" was not to your
13 "right," but to the question.
14 Q Got you. Have you ever worked with any
15 Dairy Queen franchisees?
16 A No.
17 Q You are being paid for your testimony and
18 opinions in this case, correct?
19 A Yes.
20 Q And you are being paid by ADQ's lawyers?
21 A If that's accurate, yes.
22 Q That's who you get your check from?
23 A I really don't even know that.
24 Q How much do you charge an hour for reviewing
25 documents?

61
1 A $350.
2 Q What are your other pay rates?
3 A I think this should reflect that, and I think
4 it says $3500 for deposition preparation a day and $3500
5 for depositions.
6 Q About how many days did it take you to prepare
7 for this deposition?
8 A Maybe one. Now, to be - I need -- Because of
9 this notebook thing, I want to make sure I'm answering
10 that.
11 The depositions that I was given,
12 normally I would consider that toward the expert report
13 kind of thing rather than sitting down and preparing;
14 but they were part of my last few days. So, in a sense,
15 you could say, yeah, reading those - that list that you
16 got - that could be called preparing.
17 Q What else did you read to prepare for this
18 deposition?
19 A That's it.
20 Q You didn't review any other documents?
21 A Those three pages you got I reviewed.
22 Q And what are the pages - these three pages in
23 Exhibit 2?
24 A In Exhibit 2?
25 Q Yes, sir.

62
1 A Ask me that a different way.
2 Q What is Exhibit 2?
3 A Ah. Those are some notes I took on - on --
4 Basically they tell me how good you guys are at asking
5 questions and to just be aware of that whole process.
6 Q Well, Exhibit 2 is actually notes you took
7 when you met with ADQ's lawyer in preparation for giving
8 a deposition in this case, correct?
9 A That's right.
10 Q And you were given some instructions in that
11 meeting with ADQ's lawyer, weren't you?
12 A No.
13 Q You weren't given any instructions?
14 A No - was given - simply we had a very - it was
15 about an hour and we just simply - what normally
16 happens -- What normally happens is you sit down and you
17 say, "Look, this is the way these guys might ask you
18 questions; and, you know, just do your best."
19 Q But you took notes on things you were told in
20 that meeting with ADQ's lawyer in preparation for this
21 deposition, didn't you?
22 A I took notes that I thought might be helpful
23 to me. I wasn't told anything, just we had a discussion
24 about the deposition process.
25 Q Well, one of the notes you wrote was: Don't

63
1 use the word standard. Use correct term guideline.
2 A Right.
3 Q And was that your original thought,
4 or is that what you were told to do?
5 A No. It is my original clarification. I'm
6 just -- I was just reinforcing myself so I would use the
7 right term.
8 Q So, you had a meeting with ADQ's lawyers for
9 how long? How long did y'all meet for?
10 A It wasn't lawyers plural. It was lawyer
11 singular and it was Don and we met about an hour.
12 Q So, you are hired by ADQ?
13 A Yes.
14 Q They are paying you $3500 bucks to be here
15 today?
16 A Yes.
17 Q They pay you something like 525 an hour?
18 A 350.
19 Q 350 an hour?
20 A Uh-huh.
21 Q Some of those invoices say 525. Is that
22 wrong?
23 A No, that's time and a half - the weekend.
24 Q So, sometimes they pay you upwards of $525 an
25 hour?

64
1 A Yes.
2 Q You meet with ADQ's lawyers to get ready for
3 this expert deposition that you are being paid for,
4 correct?
5 A No, it wasn't to get ready for the deposition.
6 Mr. Swift, my understanding, is not on the case anymore
7 and, so, Don and I had never met and our calendars were
8 very hard to make that happen. So, it was really a
9 meeting to see each other for the first time and just
10 talk about the deposition process.
11 Q Okay. So, what you are saying is y'all just
12 talked -- You and ADQ's lawyers just talked about the
13 deposition process when you met?
14 A Yes.
15 Q And when you wrote: Don't use word standard.
16 Use correct term -- Use correct term is guideline --
17 A Uh-huh.
18 Q -- you wrote that?
19 A Yes, I did.
20 Q And that, you are claiming today, while y'all
21 were just talking about the deposition process, you came
22 up with that thought?
23 MR. LIGHTY: Object to the form.
24 A I don't remember who came up with the thought.
25 We were discussing the case and the importance of

65
1 language.
2 Q So, now y'all were discussing the case. You
3 just told me that y'all were just talking about the
4 deposition process. So, you were also discussing the
5 case?
6 A Well, I don't know what you mean by some of
7 the sentences that you ask me back because I think you
8 and I might have different meanings about it. We did
9 not sit down and take apart the case. We did not look
10 at the report and talk about opinions.
11 Q Sir, that's not what I asked you.
12 I said, "What did y'all talk about?"
13 And you said, "The deposition process."
14 I said, "You didn't talk about the case?"
15 You said, "No."
16 Did you talk about the case in your
17 meeting with ADQ's lawyer?
18 A Based on what I understand talking about the
19 case, no.
20 Q Okay. And are all of these notes in Gappa 2
21 that -- You are going to claim that those are just your
22 original thoughts?
23 A I never said they were my original thoughts.
24 I said they were notes I made during our discussion of
25 the deposition process.

66
1 Q Well, is anything in Exhibit 2 something that
2 ADQ's lawyer told you?
3 A I -- I can't answer that the way it is being
4 asked. I don't, you know --
5 Q Did you write anything down in Exhibit 2 to
6 remember it because ADQ's lawyer told you about it?
7 A All I can say is that could be the case. The
8 word -- What "told" means to me might be different than
9 what "told" means to you.
10 Q Well, what does "told" mean to you?
11 A Do this. Don't do that. Do this. Don't do
12 that.
13 Q Sort of like the difference between being able
14 to require and just being able to ask somebody, right?
15 MR. LIGHTY: Object to the form.
16 A I don't understand that question.
17 Q Do you know what the difference is between
18 when someone requires someone to do it versus when
19 somebody asks someone to do it?
20 A When an individual requires you to do
21 something?
22 Q Well, I'm talking about in the
23 franchisor-franchisee --
24 A Ah.
25 Q -- context.

67
1 When a franchisor requires someone to do
2 something - make a change, come into compliance --
3 A Open at 8:00, close at 6:00.
4 Q -- is that different than recommending or
5 asking them to do it?
6 A Yes.
7 Q And how is that different?
8 A How is it different?
9 Q How is when a franchisor requires a franchisee
10 to do something different than when they just recommend
11 them to do something?
12 A Well, my understanding -- My understanding of
13 that difference would be like saying, "Okay. You are
14 required to have insurance. You are required to open
15 these kinds of hours. You are required to have a
16 certified manager. You are required to carry these
17 kinds of food products. You are required to have this
18 kind of signage. And we recommend you carry these kind
19 of condiments and we recommend that you have logoed
20 napkins, but we require you to use this machinery and we
21 require you to use these ingredients."
22 Q And with that, from the franchisor's
23 perspective, "required" brings an element of - that they
24 have the power to have some sort of enforcement or
25 control over that things - over things that they are

68
1 requiring, correct?
2 MR. LIGHTY: Object to the form.
3 A Well, okay. Franchising is taking the
4 intellectual property of a company that owns it and
5 licensing someone else. So, it is not about power. It
6 is about the franchisee saying, "I accept this
7 obligation. When I become your franchisee and when you
8 license me, I accept the right I have to be obligated to
9 your systems."
10 So, the power thing only comes in when I
11 decide not to do it because it is my intellectual
12 property, not yours.
13 Q And my question, I guess, was a bad question.
14 If a franchisor requires something be
15 done, is that in your opinion different than when they
16 can only recommend something be done?
17 A If the operating system recommends something,
18 then it is not a requirement.
19 Q But what is a requirement?
20 A Something that is part of the operating
21 system.
22 Q What does it mean to be part of the operating
23 system? Does it mean that there is some - a control
24 factor for the franchisor?
25 A Well, there is always a control factor because

69
1 it is their intellectual property. So, the control is
2 there if the franchisee decides not to do what is
3 required through the franchise agreement. Once they
4 decide not to do that - think speeding or going too fast
5 through a school zone - the power of the licenser kicks
6 in and I can write you a ticket, but I can't write you a
7 ticket if you are not out of compliance. Then it would
8 be sort of like racial profiling.
9 Q So, the franchisor can only require things be
10 done to meet their standards?
11 A No, that's not the way it works.
12 The way it works is when you become a
13 franchisee, the franchisor gives you what is called an
14 economic model to operate. That economic model is
15 primarily explained through the operating system,
16 through the operating manual, and other documents - the
17 training manual that you might get in initial training.
18 But these documents have within them procedures,
19 policies, programs, mandates, zero tolerances, that make
20 up the operating system and some of those are
21 recommended and some of those are mandated.
22 MR. LAWDERMILK: Object as nonresponsive.
23 Q (By Mr. Lawdermilk) You have just said some
24 are recommended, some are mandated?
25 A Required.

70
1 Q Some required -- Mandated and required in
2 the -- "Mandated" and "required" in the
3 franchisor-franchisee relationship are basically the
4 same word?
5 A I believe so.
6 Q Much like "recommend" and "ask" are probably
7 the same word in the franchisor-franchisee relationship?
8 A That's interesting because I would interpret
9 "ask" as verbal, and I would interpret "recommend" as
10 written.
11 Q Okay.
12 A And -- But they amount to the same thing. It
13 is nonrequired.
14 Q I guess my question is if a franchisor can
15 mandate its franchisee do something, then it goes to say
16 that the franchisor has some control over that
17 particular aspect, right?
18 A Not quite right. The franchisor doesn't
19 mandate that the franchisee do something. The
20 franchisor mandates that a franchisee who becomes
21 licensed fully and completely and consistently follow
22 the operating system. If you don't, if you choose to
23 think independently and not do what is required, then I
24 have the ability because of the license agreement to
25 deal with that, but it is not about power. It is about

71
1 obligation.
2 You have an obligation to implement. I
3 have an obligation to tell you what to implement. If
4 you choose to abdicate your responsibility through the
5 license agreement, not to follow, then because of all
6 the other franchisees and my intellectual property being
7 abused, I have some things I can do. I have some
8 remedies.
9 Now, that can be -- That certainly can be
10 interpreted as power if you are the franchisee who
11 didn't like it in the first place and thinks it is - for
12 some reason doesn't apply to him or her.
13 If a franchisee always follows the
14 operating system, there will never be an issue. The
15 only issues in franchising between a franchisor and
16 franchisee to become contentious in this particular
17 arena is if a franchisee decides not to do what the
18 operating system asks to do.
19 Q Well, if a franchisor has a standard --
20 A Yes.
21 Q -- that they have set --
22 A If the system has a standard - because, see,
23 the operating - the franchisor and - might have company
24 operations. So, that same operating system would apply
25 to their own operations. So, a franchisor is a subset

72
1 of the business. That's why a lot of companies form a
2 franchise company that doesn't hold the intellectual
3 property, but also has a license agreement from the
4 company that holds the intellectual property and they
5 license that company to grant licenses. There are very
6 few franchise companies that don't have company
7 operations.
8 Q To you is there a difference if ADQ has a set
9 system standard?
10 A Yes.
11 Q What is the difference between when they can
12 only recommend that the franchisee meet their system
13 standard versus when they can mandate or require the
14 franchisee meet their system standard?
15 A If -- My assumption is that that would - where
16 that would be the case would happen in a couple of
17 instances. If it were - if it were -- If what they were
18 recommending was not in their mind considered an
19 essential part of the operating system, of the Core
20 Operating System - like, for instance, the difference
21 between a machine that you had to use and ingredients
22 that went in that machine that you had to use or like
23 with Wendy's, okay?
24 Wendy's requires that the franchisee make
25 square hamburgers because it is a big deal for them that

73
1 they realize they can't cut corners. Now, that might
2 sound hokey; but they don't recommend that they use
3 square hamburgers. They require it because they don't
4 want people to cut corners.
5 On the other hand, you may have something
6 like napkins or different types of uniforms you can
7 choose from and they might say, "Okay. You are required
8 to wear a uniform; but we recommend you have eight
9 choices of uniforms," okay? "You are required to have
10 four people on at all times, but we recommend that you
11 might have five or six."
12 Q And if a franchisor believes it can require or
13 mandate something, that something would be within its
14 system core?
15 A It would -- Yeah, it would be what they
16 consider to be part of their operating system, yes.
17 Q Thank you.
18 Have you ever been to Orange?
19 A Yeah.
20 Q When?
21 A When my current 13-year-old was doing a
22 project and he was doing it in oil wells and the origin
23 of oil and we came over here.
24 Q And you went to Orange?
25 A We came over to this whole area. I don't

74
1 exactly remember how that went, it was so much fun; but
2 it was relative to a project.
3 Q How long ago was that?
4 A Oh, I don't - years - four or five years
5 maybe, no business-related reasons.
6 Q Okay. Now, Exhibits 5 or 7 --
7 A Yes.
8 Q -- are your expert reports?
9 A Yes.
10 Q Okay. That's the most updated report?
11 MR. LIGHTY: Objection. Form.
12 A It is the one I have. I think it is. I'm
13 pretty certain it is, but ...
14 Q Well, as we sit here today, do you stand by
15 all of your opinions given in that report?
16 A Yes.
17 Q And, again, you were paid to write that report
18 by ADQ's lawyers?
19 A Yes.
20 Q Now, you list some documents that you
21 reviewed; is that correct?
22 A Yes.
23 Q Now, you have also given me Exhibit --
24 MR. LIGHTY: Which one are you looking
25 for, Rocky?

75
1 MR. LAWDERMILK: The list.
2 A This one?
3 Q (By Mr. Lawdermilk) Yeah. Let me just make it
4 an exhibit.
5 MR. LIGHTY: Hand that to him.
6 A (Tendering)
7 Q Let me strike all that.
8 (EXHIBIT NO. 9 MARKED.)
9 Q I'm going to show you what has been marked as
10 Gappa Exhibit 9, and I'll ask you what is that?
11 A It's a list of depositions I have got in my
12 possession that were given to me over the last week or
13 so, maybe three weeks, of people who were involved in
14 this matter.
15 Q Have you had a chance to read all of the
16 depositions in Exhibit 9?
17 A No.
18 Q Well, which depositions have you read in
19 Exhibit 9? Can you check them off for me?
20 A Can I see that -- Where is the file?
21 MR. LIGHTY: It is the brown file.
22 THE VIDEOGRAPHER: (Tendering)
23 A (Reviewing document) Now, I'm assuming that
24 read means read and not looked at, glanced at, okay?
25 Q I'll ask you it in two questions.

76
1 Have you looked at all of those
2 depositions?
3 A Yes.
4 Q Okay.
5 A Michael Sullivan and William Zucco got quality
6 time.
7 Q Their depositions?
8 A Yes. Yes.
9 Q But you have looked at all of the depositions
10 in Exhibit 9?
11 A Yes.
12 Q Mr. Zucco and Sullivan got quality time?
13 A Yes.
14 Q And now in Exhibits 5 and 7 you list all the
15 documents that you have seen?
16 A Yes.
17 Q And the other depositions that you have had a
18 chance to see?
19 A Yes.
20 Q Is there anything outside Exhibits 5 or 7 and
21 9 that you have reviewed to form your opinions in your
22 report?
23 A No, sir.
24 Q Okay. And even after reading all the exhibits
25 or looking at all of the exhibits in Gappa No. 9, is

77
1 your opinion still the same for your report?
2 A Yes, it is.
3 Q No changes?
4 A No changes.
5 Q And do you believe that anything in those
6 depositions that you have had a chance to read is
7 contrary to your opinion?
8 A No.
9 Q Perfectly consistent?
10 A Yes.
11 Q And we are talking about the depositions in
12 Exhibit 9?
13 A Yes.
14 Q Also to form your opinion for your report
15 and - who have you talked to?
16 A I think in here -- And I want to be accurate.
17 I think the only person I mentioned I talked to was this
18 William Killion of Gray, Plant. That's what I note in
19 here.
20 Q Okay.
21 A And that's accurate.
22 Q And anyone else that you talked to to form
23 your opinion in your report?
24 A No.
25 Q Okay. What is it that Mr. Killion of Gray,

78
1 Plant & Mooty told you?
2 A I don't remember.
3 Q You don't remember what information he
4 provided you?
5 A I don't.
6 Q Did you make any notes of your discussions
7 with Mr. Killion?
8 A I actually don't remember. I know it wasn't a
9 very long conversation. That I do remember.
10 Q Do you have any notes at all on this case that
11 are not reflected in Exhibit 1?
12 A No.
13 Q No notes anywhere else?
14 A Huh-uh.
15 Q Is that a "no"?
16 A Huh? That's a no - excuse me - I do not have.
17 Q In fact, did reading Exhibit 9 - all the
18 depositions in Exhibit 9, did that additional
19 information make you even more sure that the opinion you
20 have been paid to give was correct?
21 MR. LIGHTY: Object to the form.
22 A It didn't make me more sure. It confirmed it.
23 Q It confirmed it for you. Now, everything that
24 you have been told or shown or the documents you have
25 been given have all been given to you by ADQ's lawyers,

79
1 correct?
2 A Correct.
3 Q And based on what you have been shown and told
4 by ADQ's lawyers, are you proud of the job ADQ did with
5 the playground project?
6 MR. LIGHTY: Object to the form.
7 A Say that again.
8 Q Based on what you have been shown and told by
9 ADQ's lawyers, all the documents and depositions, are
10 you proud of the job ADQ did with the playground
11 project?
12 MR. LIGHTY: Object to the form.
13 A The "playground project" means what?
14 Q Well, do you know about ADQ's playground
15 project?
16 A I'm asking you what you mean.
17 Q You don't get to ask the questions.
18 Do you know what ADQ's playground project
19 is?
20 A I can't answer that question the way you are
21 asking it. I wish I could, but I can't.
22 Q Do you believe ADQ had a playground project?
23 A I need to know what you mean by "playground
24 project."
25 Q Well --

80
1 A That's too vague for me.
2 Q Asking if ADQ had a playground project is too
3 vague?
4 A This is a very serious case to me, and I don't
5 want to try to be at all adversarial with you. I just
6 need to know what you mean by the term, and I would be
7 happy to answer your question. I don't know what --
8 That sounds like a technical term you are using from
9 your point of view. I just need to know what you mean
10 by it.
11 Q Well, based on what you have been shown and
12 told by ADQ's lawyers, are you proud of the job ADQ did
13 in trying to get their - the Texas Dairy Queen
14 playgrounds to come into compliance with the CPSC
15 guidelines?
16 MR. LIGHTY: Object to the form.
17 A One more time. Let me hear it one more time.
18 Q You bet.
19 Based upon what you have been shown - the
20 documents you have been shown and what you have been
21 told by ADQ's lawyer, are you proud of the job ADQ did
22 in trying to get the Texas Dairy Queen playgrounds into
23 compliance with the CPSC guidelines?
24 MR. LIGHTY: Object to the form.
25 A It is a -- To me, it is not about pride. To

81
1 me, it is about what somebody can do given the
2 constraints and restraints of a very difficult
3 situation, particularly in this case where there are
4 years of difficult relationships between ADQ and its
5 Texas association of franchisees.
6 Now, my opinion is - and I don't -- I
7 wasn't asked to give an opinion on whether I'm
8 personally proud or not. That's an opinion. My opinion
9 is that they did everything and more that they could do,
10 given the restraints of the franchise relationship, to
11 make a very difficult situation better. And, in fact,
12 the evidence shows and my report reflects that they were
13 pretty successful at getting some people to close
14 playgrounds, put new playgrounds in, close down
15 playgrounds. Some 65 percent of 112 - or 64 percent
16 did, in fact, respond favorably to their initiatives.
17 MR. LAWDERMILK: I object as
18 nonresponsive.
19 Q (By Mr. Lawdermilk) Let me ask you this way:
20 Based on what you have been shown and told by ADQ's
21 lawyer, do you feel ADQ did an exceptional job in
22 getting the Texas Dairy Queen playgrounds into
23 compliance with the CPSC?
24 MR. LIGHTY: Object to the form.
25 A Well, again, you know, because I take this

82
1 case - as I do them all - seriously, first of all, they
2 are guidelines. They are not laws. So, you know, what
3 we would like people to do in this case is fix your
4 playground up to the standards that comes with the
5 equipment; and I think they did an exceptional job with
6 their initiatives of getting people to realize the
7 issues and asking them clearly through letters,
8 et cetera, shut this one down, do something with this
9 immediately.
10 But they don't have any right under the
11 franchise agreement to do anything more than that. So,
12 I think they did an exceptional job at that.
13 MR. LAWDERMILK: I object as
14 nonresponsive.
15 Q (By Mr. Lawdermilk) I know this is side-bar.
16 You are giving me an answer, but you are
17 wanting to put a speech in with it. I just want you to
18 give me the answer.
19 MR. LIGHTY: Object to side-bar.
20 Q Based on what you have been shown and told by
21 ADQ's lawyer, do you feel that ADQ did an exceptional
22 job in getting the Texas Dairy Queen playgrounds into
23 compliance with the CPSC guidelines?
24 MR. LIGHTY: Object to the form.
25 A Yes.

83
1 Q Thank you.
2 And all of the documents that you have
3 been shown, show that ADQ did an exceptional job?
4 A I think the documents support that they did an
5 exceptional job, yeah.
6 Q If that's true, do you know why they hid so
7 many documents from us?
8 MR. LIGHTY: Object to the form.
9 A I'm not aware of the validity or nonvalidity
10 of that statement. I have only seen it referenced in
11 depositions.
12 Q Well, have you been shown any of the documents
13 ADQ had to turn over after they were sanctioned by the
14 Court?
15 MR. LIGHTY: Object to the form.
16 A The only documents I've seen are the ones I've
17 got, and I don't know anything that surrounded my
18 getting them or not getting them.
19 MR. LAWDERMILK: I'm getting ready to get
20 into the report. Do you want to take a break?
21 MR. LIGHTY: It is a good time for lunch,
22 yeah.
23 THE VIDEOGRAPHER: Going off the record
24 at 12:07.
25 (LUNCH RECESS FROM 12:07 TO 1:18.)

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1 THE VIDEOGRAPHER: We are back on the
2 record. The time is 1:18 P.M., August 30th, 2002,
3 beginning of Tape 2.
4 MR. LAWDERMILK: Do you have something
5 you want to put on the record, Don?
6 MR. LIGHTY: Oh, yes. I had my paralegal
7 copy the sections of that blue notebook, did not copy
8 the blank pages, and she actually returned it to me
9 sealed. So, I never got to look at it; but I'm not
10 going to break the seal. I've marked it and put Gappa
11 on top and Lighty on bottom; and if we have a hearing,
12 that will be the sealed, I guess, documents we will show
13 the Judge.
14 MR. LAWDERMILK: And you will keep it in
15 your office?
16 MR. LIGHTY: I will not destroy it. Yes.
17 Q (By Mr. Lawdermilk) Mr. Gappa, do you
18 advertise your services?
19 A Yes.
20 Q Where do you advertise and how?
21 A Through our seminar programs.
22 Q Tell me about those.
23 A We have five seminar programs that we offer
24 that are sponsored by the Canadian Franchise Association
25 and the International Franchise Association and we do

85
1 mailings to franchisors.
2 Q So, you advertise to franchisors?
3 A Yes. And we have a Web site.
4 Q And what is the domain name of that Web site?
5 A It is www.mgmt2000.com.
6 Q Do you advertise for expert testimony?
7 A It is on the Web site as one of the services
8 we offer. It is the only place it is offered.
9 Q What do you charge for consulting per hour?
10 A We don't -- Usually we don't do it by hour. I
11 doubt seriously if half of 1 percent of our revenue
12 comes from hourly consulting outside of expert
13 witnessing. It is all on a project basis.
14 Q Do you have any idea what that breaks down to
15 on an hourly basis of man hour?
16 A No, but the general formula that consulting
17 companies follow is that you can bill about 110 to 120
18 days a year. So, it -- When I figure projects, it is at
19 about - I try to guesstimate $2500-a-day rate.
20 Q What do you charge for -- What will you charge
21 for appearing at trial in this matter?
22 A $3500 a day.
23 Q Plus $3500 trial preparation a day?
24 A Yes.
25 Q Have you ever had any franchise law courses?

86
1 A No.
2 Q Are you relying on any cases for your opinions
3 in this case?
4 A No.
5 Q What did you and Mr. Lighty discuss at lunch?
6 A Our backgrounds, families.
7 Q Anything about the deposition?
8 A Nothing.
9 Q You have no certifications, do you?
10 A No.
11 Q Do you have any training at all - any academic
12 training at all in interpretation of franchise
13 agreements?
14 A Just on-the-job training.
15 Q So, that would be a "no"?
16 A Not really, but ...
17 Q Do you have any academic --
18 A Ah, no.
19 Q -- training at all in franchise agreement
20 interpretation?
21 A No, not at any university or college, no.
22 Q Do you consider yourself an expert in
23 franchise interpretation - franchise agreement
24 interpretation?
25 A Not as a lawyer, no, but as an experienced

87
1 layman in the field.
2 Q So, as a layman, you consider yourself able --
3 I'm sorry. Strike that.
4 You consider yourself able to interpret
5 franchise agreements as a layman, not as a lawyer,
6 right?
7 A Yes.
8 Q Have you ever actually gone to trial and
9 testified?
10 A Once.
11 Q In what case?
12 A Actually, no, never got called. It was at a
13 trial, but it ended -- No.
14 Q Now, I understand as a general rule a
15 franchisor can't default for something that is not a
16 requirement or standard within the Core Operating
17 System, correct?
18 A Yes.
19 Q Okay. For ADQ, is it your opinion that ADQ
20 can't default for something that is not a requirement or
21 a standard within the Core Operating System?
22 A More broadly, it can't default for anything
23 that isn't in the license - in the particular license
24 agreement that says it can't.
25 MR. LAWDERMILK: Object as nonresponsive.

88
1 Q (By Mr. Lawdermilk) Can ADQ default for a
2 requirement or standard which is not within the Core
3 Operating System in your opinion?
4 A Say it one more time.
5 Q Can ADQ default a franchise for a
6 requirement - for being in noncompliance with a
7 requirement or standard that is not within the Core
8 Operating System?
9 A I'm not sure I understand that from my point
10 of view. Again, I don't know how familiar you are with
11 franchising, but the things that a person can be
12 defaulted are very clearly put in the license agreement
13 and there may or may not be a requirement that they can
14 be put in default for. I would have to look at a
15 particular case to see what the requirement was and what
16 the franchise agreement said.
17 Q Well, we are on a particular case, aren't we?
18 A Yes, but you are asking a general question.
19 Q I said can ADQ -- Okay. Fair enough.
20 Can ADQ default -- Could ADQ have
21 defaulted the Strickland Dairy Queen for being in
22 noncompliance with a regulation - requirement or
23 standard that is not within the Core Operating System?
24 MR. LIGHTY: Object to the form.
25 A I would need to -- I would need to have you

89
1 ask me a particular requirement or standard, and I would
2 have to look at the franchise agreement.
3 Q Have you looked at the franchise agreement in
4 this case?
5 A Yes.
6 Q Okay. Within that franchise agreement --
7 Strike that.
8 Your testimony is that ADQ could only
9 default the Strickland Dairy Queen for standards or
10 requirements that are in the franchise agreement?
11 A As subject to default.
12 Q Okay. And was that a "yes"?
13 MR. LIGHTY: Object to the form.
14 A If the -- As stated in the franchise
15 agreement, that's a "yes."
16 Q And that's my question.
17 Is it your opinion that American
18 Dairy Queen can only default or could only default the
19 Strickland Dairy Queen for being in noncompliance with
20 the regulation or standard that was in their particular
21 franchise agreement?
22 A Yes.
23 Q Are QVSCs in the Strickland Drive Dairy Queen
24 franchise agreement?
25 A The process is. The right for the franchisor

90
1 to inspect is in the franchise agreement. The franchise
2 agreement doesn't spell out specifically what happens in
3 that process.
4 Q Well, who gets to decide what is in that
5 process?
6 A The franchisor.
7 Q Thank you.
8 One of your opinions is that - ADQ's
9 decisions and processes regarding playground safety and
10 you hold that ADQ acted within its rights, that it used
11 the appropriate processes, and that it acted correctly
12 in its decisions in this matter.
13 Is that one of your opinions?
14 A Yes.
15 Q Now, is your opinion based on the franchise
16 agreement between ADQ and Strickland Dairy Queen?
17 A Partially, yes.
18 Q What else is it based on?
19 A Those things they did outside the franchise
20 agreement.
21 Q That who did outside the franchise agreement?
22 A That ADQ did that it wasn't restricted from
23 doing by the franchise agreement and it wasn't required
24 to do by the franchise agreement, but they did it
25 anyway.

91
1 Q And if it wasn't restricted or required, how
2 is it that ADQ was able to do those things outside the
3 franchise agreement?
4 A Because they were concerned.
5 Q But what gave them the right to do it if it
6 was outside the franchise agreement?
7 A They didn't need to have a right to do it.
8 They did it as a business decision.
9 Q So, as a business, the franchisor can go
10 outside the franchise - what is specifically listed in
11 the franchise agreement for the good of the business and
12 the operating system, right?
13 A As a general principle, yes.
14 Q Dairy Queen -- American Dairy Queen is a
15 business format franchise?
16 A Yes.
17 Q And that's the type of franchise -- A business
18 format franchise is the type of franchise that uses the
19 franchise relationship as a bad faith end-run around the
20 rule of employer liability.
21 MR. LIGHTY: Object to the form.
22 Q Have you ever heard of that?
23 A Have I heard of it?
24 Q Yes.
25 A Yes, I have heard of it. Do I agree with it?

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1 Q Do you agree with it?
2 A I've heard of it.
3 Q Do you agree with it?
4 A Agree with what? Ask me what I agree --
5 Q Do you agree that the business format
6 franchisor is able to use the franchise relationship as
7 a bad faith end-run around the rule of employer
8 liability?
9 A No.
10 Q Where did you first hear of that?
11 A I don't recall.
12 Q One of your opinions is that compliance is
13 about getting, keeping, and satisfying customers,
14 correct?
15 A Yes.
16 Q Compliance is about maintaining the integrity
17 of the brand and what it stands for to the customer --
18 A Could I look where you are reading?
19 Q -- is that correct?
20 Absolutely - Page 8 of your report.
21 A Where are you?
22 Q Page 8, the true start of Paragraph 3, second
23 sentence, not counting the paragraph that doesn't start
24 on this page.
25 MR. LIGHTY: So, the third full

93
1 paragraph?
2 Q Third full paragraph.
3 A Yes.
4 Q Okay. Let me just try it again.
5 Compliance is about getting, keeping, and
6 satisfying customers, correct?
7 A Yes.
8 Q And that's one of your opinions?
9 A Yes.
10 Q And that holds true for American Dairy Queen?
11 A To the best of my knowledge.
12 Q Well, isn't a safe place also about getting,
13 keeping, and having satisfied customers?
14 A Is what?
15 Q Is a safe - having a safe place about getting,
16 keeping, and satisfying customers?
17 A Yes.
18 Q Now, one of your opinions on Page 9, the last
19 sentence of the first full paragraph, one of your
20 opinions is that the franchisor's legal obligation to
21 itself, to the other franchisees, and to its customers
22 is to bring the noncomplying franchisee into compliance
23 or to remove them from the system.
24 MR. LIGHTY: Object to form.
25 Q Is that your opinion?

94
1 A Yes.
2 Q What is your basis for that opinion?
3 A An understanding of multiunit retail.
4 Q Do you have any understanding or any training
5 in the field of law?
6 A No.
7 Q But you will agree that ADQ has a
8 responsibility and an obligation to customers to bring a
9 noncomplying franchisee into compliance, won't you?
10 A Yes.
11 Q And, in fact, you will agree that ADQ had an
12 obligation and a responsibility to its customers to
13 bring the Strickland Drive Dairy Queen into compliance?
14 MR. LIGHTY: Ob --
15 A With what?
16 Q With whatever they were in noncompliance with.
17 MR. LIGHTY: Object to form.
18 A Not necessarily - subject to the franchise
19 agreement.
20 Q Well, can you be in noncompliance if it is
21 outside the scope of the franchise agreement?
22 A Yeah. Their driver's license might be out
23 of - might have lapsed.
24 Q So, American Dairy Queen has the right and
25 obligation to bring a noncomplying franchisee into

95
1 compliance even if it is outside the franchise
2 agreement?
3 MR. LIGHTY: Object to form.
4 A No, I didn't say that. They don't have that
5 right and obligation.
6 Q Well, American Dairy Queen sets the standards,
7 don't they?
8 A American Dairy Queen presents an operating
9 system and documents it and trains people on it and
10 gives the measurements or standards by which they can
11 tell if the operating system is being fully and
12 completely and consistently implemented.
13 Q And if the Strickland Drive Dairy Queen fell
14 below those Dairy Queen - those American Dairy Queen set
15 standards, out of compliance with those American
16 Dairy Queen set standards, American Dairy Queen had the
17 obligation and the right to make the Strickland Drive
18 Dairy Queen come into compliance?
19 A If it was with the franchise agreement
20 obligations.
21 Q So, American Dairy Queen can set standards
22 outside the franchise agreement?
23 MR. LIGHTY: Object to the form.
24 A I didn't say that.
25 Q Can American Dairy Queen set standards outside

96
1 the franchise agreement?
2 A What I'm -- What I am testifying to is what
3 they can do within the franchise agreement and what they
4 did do in an attempt to get the franchisees to consider
5 the value of following the guidelines of the playground
6 equipment.
7 MR. LAWDERMILK: Object as nonresponsive.
8 Q (By Mr. Lawdermilk) American Dairy Queen sets
9 standards, correct?
10 A American Dairy Queen designs an operating
11 system that includes standards, yes.
12 Q And if the Strickland Drive Dairy Queen was in
13 noncompliance with the American Dairy Queen standards
14 that it set for that store, American Dairy Queen had the
15 obligation and right to make the Strickland Drive
16 Dairy Queen come into compliance?
17 A As long as it was with respect to the
18 franchise agreement.
19 Q Well, can American Dairy Queen set standards
20 outside the franchise agreement?
21 A A franchisor -- Because I was -- I was not
22 asked to be - give an opinion on that particular point.
23 But, in general, what happens oftentimes is a franchisor
24 has license agreements that are intact for a certain
25 period of time and they change the standards and, so,

97
1 the new franchisees are required to follow standards
2 that might be a little bit higher or different than the
3 existing license agreement which when it comes up for
4 renewal, if the person renews and the company accepts
5 the renewal, then they will be under that new form
6 franchise agreement with those additional new standards
7 or they can ask the franchisees to sign an addendum.
8 MR. LAWDERMILK: Objection.
9 Nonresponsive.
10 Q (By Mr. Lawdermilk) For the Strickland Drive
11 Dairy Queen, could American Dairy Queen set standards
12 that were outside the franchise agreement?
13 A It could set them. I don't know that it would
14 be applicable.
15 Q Could American Dairy Queen for the
16 Strickland Drive Dairy Queen prior to October, 1999,
17 require or mandate that the Strickland Drive Dairy Queen
18 follow any standards that are outside the franchise
19 agreement?
20 A One more time.
21 MR. LAWDERMILK: Can you read it back for
22 me? I finally got it right, I think.
23 THE REPORTER: "QUESTION: Could American
24 Dairy Queen for the Strickland Drive Dairy Queen prior
25 to October, 1999, require or mandate that the

98
1 Strickland Drive Dairy Queen follow any standards that
2 are outside the franchise agreement?"
3 A I would think not.
4 Q Well, you are the expert called to testify in
5 this case. Do you know if they can?
6 A They can't.
7 Q Thank you.
8 Page 10 of your report, Wesley Howard and
9 Golden Triangle Dairy Queen entered into a security
10 agreement, lease, sales agreement, consultation
11 agreement and executed a bill of sale and covenant on
12 October 15th, 1999.
13 Is that your understanding for the
14 Strickland Drive Dairy Queen?
15 A I'm trying to find -- Oh, okay. I just found
16 it. Excuse me. Okay. I'm sorry. Where was it that
17 you were looking? I'm sorry. Where on the page are
18 you?
19 Q Under VI, almost all the way to the bottom,
20 right above - two above the indention where it starts
21 with "Wesley Howard."
22 A Ah. Thank you.
23 (Reviewing document) That's my
24 understanding.
25 Q Wesley Howard and Golden Triangle Dairy Queen

99
1 entered into a security agreement, lease, sales
2 agreement, consultation agreement, and executed a bill
3 of sale and covenant on October 15th, 1999.
4 Is that your understanding?
5 A Yes.
6 Q And that was for the Strickland Drive
7 Dairy Queen?
8 A That's my understanding.
9 Q In your opinion who was responsible for the
10 safety of the Dairy Queen Strickland customers on
11 October 23rd of 1999?
12 A Probably a number of people.
13 Q Name them.
14 A The customers themselves, the manager on duty,
15 employees on duty, but I would think that the franchisee
16 of record is the one who is responsible ultimately for
17 making sure that all parts of the operating system are
18 followed.
19 Q Do you place any blame for this accident on
20 Wesley Howard?
21 A I have been not -- I'm not asked to testify on
22 blame. What I'm asked to be an expert on is the
23 playground and the requirements that were followed or
24 not followed because it is outside the purview of the
25 franchise agreement. So, I have been not - not been

100
1 asked to give an opinion.
2 MR. LAWDERMILK: I object as
3 nonresponsive.
4 Q (By Mr. Lawdermilk) Let me ask you this: You
5 have seen all the documents given to you by your
6 lawyers, correct?
7 A Yes.
8 Q You have read the depos that were given to you
9 by your lawyers?
10 A Yes.
11 Q And you feel that what you have gained from a
12 knowledge of that is enough to know that ADQ did
13 everything it could to get that Strickland Drive
14 Dairy Queen into compliance with the CPSC; is that
15 right?
16 MR. LIGHTY: Object to the form.
17 A Yes, it made a valiant effort at that.
18 Q Well, having reviewed that and reviewed
19 everything, in your opinion who all bears responsibility
20 for the Strickland Drive Dairy Queen not being in
21 compliance with the CPSC on October 23rd of 1999?
22 MR. LIGHTY: Object to the form.
23 A Whoever was accountable for installing that
24 playground equipment per the guidelines of the
25 manufacturer and any other guidelines.

101
1 Q Anyone else?
2 A No.
3 Q So, in your opinion the blame for it not being
4 within CPSC guidelines goes purely just to the
5 installation process and how it was installed?
6 A No. That's not my opinion. That's part of my
7 opinion.
8 Q Well, then who else besides the person
9 responsible for installing it is to blame for it not
10 being within CPSC guidelines on October 23rd of 1999 in
11 your opinion?
12 A The people who were at that point in time
13 accountable for it and knowledgeable about it being -
14 having not been installed correctly and not having
15 followed the guidelines for the safety of playgrounds.
16 Q The people who were knowledgeable that it was
17 in a dangerous condition?
18 A No. I didn't say that; and if I did, I didn't
19 mean to say that - the people who were responsible and
20 accountable for the playground and who - same people.
21 Q Okay. Who is that?
22 A Were aware and should have been - was the
23 people who were legally responsible for the building and
24 the location and the playground and whatever it was
25 associated with.

102
1 Q And who is that?
2 A It would be the franchisee of record.
3 Q And who was that?
4 A I want to look. I would have to look at the
5 franchise agreement to make sure I get that correct. I
6 don't want to depend on my memory.
7 Q Well, as you sit here today, who do you
8 believe was responsible for the Strickland Drive
9 Dairy Queen not being in compliance on October 23rd of
10 1999, with the CPSC?
11 A Well, again, I want to look at the franchise
12 agreement; and I'm not a lawyer. So, I don't know what
13 the legal obligations are of the sublease. I just know
14 it happened, but I don't know what the legal
15 implications are of that, but my opinion is - as an
16 expert nonlawyer is it is going to be the franchisee of
17 record and if we can look at the documents, that's what
18 I'm going to say.
19 Q You don't know what the legal implications of
20 the franchise agreement are either, do you?
21 A I'm not sure that's an accurate statement. I
22 do -- I know what some of them are.
23 Q You know what the legal implications of the
24 American Dairy Queen and Strickland Drive Dairy Queen
25 franchise agreement are?

103
1 A Ask me that again.
2 Q Do you know what the legal implications of the
3 American Dairy Queen and Strickland Drive Dairy Queen
4 franchise agreement are?
5 A Some.
6 Q Page 11, top, it is your understanding that in
7 1997 ADQ developed a program under which Texas
8 Dairy Queen stores could be audited by a playground
9 safety consultant?
10 A Yes.
11 Q Was the right to do that in the
12 Strickland Drive Dairy Queen franchise agreement?
13 A No.
14 Q So, that's something that American Dairy Queen
15 was able to do outside the Strickland Drive Dairy Queen
16 agreement?
17 A The franchise agreement doesn't give them the
18 right or not - doesn't address whether they can or can't
19 do it. It was a program they developed. The agreement
20 would be silent on whether or not they could do it.
21 Q And if the agreement - franchise agreement is
22 silent on whether or not the franchisor can do
23 something, how is it that the franchisor gets to do
24 that?
25 A As a leader, good business practices, prudent.

104
1 Q So, the franchisor - or American Dairy Queen -
2 decides what to do and what it can do outside the
3 franchise agreement, correct?
4 MR. LIGHTY: Object to the form.
5 A I don't think they sit around and say, "Is
6 this in the franchise agreement or not?" I think they
7 might talk about what needs to be done for good business
8 practices, not good franchising practices, at that
9 particular time.
10 Q So, it is your opinion the Texas Dairy Queen
11 playground project that IDQ implemented was, one,
12 outside the franchise agreement for the Strickland Drive
13 Dairy Queen?
14 A Yes.
15 Q Two, that it was not done by looking at the
16 legal implications, but done as a good business
17 practice?
18 A I can't agree to that. I don't know what you
19 mean by your use of the word "legal." I don't know if
20 that's a reference to the franchise agreement or what
21 you are referring to.
22 Q That the Texas Dairy Queen playground project
23 was not done by American Dairy Queen to avoid
24 liability - legal liability, but to - as a good business
25 practice?

105
1 A I can't -- I can't speak to anything about the
2 avoidance of liability.
3 Q But you just don't know why they did it?
4 A I don't know their motivation. I think -- It
5 looks to me from the documents that they were concerned.
6 Q Yeah. How many of those documents went out
7 without the Legal Department looking at them?
8 A I don't know.
9 Q Do you know if any of them went out without
10 the Legal Department looking at them?
11 A I don't know.
12 Q Who was in charge of the Texas Dairy Queen
13 playground project?
14 MR. LIGHTY: Object to the form.
15 A I don't know.
16 Q That's what we are here about today, isn't it?
17 MR. LIGHTY: Object to the form.
18 A And we can look in this report, and I'm sure I
19 wrote down somewhere in this report who was in charge.
20 I should say "I don't recall" rather than "I don't
21 know."
22 Q What about was Srinivasa Murthy in charge of
23 the Texas Dairy Queen playground project?
24 A Certainly involved.
25 Q What about Bill Zucco? Was he in charge of

106
1 it?
2 A He was involved.
3 Q Bill Zucco is the lawyer for American
4 Dairy Queen, isn't he?
5 A I believe so.
6 Q Now, who is MaryLou Iverson?
7 A Well, she is an independent consultant, I
8 believe. Yes, she is an independent consultant.
9 Q What did she do for Dairy Queen - American
10 Dairy Queen?
11 A She was involved in preparing a report that
12 was provided to GTDQ about the stores.
13 Q Well, who told you that that report was
14 provided to GTDQ?
15 A I don't -- I don't have that footnoted.
16 Somewhere I found that. I don't remember what document
17 I found that in.
18 Q Well, who provided it to GTDQ?
19 A I don't recall.
20 Q Well, MaryLou Iverson actually provided the
21 reports to American Dairy Queen, didn't she?
22 A That's my understanding.
23 Q And Mr. Murthy actually changed those reports,
24 didn't he?
25 MR. LIGHTY: Object to the form.

107
1 A I don't know.
2 Q Well, you do know that Bruce Allred and GTDQ
3 deny ever receiving those reports, don't you?
4 A Yes.
5 MR. LIGHTY: Object to the form.
6 Q Did you know that American Dairy Queen sent
7 the report for the Strickland Drive Dairy Queen to the
8 wrong address? Has anybody ever told you that?
9 MR. LIGHTY: Object to form.
10 A No.
11 Q Would that change your opinion at all as to
12 whether Bruce Allred and/or GTDQ actually had knowledge
13 of the hazards like American Dairy Queen had about the
14 Strickland Drive Dairy Queen?
15 A I don't know.
16 Q Your opinion on Page 11 where it starts with
17 Bruce Allred about two thirds of the way down --
18 A Yes.
19 Q -- it says: Bruce Allred and GTDQ failed to
20 comply with this report and recommendation to remove the
21 slide and install a safety surface around each play
22 event.
23 Is that your opinion?
24 A Yes.
25 Q Don't you agree that it would be hard to know

108
1 what to comply with if they never got it?
2 A No.
3 Q You disagree that it would be hard for Bruce
4 Allred and/or GTDQ to comply with a report that they
5 never got?
6 A That wasn't your question.
7 Q Do you agree with that, though?
8 A One more time.
9 Q Do you agree that it would be hard for Bruce
10 Allred and/or GTDQ to comply with the report that they
11 never got?
12 A With that report that we are talking about
13 here?
14 Q Yes.
15 A If they never got that report, then they
16 couldn't comply with it.
17 Q Thank you. If they never got that report, is
18 it your opinion that ADQ would then be responsible for
19 not properly warning the franchisee?
20 A No.
21 Q Okay. Page 12, the first dot under
22 Paragraph VI: IDQ and ADQ had or have no control over
23 decisions relating to maintenance or compliance with the
24 CPSC guidelines of playground equipment.
25 Is that your opinion?

109
1 A Yes. But to make sure we comment that the
2 entire sentence was not read as written.
3 MR. LAWDERMILK: I object as
4 nonresponsive.
5 Q (By Mr. Lawdermilk) I didn't ask you if I read
6 it correctly. I asked you if what I said was your
7 opinion. Is that your opinion the way I said it?
8 A Well, since you are being selective, say it
9 one more time the way you are selecting.
10 Q ADQ and IDQ -- Is it your opinion that IDQ and
11 ADQ have or had no control over decisions relating to
12 the maintenance or compliance with CPSC guidelines of
13 playground equipment at Texas Dairy Queens?
14 A I have to mark out -- Can I mark on this?
15 Q Well, you can just listen to what I am saying.
16 A Well, I have to think about what you are
17 saying rather than just respond. So, I need to know
18 what it is you are getting rid of.
19 Q Just don't look at that. Just listen to what
20 I'm saying --
21 A I can't do that.
22 Q -- and see if you can answer the question.
23 You have been answering questions all day without
24 reading.
25 A But now you are selecting things from my

110
1 report, and my opinion is that dot - whole dot.
2 Otherwise I would have written what you are reading.
3 Q Okay. Well, is it also your opinion that IDQ
4 and ADQ had or have no control over the decisions
5 relating to the maintenance of Texas Dairy Queen
6 playgrounds or compliance with the CPSC guidelines of
7 playground equipment on Texas Dairy Queens?
8 A I'm going to not answer that because it is not
9 the way I wrote it. My opinion is the way I wrote it.
10 Q You are going to refuse to answer that
11 question because I am not reading it verbatim?
12 A Unless you let me write it out and study it.
13 Q Well, forget - forget -- Forget I'm reading it
14 from this. I'm just asking you a question.
15 A I can't forget you are reading from this
16 because you are selecting words from my opinion and
17 deleting some of them, and they are all important.
18 Q Then I can ask you any question, and I'm
19 asking you a simple question.
20 MR. LIGHTY: Object to the form.
21 Q Regardless of what you wrote or what you were
22 paid to write, I want to know as you sit right here
23 right now knowing everything you know is it your opinion
24 that IDQ and ADQ did not have control over decisions
25 relating to the maintenance and compliance with the CPSC

111
1 guidelines on Texas Dairy Queen playgrounds?
2 MR. LIGHTY: Object to the form, object
3 to side-bar.
4 A Okay. I want you to read it one more time
5 so ...
6 Q As we sit right here, having reviewed
7 everything that your lawyers have given you, is it your
8 opinion that IDQ and ADQ had no control over decisions
9 relating to the maintenance or compliance with the CPSC
10 guidelines of Texas Dairy Queen playground equipment?
11 A No.
12 Q If the franchisor begins to dictate and tell
13 the franchisee how to run its operations in noncore
14 products and services, that has crossed over into
15 control and day-to-day management, hasn't it?
16 MR. LIGHTY: Object to the form.
17 A Depends on the individual item.
18 Q I want you to look at your opinion at the top
19 of Page 13. I'm going to read you the whole first
20 paragraph.
21 There are areas of the ADQ store business
22 operations which, to protect its Brand and its operating
23 systems and its goodwill in the marketplace, are
24 appropriate to dictate policies and procedures on, and
25 then there are areas that are really much more the

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1 domain or province of the local operator. The
2 installation, maintenance and supervision of playgrounds
3 is such an area which is the domain of the local
4 licensed franchise store operator.
5 Do you agree with that opinion?
6 A Yes.
7 Q So, it is your opinion that the installation,
8 maintenance, and supervision of playgrounds in the state
9 of Texas is in such an area which is the sole domain of
10 the local licensed franchise store operator?
11 A Yes.
12 Q Now, if there is a document out there that
13 says ADQ does dictate the policies and installation and
14 maintenance of playgrounds, would that change your
15 opinion?
16 MR. LIGHTY: Object to the form.
17 A I don't know. I would have to read it.
18 Q Well, if there is a document stating that ADQ
19 sets the requirements and standards for playground
20 installation, would that change your opinion?
21 MR. LIGHTY: Object to the form.
22 A I need to see the document, when it was
23 written.
24 Q Okay. What is a QVSC?
25 A It is a process that the Operations Department

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1 uses when it sends people into the field to look at a
2 person's operation.
3 Q And at Dairy Queen failing a QVSC is a
4 material default, isn't it?
5 A A what?
6 Q A material default.
7 A For?
8 Q The store.
9 A Say the question again.
10 Q In the American Dairy Queen system, failing a
11 QVSC is a material default for the local store?
12 A I would like to check the franchise agreement
13 to see if that's what it says - if it says it is
14 material.
15 Q Okay. Check it.
16 MR. LAWDERMILK: Can we go off the
17 record?
18 THE VIDEOGRAPHER: Going off the record
19 at 2:08.
20 (RECESS FROM 2:08 TO 2:23.)
21 THE VIDEOGRAPHER: Back on the record,
22 the time is 2:23.
23 MR. LAWDERMILK: Can you repeat my last
24 question, please? I'll have the court reporter read it
25 back.

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1 THE REPORTER: "QUESTION: In the
2 American Dairy Queen system, failing a QVSC is a
3 material default for the local store?
4 "ANSWER: I would like to check the
5 franchise agreement to see if that's what it says - if
6 it says material."
7 Q (By Mr. Lawdermilk) And I'll ask it again.
8 Does American Dairy Queen consider
9 failing the QVSC as a material default for a local
10 store?
11 A The license agreement doesn't approach it that
12 way.
13 Q And you are talking about the Strickland Drive
14 Dairy Queen --
15 A Yes.
16 Q -- license agreement?
17 A Yes.
18 Q And, so, is failing -- If the Strickland Drive
19 Dairy Queen fails a QVSC, is that a material default?
20 A It is an option in the license agreement that
21 not following prescribed systems can result in a
22 default.
23 Q And who prescribes those systems?
24 A That would be the franchisor.
25 Q And that would be American Dairy Queen?

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1 A That would be American Dairy Queen.
2 Q And my question, sir, is: Is failing a QV --
3 If the Strickland Drive Dairy Queen fails a QVSC, is
4 that a material default?
5 A It could be.
6 Q Based upon what? Why -- When could it not be?
7 A The license agreement says it is an option of
8 the franchisor to make that decision.
9 Q So, American Dairy Queen gets to decide what
10 is a material default?
11 A In that agreement.
12 Q Now, American Dairy Queen -- Do you know if
13 American Dairy Queen has decided that failing a QVSC at
14 the Strickland Dairy Queen would be a material default?
15 A No.
16 Q You just don't know, right?
17 A I answered no to your question.
18 Q Right. You answered, no, you do not know?
19 A I'm not aware of it.
20 Q Okay. Now, one of the things that a QVSC
21 checks for on the playgrounds is that all equipment must
22 be properly and safely maintained. Do you know that, or
23 do you not?
24 A In my report what I'm pointing out - and it is
25 my opinion - that it doesn't deal with -- What it says

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1 in my report is that condition is described as all
2 equipment must be properly and safely maintained. It
3 must not be scratched, chipped, dented, or rusted. So,
4 it's not about the installation of the equipment. It is
5 about if there is playground equipment there, what the
6 QVC talks about is what is visible just as tables are
7 visible inside.
8 Q But that playground equipment according to ADQ
9 still must be properly maintained - properly and safely
10 maintained and up to ADQ standards, right?
11 A ADQ doesn't have playground standards. It has
12 surface cleanliness standards, surface maintenance
13 standards for the external building.
14 Q Well, did ADQ's inspectors - did they or did
15 they not check the condition of the playground equipment
16 to make sure that all equipment must be properly and
17 safely maintained?
18 MR. LIGHTY: Object to the form.
19 Q Did they?
20 A They did what my report indicated they did.
21 They checked it for those things that are in the report.
22 Q To make sure that it is properly and safely
23 maintained?
24 MR. LIGHTY: Object to the form.
25 A According to what the QVC relates to. It

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1 doesn't -- It relates to very few things.
2 Q What are those few things?
3 A Well, let's see. It relates to whether it is
4 scratched, chipped, dented, or rusted and includes a
5 bike rack if the bike rack is there. It doesn't have to
6 do with the installation standards of the equipment when
7 it arrived, nor does it have to do with the guidelines
8 of other organizations.
9 Q How do you form the basis for that opinion?
10 A Because if it were subject to those, it would
11 be in the - in that report.
12 Q What would be in that report?
13 A All the things that they had to check. What
14 you would expect to be in that report would be a
15 checklist for playgrounds, but playgrounds weren't a
16 part of the franchise agreement. So, the only thing
17 that is applicable are the surfaces to see if they are
18 dented, scratched, et cetera.
19 Q I see. So, you are reading those two separate
20 sentences as though there is a colon there?
21 MR. LIGHTY: Object to the form.
22 Q Is that what you are saying?
23 A No, it's not what I'm saying.
24 Q You don't read those: All equipment must be
25 properly and safely maintained - period. It must not be

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1 scratched, chipped, dented or rusted - as two separate
2 things to be checking for?
3 A No, what I'm saying --
4 Q You read them as one thing?
5 A What I'm saying is that condition relates to
6 surface scratching, chipping, denting, or rusting
7 including a bike rack if it is there.
8 Q Well, after reviewing all the documents that
9 your lawyers have given you, do you believe that the
10 playground equipment at Strickland Drive was properly
11 and safely maintained on October 23rd of 1999?
12 A I don't believe it was installed correctly.
13 MR. LAWDERMILK: Objection as
14 nonresponsive.
15 Q (By Mr. Lawdermilk) Do you believe it was --
16 Do you believe after reading all the documents that your
17 lawyers have given you, that the playground equipment as
18 it sat at the Strickland Drive Dairy Queen on
19 October 23rd, 1999, was being properly and safely
20 maintained?
21 A You can't maintain something correctly that
22 wasn't installed correctly.
23 MR. LAWDERMILK: Object as nonresponsive.
24 Q (By Mr. Lawdermilk) And my question is simple.
25 Do you believe that the playground

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1 equipment as it was on October 23rd, 1999, at the
2 Strickland Dairy Queen playground was being properly and
3 safely maintained?
4 MR. LIGHTY: Object to the form and
5 side-bar.
6 A By whom?
7 Q That's not my question.
8 Was it being properly and safely
9 maintained?
10 A I can't answer that question that way without
11 explaining the context for my answer.
12 Q Well, was the playground equipment as it stood
13 on October 23rd, 1999, in your opinion safe?
14 MR. LIGHTY: Object to the form.
15 A My opinion is that that playground equipment
16 was never installed according to the instructions that
17 were sent with it; and given that, it wasn't safe.
18 MR. LAWDERMILK: I object as
19 nonresponsive.
20 Q (By Mr. Lawdermilk) Is it your opinion that
21 the playground equipment as it stood on October 23rd,
22 1999, at the Strickland Drive Dairy Queen, was it in a
23 safe - being maintained in a safe condition?
24 MR. LIGHTY: Object to the form.
25 A It wasn't installed correctly.

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1 MR. LAWDERMILK: Object as nonresponsive.
2 A So, it can't be safe.
3 Q (By Mr. Lawdermilk) Sir, I'm not asking you
4 about installation right now. I'm asking you about the
5 way it stood.
6 That equipment as it stood on
7 October 23rd of 1999 on the Strickland Drive
8 Dairy Queen, in your opinion was it properly and safely
9 maintained?
10 A I don't know.
11 Q But you will at least admit that as far as
12 playground equipment goes, one of American Dairy Queen's
13 standards was that all the equipment must be properly
14 and safely maintained?
15 MR. LIGHTY: Object to the form.
16 A No, I won't agree to that.
17 Q Okay. Do you blame -- Strike that.
18 Is it your opinion that Texas Dairy Queen
19 Operators' Council holds any responsibility for the
20 Dairy Queen playground on Strickland not being in
21 compliance with the CPSC guidelines as of October of
22 1999?
23 A Not according to any of the agreements I read.
24 Q So, is that a "no"?
25 A It is not according to any of the agreements I

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1 read.
2 Q Well, is it according to anything else you
3 know?
4 A I've not been asked to look at anything else.
5 Q So, you don't know?
6 A I didn't say I didn't know. I said according
7 to the agreements that I understand that were in place,
8 that's the way I answered that question.
9 Q Well, according to anything you know at all,
10 do you have an opinion as to whether the Texas
11 Dairy Queen Operators' Council was at all responsible
12 for the Dairy Queen playground on Strickland Drive being
13 in noncompliance with the CPSC as of October of 1999?
14 A Not an opinion, but I think that if they had
15 been more cooperative with the initiatives that ADQ took
16 to get people sensitized to do something about the
17 playgrounds, it might have helped.
18 Q Maybe if they hadn't have hurt Shrin's
19 feelings, would that have helped?
20 MR. LIGHTY: Objection to form, object to
21 side-bar.
22 A I don't have any thoughts about anybody's hurt
23 feelings.
24 Q Well, you do know that Shrin got his feelings
25 hurt by the Texas Dairy Queen Operators' Council, don't

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1 you?
2 A I'm not aware of anything about hurt feelings.
3 Q Well, you do know that after he got his
4 feelings hurt, he agreed to send a trump letter and
5 basically dropped the playground project, don't you?
6 MR. LIGHTY: Object to form, object to
7 side-bar.
8 A Again, that question follows one I said I
9 didn't have an opinion about - hurt feelings.
10 Q So, you just don't know?
11 A No. I said I don't know anything about hurt
12 feelings.
13 Q Well, then do you know that after the
14 May 20th, 1998, meeting with the Texas Dairy Queen
15 Operators' Council, Mr. Murthy's only thing he did to
16 further Texas Dairy Queen playground project was to
17 write a trump letter?
18 MR. LIGHTY: Object to the form.
19 Q Do you know that?
20 A I don't know that.
21 Q I'm looking at Page 14, "Summary: Texas
22 playground surveys." It is about halfway down. Will
23 you read for the jury what you wrote in parenthesis
24 starting with "I"?
25 A "I have often, in the process of preparing

123
1 this report, thought how many accidents like Tyler
2 Matthews' have been prevented through the education
3 process initiated by ADQ and the intelligent choices
4 made by franchisees who, because of having their
5 awareness raised, took actions to fix or close their
6 playgrounds."
7 Q Do you agree with that statement?
8 A Yes.
9 Q So, you are basically saying ADQ is a hero in
10 this whole thing?
11 A I don't think there are any heroes.
12 Q Well, as of October of 1999 and through ADQ's
13 education process, how many playgrounds had been
14 corrected in the State of Texas? Do you know?
15 A I'm sorry. Between what and what?
16 Q As of October of 1999?
17 A What I put in the report on Page 15 is that as
18 of 10-10-2000, in a memo from Brad Davis to Shrin Murthy
19 summarizing the actions taken after the surveys ADQ
20 "actions to be taken" letters went out between 11/96 and
21 12/97, of 112 stores surveyed where survey follow-up
22 data was available, there were 35 stores where no action
23 was taken, ten stores closed, 43 removed the
24 playgrounds, 3 closed the playground, 16 put new
25 playgrounds or updated the ones they had, and 5 refused

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1 to survey - allow ADQ to survey their store.
2 MR. LAWDERMILK: Object as nonresponsive.
3 Q (By Mr. Lawdermilk) My question, sir, is: Do
4 you know as of October of 1999 through ADQ's, as you
5 call it, education process how many Dairy Queens in the
6 State of Texas had upgraded their playgrounds to come
7 into compliance with the CPSC? Do you know?
8 A No.
9 Q Is the playground, as far as American
10 Dairy Queen is concerned, part of the facility?
11 A The playground is in various ways on or
12 contiguous to or attached to the facility, but it is not
13 part of the facility of the franchise license agreement.
14 Q Okay. Now, is the QVSC, as you understand it,
15 a recommendation or a requirement by ADQ?
16 A The performance of it or the --
17 Q Let's start with the performance of it.
18 A Well, the purpose, again, in a franchise
19 relationship -- We are not talking here cop inspector.
20 In a franchise relationship the purpose of the QVC is to
21 help the person improve their performance against
22 standards.
23 MR. LAWDERMILK: I object as
24 nonresponsive.
25 Q (By Mr. Lawdermilk) In your opinion is the

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1 QVSC - the performance of the QVSC a recommendation that
2 ADQ does, or is it a requirement that they enforce?
3 A Your question is not clear to me.
4 Q Is it your opinion that ADQ has the right to
5 do a QVSC at the Strickland Drive on Dairy --
6 A Yes.
7 Q Okay. And is it your opinion that the items
8 found to be in noncompliance on the QVSC, are those
9 items merely recommended by ADQ to be brought into
10 compliance or they are required by ADQ to be brought
11 into compliance?
12 A Could be both or one or the other.
13 Q And how could it be both?
14 A If you were talking about food temperature, it
15 might be required. If you were talking about some other
16 items that were more peripheral, it might be
17 recommended.
18 Q Well, who gets to decide what is recommended
19 and what is required?
20 A American Dairy Queen.
21 Q On Page 15, seven dots down, you wrote that
22 ADQ asked that every store operator take its
23 responsibility for the safety of its playground
24 seriously to help make playgrounds safe and enjoyable
25 for customers as is reasonably possible.

126
1 Is that a memo that you quoted in your
2 report?
3 A Yes.
4 Q To your knowledge, did ADQ ever require the
5 Texas Dairy Queen franchise bring its playground in
6 compliance with the CPSC?
7 A I believe it strongly recommended and expected
8 them to do so and might have even recommended. I can
9 check my notes a bit closer.
10 Q And my question, sir: To your knowledge did
11 American Dairy Queen ever require or mandate that any
12 Texas Dairy Queen playground be brought into compliance
13 with the CPSC?
14 A They can't according to the franchise
15 agreement.
16 Q And that, sir, is the overall foundation and
17 basis for your opinions, isn't it?
18 A Yes.
19 Q Thank you.
20 You wrote that as of 10-10-2000,
21 64 percent of the 112 had taken positive action based on
22 the "jawboning" diligence of the ADQ. What is
23 "jawboning"?
24 A Influence, persuasion.
25 Q And how many had they persuaded to do that

127
1 before Tyler's death?
2 A All I know is what this memo said as of
3 10-10-00.
4 Q So, you don't know?
5 A I don't know what that number is.
6 Q Okay. You next wrote - it is on Page 15:
7 IDQ/ADQ after reviewing the store playground surveys
8 took the strongest, most decisive and license agreement
9 appropriate actions available to it showing intense and
10 dramatic concern as is indicated by the correspondence
11 that went to the stores.
12 Do you, as we sit here today, agree with
13 that statement?
14 A Yes.
15 Q If it is shown that ADQ could have defaulted
16 the Strickland Drive Dairy Queen based on its playground
17 being in noncompliance with the CPSC, would that change
18 your opinion about that statement?
19 MR. LIGHTY: Object to the form.
20 A It is hypothetical.
21 Q Yes, it is.
22 A I don't know. I would have to see all the
23 circumstances around that.
24 Q Well, if ADQ could have defaulted the
25 Strickland Drive Dairy Queen franchise based on the

128
1 playground being in noncompliance, then is ADQ
2 responsible?
3 MR. LIGHTY: Object to the form.
4 A My answer is the same. There would have been
5 other circumstances at play
6 Q To keep ADQ from being responsible?
7 A No, to get the franchisee to be compliant.
8 You would have had a different set of circumstances.
9 Q Than the ones you have been shown?
10 A Than the ones I reviewed --
11 Q Exactly.
12 A -- for this report.
13 Q And what I'm saying is if there is more stuff
14 out there that shows that ADQ could have defaulted the
15 Strickland Drive Dairy Queen due to the playground being
16 in noncompliance, would that change your opinion at all?
17 A I don't know. I'd have to see what -- I'd
18 have to see that document.
19 Q Bottom of Page 16, last paragraph, your
20 opinion is: As nonoccupiers and owners of the premises,
21 IDQ and ADQ acted as reasonably and prudently as could
22 be expected given the legal relationship they had/have
23 with their franchise licensed independent operators.
24 Is that your opinion?
25 A I'm still try to find --

129
1 Q The very last one at the bottom of Page 16?
2 A Where it starts "In the operation"?
3 Q No - "As."
4 MR. LIGHTY: The last.
5 A Oh, on mine that's on the next page.
6 (Reviewing document) Yes. Yes, that is my opinion.
7 Q So, you have a different draft than the one
8 that has been given to me?
9 A It is just different - repaginated would be
10 my ...
11 Q Where do you have the legal training to make a
12 statement like that?
13 A Exposure to a lot of franchise agreements over
14 20 years.
15 Q Are you an expert in contract law?
16 A No.
17 Q Given its franchise license relationship with
18 its franchisee, IDQ and ADQ cannot be negligent in this
19 case. Is that your opinion?
20 A Where are you reading?
21 Q I'm just asking you a question.
22 A All right. Ask me. I thought you were
23 reading.
24 Q Given its franchise license relationship with
25 its franchisee, IDQ or ADQ cannot be held responsible

130
1 for having been negligent in this case.
2 Is that your opinion?
3 MR. LIGHTY: Object to the form.
4 A I would agree with that.
5 Q What is the definition of "negligence"?
6 A In this franchise agreement relationship?
7 Q Sure.
8 A Not meeting a requirement of the relationship.
9 Q What is the legal definition of "negligence"?
10 A I don't know.
11 Q Why don't you look at Page 17, the fourth dot?
12 Are you ready?
13 ADQ/IDQ does not consider playgrounds to
14 be a part of the Core Operating System.
15 Is that your opinion?
16 A Yes.
17 Q And what forms the basis of that opinion?
18 A The license agreement is moot on it.
19 Q Anything else?
20 A It is not part of their standard package when
21 they open a new store. It represents -- Less than
22 10 percent of the entire stores in the system have
23 playgrounds.
24 Q What percentage have playgrounds in the State
25 of Texas or had playgrounds as of October 23rd of 1999?

131
1 A If my memory serves me correctly, there were
2 maybe 750 stores in Texas. So, maybe 20 percent.
3 Q Okay. And as of October 23rd, 1999, of those
4 stores with playgrounds, how many of them did ADQ know
5 must be closed immediately?
6 A I don't know. I would imagine that that
7 figure is pretty close to - or it would represent
8 whatever the number in Texas was of that 112 they
9 referred to.
10 Q You state that the installation, maintenance,
11 and supervision of playgrounds are not even an official
12 option in the Dairy Queen system as a franchisee can put
13 one in on his premises without notifying ADQ.
14 Is that your opinion?
15 A It is what I understand to be the facts.
16 Q Where did you get that?
17 A I don't know exactly where I got that.
18 Q But from reading the documents that your
19 lawyers gave you, that's what you --
20 A It would have to be.
21 Q Well, would it change your opinion if ADQ not
22 only has to be notified, but ADQ requires or mandates a
23 playground being put in be in compliance with the CPSC?
24 Would that change your opinion?
25 MR. LIGHTY: Object to the form.

132
1 A I would have to see that document or
2 documents.
3 Q You are of the opinion that IDQ and ADQ went
4 beyond its licensing relationship in encouraging
5 inspection and compliance with the CPSC guidelines by
6 its store operators. You have told me that, right?
7 A Yes.
8 Q And they did that because, I think you said,
9 it was a good business practice in your opinion?
10 A Yes.
11 Q So, for good business, ADQ was able to go
12 outside and beyond their licensing agreement, right?
13 A I think it is a good - was a good -- I think
14 they did it because it was a good business practice, not
15 because it was outside the franchise agreement.
16 Q You make a statement on Page 18, third dot,
17 there is no evidence to support that IDQ and ADQ showed
18 any specific intent to cause substantial injury to
19 Plaintiffs and to the deceased Tyler Shane Matthews,
20 don't you?
21 A Yes.
22 Q Is that your opinion?
23 A Yes.
24 Q What is the basis of that opinion?
25 A The documents I had to review.

133
1 Q Where did you get the language "specific
2 intent to cause substantial injury"?
3 A Where are you?
4 Q Where I just read.
5 A Oh, okay. I'm sure from language in the
6 documents.
7 Q Because that's not how you normally write. Is
8 it - using words like "specific intent to cause
9 substantial injury"?
10 A Might be.
11 Q You might write like that?
12 A I might.
13 Q Okay. How about "acts/omissions involved an
14 extreme degree of risk and harm" - do you write like
15 that?
16 A I did.
17 Q How about "no evidence to support that IDQ and
18 ADQ proceeded with conscious indifference as to the
19 rights, safety, and welfare of the Plaintiffs" - is that
20 how you write?
21 A I could. I know what those words mean.
22 Q Yeah.
23 A You have to remember the philosophy.
24 Q I don't suppose there is any way for $525 an
25 hour you just went through the petition and disagreed

134
1 with it all and put - is there?
2 MR. LIGHTY: Object to the form, side-bar
3 too.
4 A I used the resources that were available to me
5 to write my report.
6 Q Now then, Page 18, last paragraph, you write
7 that the store operator in question is not an agent of
8 IDQ or ADQ because in a franchise license relationship,
9 the business is independently owned, but operates under
10 a license agreement.
11 Is that your opinion?
12 A Uh-huh, yes.
13 Q Do you have any case law to back that up?
14 A No, I have -- I have what I know and what
15 research I did.
16 Q Is there a time when the actions of the
17 franchisor and the franchisee go outside the licensing
18 agreement that can make them have an agency
19 relationship?
20 MR. LIGHTY: Object to the form.
21 A I don't know.
22 Q Now, you will agree that American Dairy Queen
23 could control the size, shape, and appearance of the
24 franchisees' establishment, right?
25 A Yes.

135
1 Q That American Dairy Queen could impose the
2 nationally known sign Dairy Queen as the only sign on
3 the premises - do you agree with that?
4 A Yes.
5 Q That a Dairy Queen could require all
6 containers to show the name of the - of Dairy Queen,
7 dictate portion control, the size and shape of the
8 containers, the uniforms of the employees, correct?
9 A Yes.
10 Q That American Dairy Queen reserved the right
11 to inspect the premises?
12 A Yes.
13 Q Will you agree that those things -- Well, will
14 you agree that when an entity can control the size,
15 shape, and appearance of its franchisees' establishment
16 and impose a nationally known sign Dairy Queen as the
17 only sign for the premises, require containers to show
18 the name of Dairy Queen, dictate portion control, and
19 size and shape of containers, and the uniforms of
20 employees, and reserve the right to inspect the
21 premises, that established agency? Do you agree with
22 that?
23 MR. LIGHTY: Object to the form.
24 A I can't answer that because it is not an agent
25 relationship, and that doesn't necessarily make it a

136
1 franchise relationship either. You have just described
2 a sentence.
3 Q I'm describing what - a relationship, and I'm
4 saying can that establish an agency relationship?
5 A And my answer is I don't know.
6 Q It is outside your area of expertise?
7 A I just said I don't know.
8 Q All right.
9 It has been an hour. Do you want a
10 break?
11 A I'm okay.
12 Q Okay. Page 19, third dot, you wrote: Neither
13 IDQ nor ADQ have the legal right to require compliance
14 by the owner and/or operator of the premises to comply
15 or adhere to recommendations made by either party or
16 third-party recommendations like the CPSC.
17 Is that still your opinion?
18 A Yes.
19 Q Could American Dairy Queen require -- Strike
20 that.
21 Did the Strickland Drive Dairy Queen have
22 to have approval from American Dairy Queen before
23 transferring the franchise?
24 A Which entity are you talking about? Are you
25 talking about the -- Clarify that for me.

137
1 Q Did the Dairy Queen on Strickland Drive have
2 to have approval before it could be transferred? Did it
3 have to have approval from American Dairy Queen?
4 A See, that's where we got - well, see, you
5 can't -- In franchising you are not transferring a
6 store. You are transferring a relationship.
7 Q Okay. Did the Dairy Queen - the
8 Strickland Drive Dairy Queen franchise --
9 A Between?
10 Q -- have to have approval from American
11 Dairy Queen before it could be transferred?
12 A Again, it would be a good time to take a
13 break. I'll check the franchise agreement.
14 MR. LAWDERMILK: Great. We will go off
15 the record.
16 THE VIDEOGRAPHER: Going off the record
17 at 3:06.
18 (RECESS FROM 3:06 TO 3:17.)
19 THE VIDEOGRAPHER: Back on the record,
20 the time is 3:17.
21 MR. LAWDERMILK: Can you read my last
22 question back for me?
23 THE REPORTER: "QUESTION: Okay. Did the
24 Dairy Queen - the Strickland Drive Dairy Queen
25 franchise have to have approval from American

138
1 Dairy Queen before it could be transferred?
2 A Yes.
3 Q Did the Strickland Drive Dairy Queen
4 playground have to come into compliance with the CPSC
5 before American Dairy Queen would give that approval?
6 A American Dairy Queen wasn't approving
7 playgrounds or disapproving playgrounds. That was an
8 option.
9 Q So, it is your testimony and opinion from the
10 documents you have been shown that the Strickland Drive
11 Dairy Queen could be transferred even if the playground
12 was not in compliance with the CPSC?
13 A My opinion is that the playground was not part
14 of the transfer. It might have been part of the assets
15 by sale purchase agreement, but it wasn't part of the
16 transfer of the franchise agreement.
17 Q And my question is: Would American
18 Dairy Queen allow the Strickland Drive franchise to be
19 transferred if the Strickland Drive playground was not
20 in compliance with the CPSC?
21 MR. LIGHTY: Object to form.
22 A My understanding is that those two were not
23 connected at that point in time.
24 Q And we are talking about back in 1999?
25 A Uh-huh.

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1 Q Is that a "yes"?
2 A Yes.
3 Q And in 1998?
4 A I don't know. I would assume so.
5 Q Okay. How about now? How about today?
6 A I'm not aware of today.
7 Q What is it that a franchisee has to come into
8 compliance with to receive approval from American
9 Dairy Queen for a franchise transfer?
10 A What the license agreement says is that the
11 franchisor, ADQ, has to be notified when the franchisee
12 wants to do such a transfer and that they have the right
13 to approve or disapprove it, but it should not be
14 unreasonably withheld either for reason or for time.
15 Q Well, could American Dairy Queen withhold
16 approval of a transfer of a Texas Dairy Queen over
17 noncompliance of a noncore systems?
18 A I don't know.
19 Q Okay. Will you agree with the statement if
20 American Dairy Queen can require --
21 A Actually can I amend that?
22 Q Yeah.
23 A So, ask the question again, would you please.
24 THE WITNESS: Could I have you read that?
25 THE REPORTER: "QUESTION: Well, could

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1 American Dairy Queen withhold approval of a transfer of
2 a Texas Dairy Queen over noncompliance of a noncore
3 systems?"
4 A One of the examples of that could be the
5 person - the person wouldn't qualify as a candidate for
6 the transfer, and that wouldn't be part of the operating
7 system in the manual. So, it would be a noncore item;
8 but the person may not qualify.
9 Q Is that in the franchise agreement?
10 A What the franchise agreement says is: To
11 protect licenser from an assignment of the rights
12 hereunder to some person or persons not meeting these
13 requirements, it is agreed and understood that no
14 assignment by licensee of the rights hereunder shall be
15 made without the prior written approval and consent of
16 licenser having been obtained. It is understood and
17 agreed that licenser is the sole and exclusive owner of
18 the franchise.
19 Q So, the person they are selling it to has to
20 also meet American Dairy Queen's requirements, right?
21 A Whatever is meant by that vague terminology.
22 Q And the people that decide what is meant by
23 that vague terminology are American Dairy Queen, aren't
24 they?
25 A And that is even --

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1 Q Is that a "yes"?
2 A -- to this day that's standard language.
3 Yes, they decide. Yes, they decide.
4 MR. LAWDERMILK: Can you go back and tell
5 me what I was starting to say when he asked me to amend
6 his answer?
7 THE REPORTER: "QUESTION: Okay. Will
8 you agree with the statement if American Dairy Queen can
9 require --
10 ANSWER: Actually can I amend that?"
11 Q (By Mr. Lawdermilk) Mr. Gappa, would you agree
12 with the statement that if American Dairy Queen can
13 require the playgrounds to come into compliance with the
14 CPSC for approval of a transfer, American Dairy Queen
15 can also or could have also defaulted a franchise for
16 noncompliance with the CPSC?
17 MR. LIGHTY: Object to the form.
18 A One would have to look at when those two
19 things were occurring in time.
20 Q What difference does time make?
21 A Because one could happen -- I mean, we are
22 talking about this particular instance, right?
23 Q Yes, we are.
24 A Well, that's hypothetical because in my
25 opinion that - that - from what I've said, that doesn't

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1 exist. That situation doesn't exist.
2 Q In your opinion?
3 A Yes, in my opinion.
4 Q Well, hypothetically, if American Dairy Queen
5 could require that the Strickland Drive Dairy Queen
6 playground be in compliance with the CPSC before it
7 would allow a transfer, could American Dairy Queen also
8 default the Strickland Drive Dairy Queen franchise for
9 the playground being in noncompliance with the CPSC?
10 A Not necessarily.
11 MR. LIGHTY: Object to the form.
12 A Because -- Well, because if the license
13 agreement doesn't address it, it could be that the new
14 form franchise agreement would and so the person --
15 Q I'm talking about the license agreement we are
16 under right now.
17 A But the situation that you are asking me to
18 comment on assumes, I think, that the transferee is
19 signing a current form franchise agreement.
20 Q I am. No, I am sorry - that the transferee
21 would go under the same licensing agreement?
22 A Different set of circumstances.
23 Q Well, under those circumstances.
24 A The question is if ...
25 Q If American Dairy Queen could require the

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1 Strickland Drive Dairy Queen's playground to be in
2 compliance with the CPSC before it would allow a
3 transfer of the Strickland Drive Dairy Queen franchise,
4 does that mean it could require the Strickland Drive
5 Dairy Queen playground be in compliance with the CPSC or
6 default it?
7 MR. LIGHTY: Objection. Form.
8 A Not necessarily, not necessarily.
9 Q And why?
10 A I would have to see the document that -- There
11 could be an addendum.
12 Q If there is no addendum?
13 A I just -- It is too hypothetical for me.
14 Q It is too hypothetical under the documents you
15 have looked at, right?
16 A Yes.
17 Q Okay. Did you know that the Strickland Drive
18 Dairy Queen premises was transferred to Anita Wilson at
19 one point?
20 A By?
21 Q Just did you know it was transferred to her?
22 A Well, that sounds as if it is a completed,
23 agreed to transaction by all parties. I know that she
24 had thought it was.
25 Q Okay. But in your opinion it wasn't?

144
1 A I don't know. I can't address whether it was
2 or wasn't. I wasn't asked to give an opinion on that.
3 Q Well, in the documents you have seen, has the
4 American Dairy Queen ever given - allowed the
5 Strickland Drive Dairy Queen to be transferred in the
6 Nineties?
7 A I don't know.
8 Q Okay. On Page 20, the fifth dot down, you
9 state the ADQ's force had to do the insurance not
10 renewing a store's insurance due to noncompliance with
11 CPSC standards.
12 Will you tell me what that means? There
13 may have been some typos there. What is your opinion
14 there?
15 A That there was a linkage that the insurance
16 company had that said before they'd insure the place,
17 that it had to be up to standards; and that was part of
18 the influence and force that ADQ had.
19 Q So, one thing that ADQ in your opinion used to
20 influence local stores was the threat or - of not
21 being - of the local stores not being able to get
22 insurance until the CPSC was up to standard?
23 A Not threat, reality.
24 Q Reality. Did you know that ADQ refused to
25 give the expert reports to the insurance company? Did

145
1 you know that?
2 MR. LIGHTY: Object to the form.
3 A I'm not aware of what happens to the expert
4 reports.
5 Q Okay. Now, the licensing agreement for the
6 Strickland Drive Dairy Queen was for what term?
7 A I've looked at so many of them. 25 years.
8 Q And when was it signed?
9 A It's -- '73.
10 Q So, what would 25 years be?
11 A '98.
12 Q And, then, so, American Dairy Queen renewed
13 the Strickland Drive Dairy Queen franchise agreement in
14 1998, gave it the five-year consecutive term, correct?
15 A I assume.
16 Q Yeah. Well, at that time American Dairy Queen
17 knew that the Strickland Drive Dairy Queen playground
18 was not in compliance with the CPSC, didn't they?
19 A I assume they did.
20 Q Yeah. Sir, I want to talk to you about
21 signage at the Strickland Drive Dairy Queen. From the
22 documents you have seen, who controls the signage at the
23 Strickland Drive Dairy Queen?
24 A The standards around the signage.
25 Q Start with the standards.

146
1 A American Dairy Queen.
2 Q Who controls what the signage says?
3 A My assumption is American Dairy Queen.
4 Q On Page 24 at the bottom you are discussing a
5 reading of Mr. Brew's deposition, correct?
6 A Yes.
7 Q And it is your opinion that Mr. Brew was
8 giving correct answers when he was stating that American
9 Dairy Queen could not default the Strickland Drive
10 Dairy Queen franchise for the playground being in
11 noncompliance with the CPSC?
12 A Yes.
13 Q And you write in the second dot in
14 Paragraph XII: It is standard practice in a franchise
15 relationship for the franchisor to default a franchisee
16 with or without remedies and cures only for those
17 infractions that are listed in the "Default" section of
18 the franchise agreement signed by a particular
19 franchisee.
20 Correct?
21 A Yes.
22 Q But in reality, and in American Dairy Queen's
23 practice, they defaulted stores and franchises for many
24 things outside what is listed in the default section of
25 the franchise agreements, didn't they?

147
1 MR. LIGHTY: Object to the form and
2 side-bar.
3 A I assume you are correct.
4 Q You write on Page 25, the second -- You write:
5 In the Dairy Queen situation only the independent
6 Dairy Queen franchisee store operator could shut down
7 one of their playgrounds.
8 Is that still your opinion?
9 A Yes.
10 Q Did you see where Mr. Murthy said that
11 American Dairy Queen shut down the Strickland Drive
12 Dairy Queen playground after Tyler's death?
13 MR. LIGHTY: Object to form.
14 Q Did you see that in his deposition?
15 A I don't recall that statement.
16 Q If Mr. Murthy made the statement and admitted
17 that American Dairy Queen shut down the Strickland Drive
18 Dairy Queen after Tyler's death, would that change your
19 opinion as to American Dairy Queen's control and ability
20 to shut down that playground?
21 MR. LIGHTY: Object to form.
22 A I need to understand the circumstances around
23 what he meant by they shut it down. That could mean
24 they influenced the shutting down of it, or it could
25 mean that they actually went out and shut it down. I

148
1 don't know what that means. I don't know the
2 circumstances around what that means.
3 Q Okay.
4 MR. LAWDERMILK: I will object as
5 nonresponsive.
6 Q (By Mr. Lawdermilk) Well, in forming your
7 opinions for this report, has anyone ever told you or
8 did you know that Mr. Murthy said that American
9 Dairy Queen shut down the playground of Strickland Drive
10 after Tyler's death?
11 A I'm not recalling it if I did.
12 Q I want you to look on No. 25 - Page 25, one,
13 two - fifth paragraph.
14 In the franchise relationship it is
15 standard industry practice that if a franchisor wants to
16 require a new standard [like playground safety] that is
17 the current form franchise agreement but is not in the
18 older franchise agreements to be implemented and/or
19 followed by the franchisees with older agreements they
20 can either get them to comply voluntarily or wait until
21 their old agreements come up for renewal and then they
22 will have to comply because they will be renewing by
23 signing the current form franchise agreement.
24 Is that your opinion?
25 A With the assumption that when the renewal

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1 occurs, that clause is in the franchise agreement that
2 they have.
3 Q And is it your opinion that those are the only
4 two ways to make the playground safe at American
5 Dairy Queen?
6 A No.
7 Q That American Dairy Queen can make a
8 playground safe?
9 A No.
10 Q What other ways can American Dairy Queen make
11 the playground safe?
12 A Well, an example would be if insurance
13 companies decided that they were going to insist on it.
14 Q Well, wouldn't it be hard for the insurance
15 companies to decide to insist upon it if American
16 Dairy Queen refused to send them the reports showing
17 that they were - the local stores were in noncompliance?
18 MR. LIGHTY: Object to form.
19 A I don't know. It could be an insurance
20 company policy.
21 Q What do you mean by that?
22 A It could not -- It could be a policy not
23 relevant to ADQ. It could just be an insurance company
24 internal policy on playgrounds.
25 Q I'm still not understanding what you are

150
1 saying.
2 A An insurance company, whether it was insuring
3 ADQ or not, could have a policy that whenever a
4 playground was on a premises, it had to comply with
5 standards; and then all of a sudden that applies to ADQ.
6 Q But if ADQ refuses to inform the insurance
7 company that some of the local stores are in
8 noncompliance, how would the insurance company then be
9 able to use that influence?
10 A How would the insurance company be able to use
11 it? Well, it may or may not -- They may just say this
12 is it. If you -- You know, if you have got a
13 playground, it has to be in compliance. They may not
14 require any reports from the company - ADQ or not. They
15 might do their own reports. They might ask for an
16 independent consultant and pay for the survey and say,
17 "Send us the report."
18 Q What if the insurance company asked and begged
19 ADQ to send them those reports and ADQ refused?
20 MR. LIGHTY: Object to the form.
21 Q Would you think that that was lax on ADQ's
22 part?
23 A I don't know the circumstances. I just need
24 to know more.
25 Q Who is it that you believe was in charge of

151
1 the playground project for ADQ?
2 MR. LIGHTY: Object to the form.
3 A That's the term we were using earlier. There
4 was a - I don't know -- I'm not familiar with the term
5 "playground project."
6 Q Who is it at ADQ that you believe was in
7 charge of attempting to have the Texas Dairy Queen
8 playgrounds come into compliance with the CPSC?
9 A I am unclear as to where accountability lies.
10 Responsibility seems to be with a number of people who
11 did things.
12 Q If ADQ can require or mandate a franchisee to
13 do something, that means that ADQ has control over what
14 they - over the thing that they can require or mandate
15 them to do, right?
16 A It is not quite that way. A set of -- A set
17 of consequences kicks in when a mandated or a required
18 standard isn't followed because, again, it relates to
19 the intellectual property of the franchisor. So, it --
20 Q Okay.
21 A -- it sort of, I think, doesn't quite
22 adequately explain the relationship to say they have got
23 control over what isn't followed. It is theirs by
24 right. It is not even a question of control. It is
25 theirs.

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1 What has happened is the person has
2 stopped using it the way they agreed to use it; and, so,
3 there are consequences to that.
4 Q And in ADQ the consequences are default
5 followed by termination of the franchise?
6 A Which is pretty common and standard practice
7 in franchise --
8 Q But --
9 A Yes, yes.
10 Q When did ADQ first learn that the Strickland
11 Dairy Queen was so hazardous it must be closed
12 immediately? Do you know?
13 A It is in here. I don't have it --
14 Q Well, you know it was long before?
15 A -- top of my --
16 Q You know it was long before Tyler's death,
17 don't you - years?
18 A A couple of years, yes.
19 THE VIDEOGRAPHER: Excuse me. Can we go
20 off the record for a tape change?
21 MR. LAWDERMILK: You bet.
22 THE VIDEOGRAPHER: Going off the record
23 at 3:42.
24 (RECESS FROM 3:42 TO 3:44.)
25 THE VIDEOGRAPHER: We are back on the

153
1 record. The time is 3:44, August 30th, 2002, beginning
2 of Tape 3.
3 Q (By Mr. Lawdermilk) Who else besides American
4 Dairy Queen's lawyers have you talked to about this
5 case?
6 MR. LIGHTY: Object to the form.
7 A I think the only person was the gentleman I
8 have in here from ADQ.
9 Q Bill Killion?
10 A Yeah. Yes.
11 Q You don't remember what he told you?
12 A I don't.
13 Q Okay. How did this accident happen?
14 A How did it happen?
15 Q As far as you know.
16 A Tyler fell from the slide and hit his head.
17 Q Do you have any reason to believe that he
18 jumped from the slide?
19 A I don't know.
20 Q From reviewing the documents, is it your
21 understanding that a majority of the local stores didn't
22 know about the ADQ Texas playground audit until after
23 the fact?
24 A I don't know that.
25 Q Well, have you seen anywhere where they

154
1 asked - where ADQ asked for permission to perform the
2 audit; or did they just go in there and do it?
3 A There may have been. What we do know is there
4 was some stores - five, I think - that refused to allow
5 them to do the survey. So, somebody must have been
6 aware of something to refuse.
7 MR. LAWDERMILK: I object as
8 nonresponsive.
9 Q (By Mr. Lawdermilk) Do you know if ADQ asked
10 for permission before performing the audits on the Texas
11 Dairy Queen playgrounds?
12 MR. LIGHTY: Object to the form.
13 A I simply don't know.
14 Q Okay. In your years of dealing with
15 franchises, have you seen where other franchisors have
16 taken on similar projects?
17 A I thought a lot about that question. I can't
18 think of one that is similar.
19 I'll comment on that, though. In this
20 report I mentioned Mr. Gatti's with Gattiland and the
21 reason I mentioned that was our company wrote the
22 manuals for that operation and I don't know if you are
23 familiar with it, but it is a huge enclosed indoor area
24 that even has ferris wheels inside and in their
25 operating manual, the franchisees were required to

155
1 comply with the standards of industry or any other
2 governing body and had to be installed and maintained
3 according to the manufacturer.
4 Q And the franchisor required that in their
5 operating manual?
6 A Yes, in the franchise agreement.
7 Q All right. I'm sorry. But do you know who
8 controls the signage at the Strickland Drive
9 Dairy Queen?
10 MR. LIGHTY: Objection. Form.
11 A The standards for the signage are set by the
12 franchisor. The implementation of that is the
13 franchisee's obligation.
14 Q What do you mean the standards for the
15 signage?
16 A It is usually called an identity package -
17 corporate identity package, but there is usually a
18 manual that describes how the trademark and signage are
19 used in any number of different ways. Sometimes it is
20 in a marketing manual.
21 Q So, the franchisor controls what signs go up
22 at the franchise?
23 A In -- Yes.
24 Q And is that true for American Dairy Queen?
25 A I would say to my knowledge, it is.

156
1 Q Is that true for American Dairy Queen and the
2 Strickland Dairy Queen franchise?
3 A I would say it does.
4 Q Can ADQ only terminate a franchise for
5 noncompliance in areas that American Dairy Queen has
6 some control over?
7 MR. LIGHTY: Object to the form.
8 A American Dairy Queen can default for reasons
9 that are in the franchise agreement with that particular
10 franchisee.
11 Q Can American Dairy Queen default for reasons
12 outside the franchise agreement?
13 A I would -- Again, I would say within - only
14 within the franchise agreement. Those things that can
15 be defaulted are listed. So, if they aren't listed
16 there, you couldn't use the default mechanism.
17 Q Well, the QVSC is not listed in the franchise
18 agreement, is it?
19 A It is in every -- What franchise companies do
20 in the franchise agreement is they say that the
21 franchisor has the right to inspect the location from
22 time to time, and the franchisee will not reasonably
23 not allow that to happen and they have the right to do
24 it.
25 Then in operations, the Operations

157
1 Department will decide what belongs to that - to that
2 inspection right; and in some franchise companies they
3 have different teams that do different things. They
4 will have -- Some people will have a standards team, and
5 some people will have a field consultant performance
6 team. Some people do both those things.
7 Q But the Operations Department is for American
8 Dairy Queen, right?
9 A I'm sorry?
10 Q The Operations Department is American
11 Dairy Queen Operations Department?
12 A Yes.
13 Q And they are the ones that decide what can be
14 inspected?
15 A Where that decision is made, it's -- It's
16 usually executed from that standpoint. In some cases
17 you will find the standards people are in the compliance
18 office.
19 Q But, regardless, it is still American
20 Dairy Queen?
21 A Yeah, yes. But my only comment was it may not
22 be operations alone.
23 Q What is negligence assistance? I'm sorry. I
24 want to try that again.
25 What is negligent assistance?

158
1 MR. LIGHTY: Object to the form.
2 A Could you put it in context for me?
3 Q What is the legal definition of "negligent
4 assistance"?
5 MR. LIGHTY: Object to the form.
6 A I don't know.
7 Q Okay.
8 A I don't know.
9 Q Can a franchisor's -- Strike that.
10 Could American Dairy Queen's actions give
11 them responsibilities and obligations and control
12 outside that of the franchisee agreement by their
13 conduct?
14 MR. LIGHTY: Object to the form.
15 A I don't know.
16 Q In your opinion from the documents you have
17 seen, did American Dairy Queen have any control over the
18 playground on Strickland Drive prior to October of 1999?
19 A That's my opinion - that they did not have any
20 control.
21 Q Okay. If a franchisor is inspecting
22 playgrounds, that's part of what they do, okay?
23 A Okay.
24 Q And then, say, in 1998 that franchisor finds
25 out that 67 percent of those playgrounds - those local

159
1 playgrounds are so dangerous, that they must be closed
2 immediately. If after that, the franchisor changes its
3 policy and it stops inspecting those playgrounds for
4 safety, can you think why they would do that?
5 MR. LIGHTY: Object to the form.
6 A No.
7 Q Well, in your experience would you think maybe
8 it is to get away from liability?
9 MR. LIGHTY: Object to form.
10 A I don't know.
11 Q You just don't know? Okay.
12 Now, ADQ sometime in '96 or '97, it
13 voluntarily took on the duty to have a program to make
14 the Texas Dairy Queen playgrounds come into compliance
15 with the CPSC, right?
16 MR. LIGHTY: Object to the form.
17 A I think -- I don't know what intent was. My
18 understanding is the intent was to raise the awareness
19 of the franchisees that they should do something about
20 unsafe, noncompliant playgrounds.
21 MR. LAWDERMILK: Object as nonresponsive.
22 Q (By Mr. Lawdermilk) You recognize that in '96
23 or '97 one of American Dairy Queen's goals was to have
24 its Texas Dairy Queen playgrounds in compliance with the
25 CPSC? Do you recognize that?

160
1 A The initiative was greater than Texas. It was
2 systemwide, and it was to get people to deal with their
3 playground safety issues because they couldn't in a
4 contractual obligation they had.
5 MR. LAWDERMILK: Object as nonresponsive.
6 Q That's just not what I asked.
7 MR. LIGHTY: Object to side-bar.
8 Q (By Mr. Lawdermilk) Do you recognize that in
9 1996 or '97 American Dairy Queen undertook a project to
10 make the Texas Dairy Queen playgrounds come into
11 compliance with the CPSC?
12 MR. LIGHTY: Object to form.
13 A I don't recognize that the way you put it, no.
14 Q Okay. Well, you recognize that one of
15 American Dairy Queen's goals back in 1996 or '97 for the
16 Texas Dairy Queen playgrounds were that they would come
17 into compliance with the CPSC?
18 A Nor do I recognize that the way you say it.
19 Q Will you agree from the documents that you
20 have seen that as early as 1998, American Dairy Queen
21 recognized that a serious injury and/or fatality could
22 occur to a child on a Texas Dairy Queen playground if
23 the playgrounds were not brought into compliance with
24 the CPSC?
25 A I don't know.

161
1 Q Okay. Do you agree that the CPSC guidelines
2 are the absolute minimum safety standards that a
3 playground should meet?
4 MR. LIGHTY: Object to form.
5 A I don't know. I know that this case has made
6 me very aware of the fact that there are lots and lots
7 of playgrounds that aren't anywhere near those
8 standards.
9 MR. LAWDERMILK: Object to the
10 nonresponsive portion.
11 Q (By Mr. Lawdermilk) Well, do you agree with
12 the knowledge you have obtained in this case that the
13 Strickland Dairy Queen playground was an unsafe place
14 for children in October of 1999?
15 MR. LIGHTY: Object to form.
16 A I don't know.
17 Q How many children do you have?
18 A Two.
19 Q What are their ages?
20 A 30 and 13.
21 Q Do you have any grandchildren?
22 A No.
23 Q Okay. Do you have any relatives around the
24 age of 5 or 6 or 7?
25 A No.

162
1 Q Knowing what you know from all the documents
2 that you have been given, would you allow a child to
3 have played on that playground back in the condition it
4 was in in October of 1999?
5 A With what I know now, no.
6 Q It appears that in the two years prior to
7 Tyler's death, there were three people on a local level
8 with interest in the Strickland Dairy Queen, right?
9 MR. LIGHTY: Object to the form.
10 A I don't know.
11 Q You don't know?
12 A I don't know.
13 Q Well, regardless of how many people had an
14 interest in that Strickland Dairy Queen, ADQ has always
15 been above them in the Dairy Queen system or family --
16 MR. LIGHTY: Object to form.
17 Q -- correct?
18 A I don't understand your comment. What does
19 "above them" mean?
20 Q That ADQ is the top dog, and it all flows down
21 from them.
22 MR. LIGHTY: Object to the form.
23 A ADQ is the franchisor.
24 Q Well, doesn't ADQ consider itself a family?
25 A I don't know.

163
1 MR. LAWDERMILK: Go off the record for
2 just a second.
3 THE VIDEOGRAPHER: Going off the record
4 at 4:04.
5 (RECESS FROM 4:04 TO 4:17.)
6 THE VIDEOGRAPHER: Back on the record,
7 the time is 4:17.
8 Q (By Mr. Lawdermilk) If the majority of the
9 Texas Dairy Queen playgrounds were not changed or closed
10 from 1997 until October of 1999, is anyone at ADQ to
11 blame in your opinion?
12 A Okay. Now that I know the end, would you
13 repeat it one more time?
14 Q If a majority of the Texas Dairy Queen
15 playgrounds were not changed or closed from 1997 to
16 October of 1999, is anyone at ADQ to blame?
17 A Not in my opinion.
18 Q Closing playgrounds would cost ADQ money,
19 correct?
20 MR. LIGHTY: Objection. Form.
21 A That's -- There was some conversation about
22 that in the documents I read. I don't know if -- Do you
23 mean in terms of royalty - loss of royalty?
24 Q In terms of lost profit in the amount of money
25 being sent to them.

164
1 A I don't know that that's true or not. It
2 might be short-term for long-term gain. I don't know.
3 Q Well, in your experience of dealing with all
4 these franchises and franchisors, when an attraction
5 that brings children in is taken away, it flows up and
6 it costs the franchisor money, doesn't it?
7 A Not necessarily, not necessarily.
8 Q But in this case you just don't know?
9 A I don't know.
10 Q Now, you do consider playgrounds part of
11 marketing, right?
12 A The playgrounds are not necessarily -- Do I
13 consider playgrounds marketing? I haven't looked at it
14 that way. I would have to think about that. It is not
15 necessarily a quick "yes" or "no."
16 Q So, as we sit here right now, you just don't
17 have an opinion?
18 A Well, it is marketed -- They are marketing in
19 the sense that they create perceptions. In the broadest
20 sense of the word of "marketing," yes, they are
21 marketing.
22 Q Well, playgrounds are used to lure children
23 and their families to Dairy Queen for more profit,
24 right?
25 MR. LIGHTY: Objection. Form.

165
1 A I don't know that. When McDonald's started
2 playgrounds, they did it to give the parents a break
3 while their children played. So, the playgrounds were
4 designed to get the parents to come in with the
5 children, not to get the children to come in. It
6 isn't --
7 Q But that was McDonald's?
8 A Well, and I don't know that -- I don't know
9 that -- Well, I know that I don't - and I never have -
10 like the use of the word "lure" in terms of that - in
11 terms of marketing.
12 I think in terms of something like that,
13 it is more to attract the desire of children to come
14 rather than to lure.
15 Q Well, have you seen anything where the word
16 "lure" comes from ADQ?
17 MR. LIGHTY: Object to the form.
18 A Somewhere in the back of my mind there is the
19 words there, but it seems to me that when it is used,
20 it's in the context of a document - some memory of -
21 some of this stuff is clearer to me than others. Seems
22 to me that in the context it is being used as - in a
23 reference to other quick service restaurants that are
24 using it to lure. I don't know that it is used in the
25 sense that the American Dairy Queen is luring. I think

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1 more it was in the context of other quick food concepts
2 are luring with playgrounds.
3 MR. LAWDERMILK: Object to the
4 nonresponsive portion.
5 Q (By Mr. Lawdermilk) In your opinion could
6 American Dairy Queen terminate the Strickland Drive
7 franchise for the Strickland Drive Dairy Queen
8 playground being in noncompliance with the CPSC?
9 MR. LIGHTY: Objection. Form.
10 A No, no.
11 Q Did you know that Mr. Murthy believed they
12 could?
13 A I don't know that.
14 Q Have you seen any documents indicating that
15 Mr. Murthy believed American Dairy Queen could terminate
16 the Strickland Drive franchise for its playground being
17 in noncompliance with the CPSC?
18 MR. LIGHTY: Objection. Form.
19 A I'm not aware that I have.
20 Q Have you seen any document wherein Mr. Murthy
21 believed that American Dairy Queen could terminate any
22 Texas franchise for its playground being in
23 noncompliance with the CPSC?
24 MR. LIGHTY: Objection. Form.
25 A I'm not aware.

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1 Q Now, ADQ voluntarily undertook a project to
2 try to make the Texas Dairy Queen playgrounds safe for
3 children?
4 MR. LIGHTY: Object to the form.
5 A They weren't trying to make the playgrounds
6 safe for children. They were trying to get their
7 franchisees to make their playgrounds safe for children.
8 MR. LAWDERMILK: Object as nonresponsive.
9 Q (By Mr. Lawdermilk) ADQ voluntarily undertook
10 a project -- Strike that.
11 ADQ voluntarily undertook a project in
12 hopes of making all Texas Dairy Queen playgrounds safe
13 for children?
14 MR. LIGHTY: Object to the form.
15 A They undertook a project that dealt with
16 something that wasn't in their franchise agreement -
17 playgrounds that they wanted to make safer.
18 Q And that included the Strickland Dairy Queen?
19 A Yes.
20 Q And ADQ - one of the reasons they did this is
21 they recognized it as being necessary to protect the
22 customers at the Texas Dairy Queens including the
23 Strickland Dairy Queen?
24 A I truly don't know their motivation.
25 MR. LAWDERMILK: Don, if you don't mind,

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1 Dru is next. I'm going to look at my notes. I really
2 think I may be done. If you just give me -- By the time
3 he gets done, I will be done looking at my stuff.
4 EXAMINATION
5 BY MR. MONTGOMERY:
6 Q Mr. Gappa, my name is Dru Montgomery; and I,
7 too, represent the Plaintiffs in this case. The
8 questions I'm going to ask you deal less with your
9 specific opinion and more with how you arrived at those
10 opinions. Do you understand that I'm kind of making a
11 shift in the way we are looking at these questions?
12 A Yes.
13 Q Okay. You have made certain statements during
14 the deposition that you were not hired to present an
15 opinion on certain issues. Can you kind of explain to
16 the jury what opinion you were hired to present?
17 A What the franchise relationship is and was
18 between American Dairy Queen and its franchisees
19 particularly in this case with Tyler Matthews and the
20 issue of playgrounds as - as whether or not it is part
21 of their relationship.
22 Q So, you are going to explain the
23 franchisor-franchisee relationship and then specifically
24 how that exists - that relationship existed in the case
25 of Tyler Matthews; is that fair?

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1 A Well, what I can do is simply review what the
2 report says I was doing.
3 Q Well, it is quite a voluminous report and I
4 understand that your opinions are set out pretty clearly
5 in that report, but I wanted to kind of - rather than to
6 have the jury read the report every time to understand
7 why you are here, I would kind of like to understand
8 that because we are going to have to refer to why are
9 you here in shorthand rather than look at the report
10 every time.
11 MR. LIGHTY: Object to side-bar, form.
12 A Well, this is a very simple thing. I'm
13 addressing franchising and the relationship, which is
14 what I just said - the American Dairy Queen franchise
15 relationship and its license agreement, the actions it
16 made with reference to the case, and that it operated
17 consistently with its practices and that they are normal
18 and regular standards.
19 Q As they relate to other franchise system
20 practices?
21 A Yes.
22 Q So, what you have read was basically
23 summarized what is in the first paragraph of the
24 introductory paragraph of your expert report, right?
25 A Yes.

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1 Q And are you here to provide an expert opinion
2 on anything else that is not in that first paragraph?
3 A I don't believe so.
4 Q Okay. You also mentioned earlier that you
5 were here as a lay person trying to explain the
6 relationship between a franchisor and a franchisee,
7 correct?
8 MR. LIGHTY: Object to the form.
9 A No. What I said was I'm not a lawyer.
10 Q Okay. How would you like to be referred to if
11 you don't -- If you are not a lawyer and not a lay
12 person, how would you like me to refer to you as?
13 A It is not relevant to me how you refer to me.
14 Q Okay. So, you are not -- You are not here to
15 provide any legal opinions that a lawyer would be
16 singularly capable of providing, correct?
17 MR. LIGHTY: Object to the form.
18 A All I'm doing is providing an expert report.
19 Q But it hasn't -- You are not here to provide a
20 legal opinion that a lawyer would be qualified to
21 present?
22 A I can't. I'm not a lawyer.
23 Q One thing I'd like to ask you about is on Page
24 12. If you'll look at the second to last bullet,
25 okay -- Do you see the second to last bullet on Page 12?

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1 It states: The non-core operations of the business, in
2 which category I would put safety and security, are in
3 the franchisee's domain and not the franchisor's, right?
4 A That's what it says.
5 Q Okay. You put safety and security into the
6 noncore category. How did you do that? Is that just
7 your opinion?
8 A Yes.
9 Q And I would kind of like to know how you
10 formed that opinion. How does the typical franchise
11 expert go about categorizing certain actions as core or
12 noncore?
13 A They might do it a number of ways. They might
14 make a list of things that say when is this franchise
15 not - not - let's say -- Let's pick Franchise X. When
16 is this not - not this franchise anymore - if it
17 eliminates doing what?
18 An example is food safety, okay? What
19 you do with food safety is the franchisor says that
20 whatever the standards and the regulations are of the
21 local authorities with food safety, the franchisee has
22 to follow that, okay? That's a good example of safety
23 is not a core.
24 Q And what is important to me is not as much
25 whether food safety is or is not a core, but how you

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1 arrived - how that franchise expert arrived at that
2 decision. Did they just -- Is it based on their
3 experience? Is it based on comparing it to other
4 franchises? How is it -- What is it based on?
5 A Well, based on the fact that I am a franchisee
6 of a lot of different concepts and have been. So, I
7 understand in those systems what is and isn't core. And
8 I've also put a franchise company together. So, I
9 understand from that perspective. And I have been in
10 this business 20 years and dealt with over 800
11 companies.
12 Q So, the fact that you were a franchisee, the
13 fact that you have been in the business for 20 years,
14 you draw - enables you to make that opinion; is that
15 right?
16 MR. LIGHTY: Object to the form.
17 A Yeah, experience.
18 Q Okay. Is there - have you ever -- You just
19 kind of explained to me the food safety issue - how that
20 can be a noncore, how an expert would make that
21 decision. Have you ever talked to other franchise
22 experts or other folks experienced in the franchise law
23 field about how you make something core or noncore?
24 A I have been involved in many discussions
25 about what is core and what isn't. It happens almost

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1 monthly. Sometimes lawyers are there. Sometimes they
2 aren't.
3 Q When you do that, have you ever -- Have you
4 ever published any way of determining whether something
5 is core or noncore?
6 A No.
7 Q Have you ever spoken at a seminar that allowed
8 feedback to occur based on your conclusions?
9 A Yes.
10 Q And is that seminar the Mexican Franchise
11 Association seminar?
12 A No.
13 Q What seminar was that where they were able to
14 provide feedback on your opinions?
15 A Any one of the seminars that we give might
16 have that topic come up - what in a franchise system
17 should be a zero tolerance or a core.
18 Q Okay.
19 A That might come up anywhere, anytime.
20 Q In fact, you are in the business of having
21 these seminars and I assume that people attending them
22 pay to go to these seminars, correct?
23 A Uh-huh, yes.
24 Q Do you have other peers, other friends, folks,
25 experienced in the franchise business come and critique

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1 your analysis of what is core and noncore at these
2 seminars?
3 A No.
4 Q Have you ever published an essay or article or
5 anything that allowed an opportunity for your peers to
6 criticize - positive or negative, either way - your
7 opinion on what is core or noncore?
8 A No.
9 Q You made the decision that, okay, that
10 security and safety are noncore - is a noncore issue.
11 Is there any way for me to go find another expert to
12 apply your test to figure out whether it is a core or
13 noncore? Do you have some sort of method that you could
14 explain to someone else?
15 A I don't understand your question.
16 Q What I'm ultimately going to try to get at -
17 and maybe you will help me get there - is whether we
18 would be able to repeat your analysis in kind of an
19 objective setting?
20 A Which analysis?
21 Q Whether something is core or noncore. It's
22 just an example of an opinion that you drew.
23 A Are you talking about the one you just read?
24 Q Yes.
25 A Well, you could ask people. You could do a

175
1 survey.
2 Q Have you ever done that?
3 A I don't have any reason to.
4 Q Why not?
5 A Why should I?
6 Q Why should you test your method for
7 determining whether something is core or noncore?
8 A When you are in the consulting business, your
9 expertise is tested every day by your clients, whether
10 or not it makes sense to them; and if you stay in
11 business 20 years and have 850, then you begin to sense
12 that you have a good process by which to help another
13 party, the franchisor, determine what they want to have
14 as core.
15 It is not what I do. We don't determine
16 things for our clients. We help them go through the
17 process of their determining what they want as core. We
18 don't do that for them.
19 Q Is that process written out anywhere?
20 A Is it written out anywhere?
21 Q Is there a book I can open up to determine
22 that?
23 A No.
24 Q Is it usually based -- You said it was based
25 on your expertise and you kind of counseling people. Is

176
1 your expertise in deciding where it goes, is that
2 printed out anywhere?
3 A It is "deciding where it goes"? What does
4 that mean?
5 Q Okay. That's a sloppy question. I'll move on
6 to another issue.
7 The -- Why don't you turn the page to
8 Page 13 at the top, and there is a paragraph. The
9 last - there is a bullet and paragraph and the last
10 sentence says: The installation, maintenance, and
11 supervision of playgrounds is such an area which is the
12 domain of the local licensed franchise store operator.
13 Did you draw that opinion based on your
14 expertise?
15 A The license agreement.
16 Q So, you looked at the license agreement?
17 A It doesn't address playgrounds.
18 Q Okay. So, if I wanted to kind of -- If I was
19 just the average Joe and I wanted to see whether the
20 installation, maintenance, and supervision of
21 playgrounds is such an area was in the domain of a local
22 licensed franchise store operator, I could just go look
23 at the franchise license agreement; and if it is not on
24 there, then I would be able to conclude that it is not
25 the franchisor's responsibility?

177
1 MR. LIGHTY: Object to the form.
2 A I don't know what you mean by a local Joe.
3 Q Well, would the average juror - how about
4 that - be able to look at the contract; and if they
5 don't see it there, they can draw their own conclusion?
6 MR. LIGHTY: Object to the form.
7 A What is the circumstance of this person - this
8 average juror? Because the answer could very well be
9 yes.
10 Q Sure. They are trying to decide, "Hey, is
11 this the responsibility of ADQ or not?" Could they just
12 look at the franchise agreement and see that it is not
13 there and think it is not their responsibility - it is
14 not ADQ's responsibility?
15 A Playgrounds are not addressed in the franchise
16 agreement. I don't -- I can't speak to whether or not
17 an individual person who we are hypothetically talking
18 about could determine that. I just can't -- I don't
19 know.
20 Q Fair enough. Just a little bit longer, and
21 that will be it.
22 You indicated on Page 14, the next page -
23 it is the one, two, three, four, fifth bullet counting
24 all the bullets, Page 14, fifth bullet -- Are you ready?
25 ADQ acted appropriately in referring the

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1 franchisees to manufacturers' publications and in
2 helping to educate the franchisee on the possible
3 consequences of their decisions and nondecisions
4 relative to the noncore product and service issues
5 surrounding the playgrounds.
6 Is that your expert opinion?
7 A Yes.
8 Q That they acted appropriately?
9 A Yes.
10 Q How did you -- What is your standard of
11 appropriateness?
12 A It is based on my experience and what
13 processes they used to raise their awareness.
14 Q Okay. So, it is based on your experience?
15 A It is based on the data I looked at and the
16 documents I looked at.
17 Q What data did you look at?
18 A It is on the front of this report.
19 Q I know there is a lot of stuff you listed. Is
20 there anything else? Is there anything specifically
21 that you relied upon to draw this?
22 A I'm sure there were. I would have to spend
23 time pulling that out so that I could answer that, but
24 I'm sure there were. I mean, there are letters that
25 were written and surveys that were done and references

179
1 to Brochure 100 and other instances where there are
2 references to raise awareness.
3 Q How does that make it appropriate? Just
4 because there are efforts made, what makes it
5 appropriate? I want to know how you - what the basis of
6 your conclusion is.
7 A Well, first of all, contractually they could
8 ignore it. So, anything they did after ignoring it is
9 appropriate. Then to the extent that they do
10 additional -- To the extent that we can assess the
11 totality of what they did, it just becomes more and more
12 and more appropriate because it is outside of what they
13 need to do appropriately. It is a business decision
14 they made. So, whatever it is they did, was
15 appropriate.
16 Q So, merely because it was extracontractual -
17 outside the contract - that makes it appropriate?
18 A That's not what I said. I specifically said
19 there are things they do in the contract that are
20 appropriate to their responsibility. This is outside
21 and they did it and, so, it is still appropriate because
22 it is a good business decision.
23 Q How do you -- What makes it a good business
24 decision? See, you are just drawing a conclusion. I
25 need to see how you got there. I know they did certain

180
1 acts and I know you think they are appropriate, but I
2 need to know how you came up with this opinion that it
3 is appropriate. Compared to what? Compared to other
4 franchises? Compared to the reasonable businessperson?
5 Compared to the reasonable franchisee? What?
6 A Compared to doing nothing about a situation
7 they were aware of that they thought needed to be
8 remedied for which they had no recourse in the franchise
9 license agreement. So, they had to try to do something
10 and, so, they tried to use persuasion and data and
11 experts and meetings and letters to raise the awareness
12 of the franchise community and, in fact, it worked.
13 Q And this is -- My first statement to you was
14 I'm not as much concerned ultimately with what happened
15 in this. I want to understand how you got there. This
16 is one of those cases.
17 You are very well defining -- explaining
18 to me why you think it is appropriate and you refer data
19 that you have looked at, but how is this standard
20 appropriate other than we just have to trust your
21 opinion that it is appropriate? We don't know any
22 differently because we don't have any experience in
23 that. When I say "we," just the average person involved
24 with this case. We don't have any other way of knowing
25 whether that is appropriate or not appropriate. We just

181
1 have to take your word for it; but since you are
2 providing an opinion based on something, I need to know
3 what it is based on more than just taking your word for
4 it.
5 A I already answered this.
6 MR. LIGHTY: Object to form. Asked and
7 answered.
8 A I already answered this. And my answer was
9 the same as it is going to be right now. It is a
10 situation that they felt needed to be addressed that
11 they couldn't address within the franchise agreement.
12 So, they addressed it anyway; and that was an
13 appropriate action to take.
14 Q And the last one, and then you are out of here
15 with me.
16 As the non -- Page 16, the last
17 paragraph: As the nonoccupiers and owners of the
18 premises, IDQ and ADQ acted as reasonably and prudently
19 as could be expected given the legal relationship they
20 had/have with their franchise licensed independent
21 operators.
22 You discussed it at length with
23 Mr. Lawdermilk, but we kind of discussed earlier that
24 you weren't legally trained to be an attorney. Are you
25 really trying to give - render an opinion on the legal

182
1 relationship they had?
2 A Would you point me to where --
3 MR. LIGHTY: It is the last bullet point
4 on the page.
5 A Last bullet? Ah, that's the one that ended up
6 on the top of the page. Excuse me.
7 Q It begins "as non-occupiers."
8 A Thank you. I just found it. I'm sorry. Ask
9 your question now.
10 Q Sure. We discussed earlier that you were not
11 trained to be an attorney and, so, you are not going to
12 here - you can't provide a legal opinion and I want to
13 clarify that you are not trying to give an opinion on
14 the legal relationship between the franchisee and
15 franchisor?
16 A Right - except as I understand the documents
17 having been a person who has signed a number of them and
18 helped draft a number of them.
19 Q Again, we have to rely - take your word for
20 it, right?
21 A Actually you don't if you don't have to. I
22 mean, I have signed the documents and I have helped a
23 lot of clients write documents. That could be provided
24 to you. You don't have to rely on it.
25 MR. MONTGOMERY: Okay. I believe that

183
1 will do it. Thank you. I pass the witness.
2 MR. LAWDERMILK: I went through my notes.
3 Can I finish up?
4 RE-EXAMINATION
5 BY MR. LAWDERMILK:
6 Q Did you know that some of the local operators
7 that ADQ heard from regarding their playground project,
8 those local operators expressed the opinion that they
9 thought ADQ was just trying to sell them something?
10 Have you heard that?
11 A I don't think I have.
12 Q Okay. Do you know that some of the local
13 operators that ADQ heard from expressed the opinion that
14 they thought ADQ's expert, MaryLou Iverson, was not
15 independent? Have you heard that?
16 A I think I have heard that.
17 Q Okay. Do you know that the local operators
18 ADQ heard from expressed the opinion they thought ADQ's
19 expert was just trying to sell them playground
20 equipment?
21 A I have not heard that.
22 Q Well, had you ever heard that some of the
23 local operators thought the playground surveys were just
24 a way of making them buy playground equipment?
25 A I don't think I have heard that.

184
1 Q Would you describe ADQ's relationship with the
2 Texas operators as trusting or not trusting from what
3 you have seen in the documents and been told?
4 A The documents pretty much say it is not
5 trusting.
6 Q Now, a Dairy Queen franchisee must obtain
7 prior written consent from ADQ to assign any interest in
8 the franchise agreement; is that right?
9 A That's my understanding.
10 Q And that's true for all franchises - at least
11 for the Strickland franchise?
12 A Yeah, yeah.
13 Q So, ADQ has to approve the transfer of the
14 Strickland Dairy Queen franchise?
15 A And the people involved in it.
16 Q Yes. Thank you.
17 Facility improvements and upgrading are
18 required as a condition of ADQ's final approval of a
19 transfer of that Strickland Dairy Queen franchise,
20 right?
21 MR. LIGHTY: Objection. Form.
22 A It would depend on the wording of that
23 transfer. In most franchise companies, the more mature
24 they get, the more specific that gets. In some
25 franchises it just simply says that you have to do

185
1 whatever it says in the current form franchise
2 agreement.
3 Q Well, I'm talking about the Strickland
4 Dairy Queen franchise that we are here about today. Are
5 facility improvements and upgrading required as a
6 condition of ADQ's final approval of a transfer for the
7 Strickland Dairy Queen franchise?
8 MR. LIGHTY: Object to the form.
9 A Before I were to say yes to that, I want to
10 take five minutes and look at it.
11 Q Go ahead. We will go off the record.
12 THE VIDEOGRAPHER: Going off the record
13 at 4:48.
14 (RECESS FROM 4:48 TO 4:49.)
15 THE VIDEOGRAPHER: Back on the record,
16 the time is 4:49.
17 Q (By Mr. Lawdermilk) Facility improvements and
18 upgrading are required as a condition of ADQ's final
19 approval of a transfer of the Strickland Dairy Queen
20 franchise, correct?
21 MR. LIGHTY: Object to the form.
22 A I did not find that in that document stated
23 that way.
24 Q So, is it your opinion that that would be a
25 false statement?

186
1 A Yes.
2 Q If a local operator wanted to put a new
3 playground in in 1998, ADQ would require the playground
4 be in compliance with the CPSC, right?
5 A I don't know.
6 Q ADQ could require that the Strickland
7 Dairy Queen facility be maintained in a high state of
8 repair, correct?
9 A I don't know what is meant by "a high state of
10 repair."
11 Q Well, who would determine what is meant by "a
12 high state of repair"? The franchisor?
13 A I would think.
14 Q And that would be ADQ?
15 A Yes.
16 Q ADQ could require the Strickland Dairy Queen
17 premises maintain the standards of quality ADQ set?
18 A Yes.
19 Q ADQ could require the Strickland Dairy Queen
20 premises maintain the standards of quality ADQ set up at
21 the time of the franchise agreement, correct?
22 A Yes.
23 Q And ADQ has the right to change ADQ's
24 standards of quality --
25 A Yes.

187
1 Q -- for the Strickland Dairy Queen premises?
2 A Yes.
3 Q Okay.
4 A It would be uniform, though, if they did.
5 Q And ADQ had the right to change ADQ's
6 standards of quality for the Strickland Dairy Queen
7 premises prior to October of 1999?
8 A Yes; but, again, in franchising, whenever -
9 what applies to one applies to all when you are talking
10 about standards.
11 Q So, it would have applied to all the Texas
12 Dairy Queens?
13 A All the Dairy Queens.
14 Q ADQ required written approval to transfer any
15 rights of the Strickland Dairy Queen franchise to ensure
16 a maintenance of high standards, correct?
17 MR. LIGHTY: Object to the form.
18 A I wouldn't want to isolate just one thing.
19 The transfer of a license agreement is the transfer of
20 all of the intellectual property. So, everything in the
21 operating system would apply and all the standards would
22 apply and if that one was part of it, then it would
23 apply.
24 Q What one standard?
25 A Maintenance - if that was the one that you

188
1 read me.
2 Q Okay. The agreement with American Dairy Queen
3 for the Strickland Dairy Queen franchise was extended
4 for five years in March of 1998?
5 A Yes.
6 Q And the Strickland Dairy Queen franchise had
7 to be maintained up to '82 standards for the agreement
8 to be extended for those five years, correct?
9 A I think that's an automatic five-year -- I
10 don't think there is any - there is not any adjustment.
11 It is just a five-year unless they are in default.
12 Q It is an automatic five years if the
13 Strickland Dairy Queen was being maintained up to ADQ
14 standards?
15 A That relate to that franchise agreement.
16 Q Yes.
17 A Yeah.
18 Q Okay. Can American Dairy Queen or
19 International Dairy Queen require a local Dairy Queen
20 premises be in a safe condition for its customers?
21 MR. LIGHTY: Object to the form.
22 A I would say that it would -- It depends on
23 what is left up to American Dairy Queen to decide if it
24 relates to safety and what is left up to the individual
25 operator, as I have said before.

189
1 Q American Dairy Queen and International
2 Dairy Queen -- Strike that.
3 American Dairy Queen systems bulletins
4 dictate American Dairy Queen's standards, right?
5 MR. LIGHTY: Object to the form.
6 A Along with other things it communicates, yes.
7 Q Strickland Dairy Queen playground is
8 recognized as part of the building, right?
9 A I don't know that it is.
10 Q Does it make a difference to you in your
11 opinion whether it is recognized as part of the building
12 or not?
13 A No, because it is not part of the franchise
14 agreement.
15 MR. LAWDERMILK: Okay. I will pass the
16 witness.
17 MR. LIGHTY: How much time is left on
18 that tape? How much time is left on that tape?
19 THE VIDEOGRAPHER: One hour.
20 MR. LIGHTY: So, they used five hours so
21 far?
22 THE VIDEOGRAPHER: Roughly. This is a
23 little fast.
24 MR. LIGHTY: Do you want to take a break
25 before we get started, or are you ready to go?

190
1 THE WITNESS: I'm ready to go.
2 MR. LIGHTY: Okay.
3 EXAMINATION
4 BY MR. LIGHTY:
5 Q Would you please introduce yourself to the
6 ladies and gentlemen of the jury.
7 A My name is Robert A. Gappa.
8 Q Mr. Gappa, as you well know, my name is Don
9 Lighty; and I'm here on behalf of International and
10 American Dairy Queen. Before we get started and I ask
11 you some questions, I would like you to tell the ladies
12 and gentlemen of the jury where you reside?
13 A Houston, Texas.
14 Q And what is your occupation?
15 A Consultant.
16 Q What type of consultant?
17 A Specializing in multiunit retailing and
18 franchising.
19 Q Can you tell the ladies and gentlemen of the
20 jury just briefly about your education and your
21 background before you started into the business world?
22 A Sure. College education, some graduate work
23 with no graduate agree, taught in college, taught in a
24 religious Catholic educational center for adults, and
25 then worked in consulting companies until I started my

191
1 own consulting company 20 years ago.
2 Q Where did you go to college?
3 A St. John's University in Collegeville,
4 Minnesota.
5 Q And what was your major?
6 A Philosophy with a minor in psychology.
7 Q Did you receive a degree?
8 A I did.
9 Q In what year?
10 A '64, I believe.
11 Q I believe you testified earlier you went on to
12 do some postgraduate work on a master's degree program?
13 A Yes.
14 Q Where was that at?
15 A At the same university - St. John's in
16 Collegeville, Minnesota.
17 Q And what was that major?
18 A Theology.
19 Q And did you complete that degree program?
20 A Everything, but the thesis.
21 Q And why did you not complete the thesis?
22 A Just I started doing other things. I started
23 teaching.
24 Q Where did you begin your time spent as a
25 college professor?

192
1 A At a college called St. Leo's College out of
2 Tampa.
3 Q And what did you do there?
4 A I taught philosophy, theology, and ethics.
5 Q How long did you remain in the teaching
6 profession?
7 A Four years.
8 Q Then what did you do after that?
9 A I spent a brief period of time in the doctoral
10 program at the University of Iowa.
11 Q Did you complete that program?
12 A No, I quit after the middle of the first
13 semester.
14 Q And why was that?
15 A I was disappointed in the program, and I
16 wanted to get as much of my tuition back as I could.
17 Q What did you do after that?
18 A I got a job working for the diocese of
19 Des Moines running what they called the St. Joseph
20 Educational Center which was a program for adults - for
21 parents of Catholic parishes in the city of Des Moines.
22 Q Okay. And how long did you work in that
23 position?
24 A I think about four years.
25 Q What did you do after that?

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1 A Went to work for a consulting company called
2 Batten, Batten, Hudson & Swab.
3 Q Where are they located?
4 A Des Moines, Iowa.
5 Q And what was the type of business that Batten,
6 Batten, Hudson & Swab was in?
7 A It was a general consulting business mostly to
8 Fortune 1000 companies in the area of organizational
9 development and human resource management and training.
10 Q And how long were you in that company?
11 A Like about four or five years.
12 Q And what was your position or job duties
13 within that firm?
14 A I was started out as a consultant, became the
15 vice-president of marketing, the vice-president of
16 education, opened up their Houston office, and then went
17 back as their vice-president of marketing.
18 Q After you left Batten, Batten & Hudson -
19 excuse me - Batten, Batten, Hudson & Swab, where did you
20 go to work?
21 A Started Management 2000.
22 Q Is that the company you are currently with
23 now?
24 A Yes.
25 Q What is your position?

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1 A President.
2 Q How long have you been president?
3 A Since the beginning.
4 Q When was it founded?
5 A 1981.
6 Q Is that a Houston company?
7 A Yes.
8 Q What does Management 2000 specialize in?
9 A Helping companies that franchise to do that
10 business strategy more effectively.
11 Q And over the past 20-plus years, about
12 approximately how many franchise companies have you
13 worked with?
14 A Over 850.
15 Q And have you ever helped any franchise
16 companies begin that business operation?
17 A Yes.
18 Q And on how many occasions have you done that?
19 A I would guess maybe 30.
20 Q Do you hold yourself out as an expert in
21 franchise management?
22 MR. LAWDERMILK: Objection. Form.
23 A Yes.
24 Q And what is that based upon?
25 A Exposure and experience and study.

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1 Q Okay. Are you a member of any trade
2 associations that deal with - or any franchise
3 associations?
4 A Both the International Franchise Association
5 which is for the U.S. and the Canadian Franchise
6 Association.
7 Q And what did these associations do?
8 A Provide services for members, both educational
9 and political.
10 Q Have you ever been published in any areas
11 concerning franchises?
12 A Yes.
13 Q And how many times have you been published?
14 A I'd have to look at the resume and count them.
15 Q Okay.
16 A I don't really know.
17 Q I believe your resume has been attached to
18 your deposition as Exhibit 8?
19 A Yes.
20 Q Okay. Can you look at that very quickly and
21 just tell me what type of publications you have had in
22 the past solely on the subject of franchising?
23 A We had three chapters in a hardbound book, and
24 the rest of them have been in magazines.
25 Q Okay. And that hardbound book is called what?

196
1 A THE FRANCHISE HANDBOOK.
2 Q And when was that published?
3 A 1993.
4 Q And what were the three chapters that you
5 helped or corroborated or wrote?
6 A One is call "Strengthening and Supporting the
7 Franchise System," one is called "The Operations
8 Manual," and one is called "The Dynamics of the
9 Franchise Relationship and Recruitment Strategies."
10 Q The articles that you wrote that were
11 published in periodicals, what were their titles?
12 A They include one called "Franchising Is It for
13 You," "Stop Selling Franchises," "Customer Driven Brand
14 Equity."
15 Q Have you ever given speeches to any franchise
16 associations concerning the topic of franchise?
17 A Yes, I have.
18 Q On how many occasions?
19 A Three or four there, but I probably give
20 keynote addresses at franchisee conventions maybe eight
21 or ten times a year.
22 Q Now, do you also -- Are you also retained as
23 an expert witness on the subject of franchise?
24 A On occasion.
25 Q Okay. And over the past 20 years, how many

197
1 occasions have you been retained as an expert witness
2 specifically to franchises?
3 A Nine. Nine.
4 Q Okay. Have you ever been retained as an
5 expert witness in any other field besides franchises?
6 A No.
7 Q Do you consider yourself as having expert
8 knowledge in any other field other than franchises?
9 A Yes.
10 Q And what other fields?
11 A Nonfranchise multiunit retailing.
12 Q And any other fields besides those two?
13 A No.
14 Q The nine cases that you have been retained,
15 are they solely in the Houston or greater Harris County
16 area?
17 A No.
18 Q Have you, in fact, worked all over the
19 United States?
20 A Yes.
21 Q Such as Florida?
22 A Yes.
23 Q California?
24 A Yes.
25 Q Michigan?

198
1 A Yes.
2 Q Montana?
3 A Yes.
4 Q Ohio?
5 A Yes.
6 Q Alabama?
7 A Yes.
8 Q Do you remember approximately when you were
9 first contacted in this case?
10 A I think it was either around July of this
11 year --
12 Q Of this year?
13 A No. I'm sorry - of a year ago - of '01.
14 Q When you were contacted, what were you asked
15 to do?
16 A To prepare an expert witness report for this
17 case relative to the franchise relationship.
18 Q And did you do so?
19 A I did.
20 Q And we have been referring to that report for,
21 I guess, the better part of today as Exhibits 5 and 7?
22 A Yes.
23 Q It has been mismarked.
24 And is that your complete report?
25 A Yes, it is.

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1 Q Do you have any other report other than
2 Exhibit 5 and 7 which is identical?
3 A No.
4 MR. LIGHTY: Will you agree that it is a
5 business record so I don't have to prove it up?
6 MR. LAWDERMILK: Yeah.
7 MR. LIGHTY: Okay.
8 Q (By Mr. Lighty) First, I would like to take a
9 little bit of time, Mr. Gappa, if you will, for the jury
10 explain what is a franchise and why do businesses enter
11 into such relationships?
12 A Okay. If somebody wants to go into business
13 for themselves or if somebody who already is in business
14 wants to go into additional businesses, in order to cut
15 down their learning curve where they aren't wasting time
16 on how to run the business, how to structure the
17 business, how to administer the business, how to market
18 the business, how to support the business - rather than
19 trying to figure all that out, the benefit of a
20 franchise is it has it all figured out - written down in
21 manuals, training programs, and help.
22 So, when you become a franchisee, your
23 learning curve is virtually zero; and that's the benefit
24 of why people do it.
25 MR. LIGHTY: Okay. Can we have some more

200
1 document tabs, please? I'll probably need the next
2 page, too.
3 (EXHIBIT NO. 10 MARKED.)
4 Q (By Mr. Lighty) I'm going to hand you what has
5 been marked as Gappa Exhibit No. 10, and can you
6 identify that?
7 A Yes, this is a page that we use in some of our
8 seminars that explains a PowerPoint presentation and
9 this one has "What is franchising?"
10 Q Can you show that to the ladies and gentlemen
11 of the jury? Let's just spend a second for the camera
12 to zoom up on it.
13 A (Complying with Counsel's request)
14 Q You can go ahead and look at it. The purpose
15 of that document is to explain during your presentations
16 what is a franchise?
17 A Yes.
18 Q Okay. And have you basically told the jury
19 already why someone would go into franchising or what
20 the franchise is?
21 A Not really.
22 Q Okay.
23 A What this document addresses is that all
24 franchises are partnerships and because it is a business
25 strategy, we refer to it in our company as strategic

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1 partnerships and the focus is on customers.
2 Q And what do you mean by that?
3 A It means that the franchisee together with the
4 franchisor implements the systems designed by the
5 franchisor to get and keep customers, but the franchisee
6 is the means by which the franchisor implements that
7 process.
8 It is sort of like teaching your children
9 what they should do when they get married and have their
10 own kids on Christmas. It's this is what you do if you
11 are going to do that.
12 It is also, for some people, it's a way
13 of marketing and distributing materials and products
14 like automobiles or soda pop, Coke, Pepsi, beer, wine,
15 clothing. And it is also a method that some companies
16 use to dominate markets.
17 Q Is franchising a common way of doing business
18 in this country?
19 A I think it is a common way of doing business.
20 Q Approximately how many franchises are there in
21 this country?
22 A 750,000.
23 Q And how many retail or local franchisee
24 establishments does that represent?
25 A How many franchisors?

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1 Q Yes, sir - franchisees.
2 A Well, that would probably represent -- 750,000
3 would probably be half a million individual franchisees
4 that operated those.
5 Q So, it would be a dominant way of doing
6 business within this country?
7 MR. LAWDERMILK: Objection. Form.
8 A I misunderstood your question, I think. There
9 are about 20 million small businesses in this country.
10 So, franchising is not -- Percentagewise it doesn't
11 dominate, but it does from capturing business.
12 Q Okay. It has been a successful model in the
13 American business economy?
14 A Yes.
15 (EXHIBIT NO. 11 MARKED.)
16 Q Let me hand you what I have marked as Gappa
17 Exhibit No. 11, if you can identify that for the ladies
18 and gentlemen of the jury.
19 A Okay. Should I show this to --
20 Q Please. Let's let the videographer zoom in on
21 it. And what is that document entitled?
22 A Well, this document builds on the first one.
23 The first one says, "What is franchising?" This
24 document deals with the purposes of franchising.
25 Q And what are the purposes of franchising,

203
1 Mr. Gappa?
2 A The first is to give somebody a business that
3 actually works. So, the first thing is economic
4 performance.
5 Q Can you explain that a little bit?
6 A Yes. When you franchise, what you are doing
7 is you are taking a proven system that makes money; and
8 you are telling somebody if you operate this the way we
9 tell you to operate it, it will perform.
10 The other purpose is to get and keep
11 customers, the other purpose is to satisfy customers,
12 and the other is to help the franchisor dominate markets
13 and build brand awareness and then ultimately to be the
14 No. 1 franchise in that marketplace - so, to gain
15 disproportionate market share.
16 Q Why is it important to follow a proven
17 pattern?
18 A Because if you don't, you don't get the
19 results you want. A proven operating system is designed
20 to get results. For instance, how many times if you put
21 your glasses in the wrong place, you have got to look
22 for them? It wastes time. If you put your keys in the
23 wrong place, you waste time - your billfold. If you
24 park your car in a different place, you go out and you
25 wonder where it is.

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1 Franchising is like the way we operate
2 our lives. We operate our lives on systems; and when
3 you go outside a system, you get different results,
4 usually not as good. So, franchising is like life.
5 It's based on the best results are gotten through
6 systems that work.
7 Q And do the franchising models have a good
8 success rate in this country?
9 A They do.
10 Q As compared -- Would you compare that to
11 businesses or start-up businesses in general?
12 A The statistics that are commonly put out are
13 that a franchise - that seven years after a franchisee
14 is in business, about 90 percent of them are still in
15 business.
16 Q Now, how does that compare to nonfranchise
17 businesses that are seven years outside their start-up
18 time?
19 A The published statistics are reversed -
20 10 percent will still be in business - 7 to 10 percent
21 of a nonfranchise start-up business will still be in
22 business.
23 Q And what publications are you relying upon to
24 base that information?
25 A You see those periodically from the WALL

205
1 STREET JOURNAL to FORTUNE to ENTREPRENEUR to INC. And
2 the International Franchise Association itself will
3 quote these statistics.
4 (EXHIBIT NO. 12 MARKED.)
5 Q I would like to hand you what I have marked as
6 Gappa Exhibit No. 12 if you will identify that as well
7 for me?
8 A Okay. This one again builds from what is
9 franchising to the purposes to what are the elements of
10 franchising.
11 Q And can you explain to the ladies and
12 gentlemen of the jury why the elements of franchising is
13 important?
14 A Because it is like the elements of a recipe to
15 a meal. If you leave out one of them, you know, it is
16 like making chocolate chip cookies and forgetting the
17 chocolate chips and saying it is still chocolate chip
18 cookies.
19 Any one of these, if they are not
20 present, will get you less results than you want if they
21 are present.
22 Q And what are the elements of franchising?
23 A A name brand, a system that tells you how to
24 operate, a group of people that will come out and help
25 improve your performance, the relationship you have with

206
1 the franchisee strategic partner of the franchisor, the
2 relationships you have with your customers, the way you
3 market the business, the shared beliefs you have among
4 one another, and if you have a business plan or not and
5 if you are planning as a team rather than as
6 individuals.
7 Q Why is that important?
8 A Because when franchisees don't plan together,
9 they consider themselves enemies and competitors. They
10 think "Somebody else is in the same business I am in,
11 and he is taking business from me." If you plan
12 together in a market seeing that the real competitors
13 are other people, then you can get more done.
14 Q Why is it important to follow the elements of
15 a franchise?
16 A Because that's the formula for success.
17 Q And they base that formula upon what?
18 A Usually it is upon their having done it with
19 company operations and so they know it works.
20 Q Experience?
21 A Experience.
22 (EXHIBIT NO. 13 MARKED.)
23 Q Now, based upon your review of the
24 documentation is ADQ a franchisor?
25 A Yes.

207
1 Q Do they qualify under that definition?
2 A Yes.
3 Q And why is that?
4 A Because they have the elements of a franchise
5 system. They have a business format franchise system.
6 Q And can you explain to the jury how a
7 franchisor such as ADQ conducts their business --
8 MR. LAWDERMILK: Object to the form.
9 Q -- develops their business and increases their
10 business?
11 MR. LAWDERMILK: Object to the form.
12 A Well, a company like ADQ increases its
13 business by a couple of different ways. The first thing
14 is -- The first rule of thumb is everything begins and
15 ends with the person to whom you grant the franchise.
16 If you grant a franchise to the right person, then you
17 are going to have higher average in a volume, better
18 customer service. That will create higher volumes and
19 higher revenues for the franchisor who makes money when
20 the franchisee makes money, and they get a share of the
21 customer's money called a royalty. The more successful
22 units there are, the more they make money and the more
23 the brand means positive things.
24 Q Let me hand you what has been marked as Gappa
25 Exhibit 13. If you will, turn that over and identify

208
1 that for me and for the jury.
2 A Okay.
3 Q And show it so the videographer can zoom in on
4 it just for a second.
5 A (Complying with Counsel's request)
6 Q Okay. Can you identify Gappa Exhibit 13?
7 A What this slide represents is the generic
8 obligations that a franchisee has when they enter into a
9 license agreement; and kind of humorously sometimes
10 people enter into license disagreements.
11 Q Okay.
12 A But this is actually an agreement and these
13 are elements that are common to obligations a franchisee
14 accepts. They accept -- They agree to use the brand,
15 the operating system, the assistance that is given them
16 to help improve their performance, and they agree to do
17 that in a defined market - say, Houston - for a specific
18 period of time - 10, 15, 25 years - to help develop
19 market share by having satisfied customers and to build
20 their business.
21 Q Based upon your review of the information that
22 has been provided, do you find that ADQ had entered in
23 such a licensing or franchise agreement with anybody who
24 is involved in this case?
25 A Yes, I did.

209
1 Q And who is that?
2 A The -- Particularly the franchisees of the
3 Strickland operation.
4 Q Is that Golden Triangle Dairy Queen?
5 A Yes.
6 Q And Mr. Bruce Allred?
7 A Yes.
8 (EXHIBIT NO. 14 MARKED.)
9 Q I'll hand you what has been marked as Gappa
10 Exhibit No. 14; and, if you will for me and for the
11 jury, identify what Gappa Exhibit No. 14 is.
12 A This exhibit deals with the concept of what is
13 granted by a franchisor to a franchisee.
14 Q Are you talking about the contractual
15 relationship?
16 A Yes.
17 Q Okay. And what is granted between a
18 franchisor and a franchisee? What are they doing?
19 MR. LAWDERMILK: Objection. Form.
20 A Fundamentally what you are doing is you are
21 accepting a right and the right is to be obligated to
22 doing what the franchisor asks you to do. So, you are
23 obligated to be in a relationship with the franchisor of
24 the business and to fully, completely, and consistently
25 implement all aspects of the business model and to

210
1 maintain positive relationships with customers.
2 Q Now, I didn't go over this at the beginning of
3 my questioning; but are you currently a franchisee?
4 A Yes.
5 Q How many types of businesses do you currently
6 operate as a franchisee?
7 A Well, we operate a Texaco convenience store
8 gas station called Star Mart in Phoenix and there are
9 three of those and each of those has a Church's Chicken
10 franchise inside of it. We have a Logan Farms Honey
11 Glazed Ham Store in Webster city.
12 Q Southwest, south of Houston?
13 A By Clear Lake, yes. And we have three
14 franchises here in Houston called Two Men and a Truck.
15 It is a local moving franchise.
16 Q Are you the owner of those individual
17 franchises?
18 A I'm a shareholder in each of those.
19 Q You are not on the side where you are
20 franchising those companies out to other people?
21 A That's correct.
22 Q Okay. When you entered into those franchises,
23 did you get or did you enter into agreements about -
24 between you and the franchise holder or franchisor
25 certain rights and obligations?

211
1 A What we got was the right to follow their
2 system.
3 Q And why would you enter into a business to
4 follow someone else's system?
5 A Because we know it works.
6 Q And what was that based upon?
7 A We -- In each of these cases except Church's,
8 we wrote the operations manual for the franchise company
9 as a project; and with Church's, we knew the leadership
10 and management of that company. So, due diligence.
11 Q Now, in the case we are here about with
12 International Dairy Queen and American Dairy Queen, why
13 would someone like Bruce Allred want to open up a
14 Dairy Queen store?
15 MR. LAWDERMILK: Objection. Form.
16 A I'm not sure of what his intent is. I would
17 assume it is because it was a good business opportunity
18 in his mind.
19 Q Okay. And he would have to agree just like
20 anyone else to follow the American Dairy Queen model
21 rules and obligations that they set out if they were
22 going to come to an agreement as to the franchise and
23 whether he would be granted a license?
24 MR. LAWDERMILK: Objection. Form.
25 Objection. Leading.

212
1 A Yes.
2 Q Can you tell by documentation when American
3 Dairy Queen and Golden Triangle Dairy Queen and
4 Mr. Bruce Allred first entered into an agreement?
5 A Yes, the franchise license agreements were
6 signed and dated.
7 Q And when were they signed and dated?
8 A In March of '73.
9 Q And what is the importance of that document?
10 MR. LAWDERMILK: Objection. Form.
11 A It is the document that explains if someone
12 needs to remember what their rights and obligations are
13 in the relationship.
14 Q Do you have that document with you?
15 A Yes, I do.
16 Q Has that been previously marked as an exhibit?
17 A It is Exhibit 1 in the box of materials.
18 Q I'm going to remove this cover letter.
19 (EXHIBIT NO. 15 MARKED.)
20 Q I have this marked as Gappa Exhibit No. 15.
21 Can you identify Gappa Exhibit No. 15?
22 A It is the agreement made and entered into on
23 the 5th day of March of 1993, between Dairy Queen
24 Products of Texas, a Partnership, and Bruce Allred or
25 Golden Triangle Dairy Queens, Inc., in Beaumont Texas.

213
1 Q And in simple terms what is that document?
2 A This document binds both parties to each other
3 for a 25-year relationship.
4 Q Let's talk about after 25 years what happens?
5 A There is an automatic five-year renewal if
6 everything is okay.
7 Q And what is -- How long will that renewal go
8 on?
9 A I believe -- I want to make sure I answer that
10 question correctly.
11 It goes on as long as each party wants it
12 to go on.
13 Q In perpetuity?
14 A Yes.
15 Q Now, you said that the automatic five-year
16 renewal program occurs if what?
17 A If both parties agree.
18 Q And what did the terms of the document exactly
19 say as far as what the obligations of each party is in
20 order to make sure that it is renewed automatically at a
21 five-year period?
22 A It says: The term of this agreement shall
23 automatically be extended for additional terms of five
24 years each subject to all the undertakings and
25 agreements herein provided and the continued payment of

214
1 the royalties herein provided unless the licensee or his
2 assigns shall give written notice to the licenser of the
3 licensee's election to cancel this agreement at its
4 termination at least 60 days prior to the termination of
5 this agreement or any subsequent extension thereof.
6 At the termination of this agreement, the
7 licensee agrees to properly crate the freezers provided
8 herein by the licenser and deliver them to the licenser
9 FOB San Antonio, Texas.
10 Q In simple terms, as I understand it - and I
11 want you to correct me if I'm wrong - does that
12 agreement state that if you follow the terms of the
13 licensing agreement, after 25 years it will
14 automatically be renewed every five years unless the
15 licensee - which in this case is Golden Triangle
16 Dairy Queen and Bruce Allred - provide a written
17 notification that they don't want it to extend any
18 further?
19 A Yes.
20 MR. LAWDERMILK: Objection. Form.
21 Objection. Leading.
22 MR. LAWDERMILK: Don, can we take
23 about --
24 MR. LIGHTY: Let's take a break.
25 THE VIDEOGRAPHER: Going off the record

215
1 at 5:25.
2 (RECESS TAKEN FROM 5:25 TO 5:36.)
3 THE VIDEOGRAPHER: Back on the record,
4 the time is 5:36.
5 Q (By Mr. Lighty) Mr. Gappa, what is your
6 understanding of the terms of conditions for renewal
7 between ADQ and Golden Triangle Dairy Queen and
8 Mr. Bruce Allred under their licensing agreement?
9 MR. LAWDERMILK: Objection. Form.
10 A That the renewal occurs -- Well, what it says
11 is that the term of this agreement automatically
12 extends, but that - unless Bruce Allred gives 60-day
13 notice prior to its termination.
14 Q And what must occur in order for the licensing
15 agreement to automatically extend for a period of five
16 years?
17 A That all the -- It says that all the
18 undertakings and agreements required and the continued
19 payment of royalties happens.
20 Q Anything else?
21 A He could assign it to somebody else and that
22 ceases it, but if they don't, it just keeps going and
23 that seems to be all that it says here.
24 Q And if there is an assignment, does there have
25 to be any approval by anyone for that assignment?

216
1 MR. LAWDERMILK: Objection. Form,
2 leading.
3 A Yes. The franchisor has to approve the
4 transfer and the person to whom it is transferred.
5 Q Do you have an understanding of whether
6 Mr. Allred and Golden Triangle Dairy Queen has ever
7 attempted to assign rights under this licensing
8 agreement to any other party?
9 A I believe they had.
10 Q Okay. Have you ever seen a document whereby
11 American Dairy Queen or International Dairy Queen has
12 approved those transfers?
13 A I have not.
14 Q Gappa Exhibit -- Let me look at this document
15 again, No. 15. Can you show or identify for the ladies
16 and gentlemen of the jury where that licensing agreement
17 references, refers to, makes any type of mention as to
18 the rights and obligations between the parties of that
19 agreement concerning playgrounds, playground safety,
20 playground construction, or playground maintenance?
21 A There is nothing in this agreement that
22 relates to playgrounds, playground equipment, or
23 playground maintenance.
24 Q Is it your understanding that Gappa Exhibit
25 No. 15 was signed and introduced - excuse me - was

217
1 signed and entered into by the parties to the agreement
2 prior to the time that a playground was installed at the
3 Strickland Drive Dairy Queen?
4 A That's my understanding.
5 Q By a period of over ten, twelve years?
6 A Yes.
7 (EXHIBIT NO. 16 MARKED.)
8 Q I'll come back to Gappa Exhibit 15 in a little
9 bit. I'm going to continue about - talking about
10 franchises. Can you identify what I have marked as
11 Gappa Exhibit No. 16?
12 A Yes. This document talks about the purposes
13 of systems, and it is meant particularly to talk - to be
14 able to relate to the value of systems in a franchise.
15 Q Okay. And can you explain what the value or
16 the purposes of systems are to franchisees?
17 A Yes. First of all, systems in general are
18 critical to the success of anything. The systems in our
19 human bodies are interrelated and when - they are
20 designed to help us eliminate problems in our life as
21 systems in businesses are designed to eliminate
22 problems, to maximize results, to maximize productivity,
23 to maintain performance, to provide early warning signs.
24 Like when your gas indicator indicates that you are
25 running out of gas, that's an example of an early

218
1 warning sign that a car system has and allows you to get
2 back on track to get off and fill your tank; and it
3 signals the need for outside help. Signals do that --
4 Systems do that, and systems will indicate the need in a
5 business to replace people, processes, or procedures.
6 If things don't work, if they are not getting the
7 results you want, you change them.
8 So, systems thinking is important to
9 franchising.
10 Q And does ADQ follow this systems thinking in
11 its application with the Strickland Drive Dairy Queen?
12 A Yes.
13 MR. LAWDERMILK: Objection. Form and
14 leading.
15 Q Getting back to Gappa Exhibit No. 15 which is
16 the licensing agreement between ADQ and Golden Triangle
17 Dairy Queen -- Well, before I ask you that, have you
18 been provided with any licensing agreement between
19 International Dairy Queen and Golden Triangle
20 Dairy Queen, Bruce Allred, Wes Howard, his businesses,
21 or Anita Wilson?
22 A No.
23 Q Is it your understanding that such an
24 agreement exists or doesn't exist?
25 MR. LAWDERMILK: Objection. Form.

219
1 A Doesn't exist.
2 Q Okay. What is that based upon?
3 A The way that International Dairy Queen is set
4 up, it has licensed American Dairy Queen to grant
5 franchises to people on its behalf.
6 Q And that would be the company that licenses
7 those franchise agreements?
8 A Yes, American Dairy Queen.
9 Q Now, a licensee, even though they have entered
10 into an agreement such as a franchise license and would
11 have obligations and duties, are they allowed to make
12 independent decisions?
13 MR. LAWDERMILK: Objection. Form and
14 leading.
15 A They can make any decision they want. Just
16 because they are obligated doesn't mean that they are
17 going to meet that obligation. So, they are totally
18 independent even though they have made a commitment.
19 They can decide to do or not do anything that the
20 franchisee - the franchisor requires them, but outside
21 of what the franchisor requires them, they also have
22 decision making that they - that is in their area.
23 Q First let's talk about the decisions that a
24 licensee makes as to items that they are required to do
25 under their agreement or contract. What happens if they

220
1 decide not to follow those duties or obligations or
2 requirements?
3 A When the franchisor becomes aware that they
4 are not following them, they will have some written
5 process or procedure to get the franchisee to
6 self-correct and to change. If the franchisee for some
7 reason decides not to change and get back in compliance
8 and follow the standards, then it is fairly normal
9 practice after a period of time to write the person a
10 letter - a default, if you will - with a period for cure
11 and if they don't change, then they terminate the
12 franchise agreement.
13 Q And does ADQ have such a procedure in place if
14 it happens with one of its franchisees?
15 A It is my understanding that they do.
16 Q Can you give us other examples where a
17 licensee can make independent choices after being
18 granted a license or a contract?
19 MR. LAWDERMILK: Objection. Form.
20 A They can make decisions on who they hire, how
21 they supervise people, how many people are on payroll,
22 what they pay them, what their schedules are, how many
23 shifts they work. They can make decisions on - in some
24 cases on what vendors they use or don't use, what - can
25 be - what uniforms they pick out of those that are

221
1 required. So, they can make a fair number of decisions.
2 Q Okay. I fear when I go back and listen to
3 this deposition, I'm going to be upset with myself in
4 always talking in these formal terms of licensees,
5 licensers, franchisor, franchisees.
6 Before we go any further, can you give me
7 an example of an entity that licenses someone and
8 someone would be a licensee that most of the jurors
9 would be familiar with?
10 A Well, besides the obvious one - McDonald's,
11 they might be familiar with, say, Carlson Travel or
12 Blockbuster.
13 Q Okay. Well, I want you to assume that we have
14 twelve people on this jury. Do you think those twelve
15 would have a common license in which they would be a
16 licensee?
17 A I do.
18 Q And what would that be?
19 A Their driver's license.
20 Q Okay. What authority grants them that
21 driver's license?
22 MR. LAWDERMILK: Objection. Form.
23 A If we are in the state of Texas, it would be
24 the State of Texas.
25 Q And what does that allow?

222
1 MR. LAWDERMILK: Objection. Form.
2 A It allows them to get from Point A to Point B
3 following the systems designed by the state of Texas to
4 ensure that they can get there in the easiest fashion.
5 Q Operate a motor vehicle?
6 A Operate a motor vehicle.
7 Q Who determines the requirements, the duties,
8 and obligations in order to - for someone qualifying in
9 order to obtain a driver's license?
10 A The State of Texas.
11 Q And the person who is applying for that
12 license would have to meet those qualifications?
13 A Yes.
14 Q Such as age qualification?
15 A Age, sight.
16 Q Physical ability?
17 A Ability to drive, ability to pass a written
18 test.
19 Q And such as that. Then once a person is
20 granted that license, does it allow him to do anything
21 with that license?
22 A No. He can drive according to the rules and
23 regulations.
24 Q And what happens if he doesn't follow the
25 rules and regulations?

223
1 A It can be revoked or suspended.
2 Q By which body?
3 A The State of Texas.
4 Q The same body that granted that license?
5 A And, again, what is interesting is, that can't
6 be - in this instance that can't be transferred or sold.
7 Q Now, do agreements like the franchise
8 agreement that we have been referring to - and I believe
9 that is Exhibit No. 15, Gappa Exhibit No. 15 - do they
10 change over time?
11 MR. LAWDERMILK: Objection. Form.
12 A Yes, they do. They almost all change over
13 time.
14 Q Can you explain that process?
15 A As a company matures and as situations occur
16 in a company's history, they might discover that certain
17 things that weren't important at one point in their
18 history become important at another point in their
19 history - for instance, how much territory you might
20 give somebody. In your early franchise agreements you
21 might find -- Like probably everybody has heard of
22 Ruth's Chris Steak House. Houston had the second Ruth's
23 Chris Steak House. They had a 50-mile radius that the
24 person got that they promised they wouldn't put anybody
25 in. Now it is a mile.

224
1 McDonald's used to have large
2 territories, and now their territory is the external
3 perimeter of the building.
4 Q Okay.
5 A Okay? So, things change like that. The term
6 of a license agreement might be 25 years. In today's
7 environment you don't find many 25-year agreements
8 because things change so much, and people want to go
9 back - get them back into training. You want to sign a
10 current form agreement because you know that it - you
11 know precisely that things are going to change, and you
12 want the ability to get your franchisees to change with
13 it.
14 Q And things that may not have been contemplated
15 during the original agreement, you would want in the
16 latter agreement?
17 A Absolutely.
18 Q Now, in this case were you ever provided with
19 any addendums to the licensing agreement?
20 A Yes.
21 Q And do you have those with you?
22 A I do. (Procuring) At least I think these are
23 those. Let me get all this licensing material together.
24 Here is a participation agreement. I don't know if
25 that's exactly what you are referring to.

225
1 Q Okay. First let's have that marked, if you
2 will hand it to me; and I will take off the cover letter
3 which I think is identifying this.
4 (EXHIBIT NO. 17 MARKED.)
5 Q And will you identify what has been marked as
6 Gappa Exhibit No. 17?
7 A This is a Dairy Queen Freezer Participation
8 Agreement. It is an agreement to participate in their
9 freezer program.
10 Q Does that document have anything to do in any
11 form or fashion with playground, playground equipment,
12 playground inspections, playground maintenance,
13 playground safety?
14 A No.
15 Q What other agreements followed the licensing
16 agreement which has been marked as Gappa Exhibit 15?
17 A Here is an addendum to the license agreement,
18 and it deals with the expenditure of co-op advertising
19 funds.
20 Q Okay.
21 A And increasing the advertising fund.
22 Q Can I have that document as well?
23 A (Tendering)
24 (EXHIBIT NO. 18 MARKED.)
25 Q I'm going to mark that document as Gappa

226
1 Exhibit 18 and ask you the same questions I asked you
2 about Gappa Exhibit 17.
3 Does Gappa Exhibit 18 have anything to do
4 with playgrounds, playground construction, playground
5 equipment, playground safety guidelines, the maintenance
6 of playgrounds whatsoever?
7 A No, it is just co-op advertising.
8 Q Did you find any other agreements between
9 American Dairy Queen and Golden Triangle Dairy Queen,
10 Bruce Allred, the franchise?
11 A If I did, they are not top of mind with me
12 right now.
13 Q Have you ever seen any subsequent franchise
14 agreement document that dealt specifically with
15 playgrounds, those issues - maintenance, safety - that I
16 have been talking about?
17 A No, I didn't.
18 Q Why is it so important for one who grants the
19 right to use their trademarks - the franchisor - to have
20 compliance by the franchisee to follow their systems?
21 A Well, the essence of franchising is just
22 that - it is compliance. It is this is what we have got
23 for you to implement. This is our business model. You
24 sign a franchise agreement that says: I will implement
25 that model the way you want it implemented.

227
1 And compliance of one person in one
2 location affects what another -- What customers that
3 come here, if this person is not compliant, might decide
4 not to go anywhere else if you have had a bad experience
5 because somebody wasn't in compliance. So, what happens
6 to the one, accrues to the whole - good or bad or
7 indifferent. And without compliance, you actually
8 dilute the investment of everybody else.
9 Q And what do you mean by that?
10 A Well, if the full and complete and consistent
11 implementation of the system is the best way to get the
12 best results, then if people in the system are not in
13 compliance, it means they aren't getting the best
14 results in satisfying the customers; and that means that
15 customers are not going to be as loyal to go there for
16 food, say. And, so, it affects everybody else's
17 investment.
18 Q If I understand you correctly, Mr. Gappa, if a
19 customer is upset with their experience, say, in a
20 Dairy Queen in Houston, Texas, it may affect their
21 purchasing products from a Dairy Queen in Beaumont,
22 Texas?
23 A I think everybody has done that in their
24 life - where they have had a bad experience and they
25 tell everybody about it and they don't go back.

228
1 Q Now, what happens if a franchisee's decisions,
2 practices, and behaviors are not covered by a licensed
3 agreement or any subsequent document as far as that
4 licensee's rights, responsibility, or obligation to a
5 particular area?
6 MR. LAWDERMILK: Objection. Form.
7 A Ask me one more time, please.
8 Q Okay. What happens with a franchisee's
9 practices, their decisions, and their behaviors when
10 they are not covered by any terms or conditions located
11 with any license agreement or subsequent document that
12 has been entered into between the franchisor like an ADQ
13 in this case and the franchisee like Golden Triangle
14 Dairy Queen?
15 MR. LAWDERMILK: Objection. Form.
16 A Their decisions would be their own.
17 Q Okay. Now, what rights and duties under the
18 agreements would a franchise - franchisor have to
19 correct those decisions, practices, and behaviors when
20 the contracts do not speak to those issues?
21 MR. LAWDERMILK: Objection. Form.
22 A They wouldn't have any.
23 Q And what do you base that opinion upon?
24 A Well, my experience in real life, the
25 frustration that franchisors have.

229
1 Q And what is that?
2 A In franchisees doing things that they
3 neglected to cover in the franchise agreement; and, so,
4 they have to live with it or try to get people to see
5 the value of not doing that.
6 Q And is that one of the reasons why over time
7 franchise agreements evolved?
8 MR. LAWDERMILK: Objection. Form.
9 A It's one of the basic reasons why.
10 Q And that's what we have been talking about
11 earlier in your deposition testimony?
12 A That's right.
13 Q What duties and obligations, requirements, did
14 Golden Triangle Dairy Queen or Bruce Allred have to
15 American Dairy Queen concerning the decision to purchase
16 a playground for the Strickland Drive location?
17 MR. LAWDERMILK: Objection. Form.
18 A There was no contractual relationship with
19 that issue of buying and installing a playground with
20 Dairy Queen and Bruce Allred of Golden Triangle.
21 Q And based upon your review of the contractual
22 agreements and your 20-plus years in franchising
23 experience, what does that mean?
24 A It means that if they wanted to, they could;
25 and if they didn't want to, they didn't have to.

230
1 Q In this particular situation, whose decision
2 was it to put a playground at the Strickland Drive
3 Dairy Queen?
4 MR. LAWDERMILK: Objection. Form.
5 A It would have been Bruce Allred's.
6 Q And whose decision was it to choose what type
7 of playground equipment to install on their premises?
8 MR. LAWDERMILK: Objection. Form.
9 A It would have been Bruce Allred's or somebody
10 he delegated that to.
11 Q Who owns the property where the Strickland
12 Drive Dairy Queen franchise was located?
13 A My assumption is that Bruce Allred did.
14 Q Who determined what type of surfacing was
15 placed under the playground equipment?
16 MR. LAWDERMILK: Objection. Form.
17 A Bruce Allred did.
18 Q Would Dairy Queen under their license
19 agreements or any subsequent documents they had signed
20 with Golden Triangle Dairy Queen and Mr. Allred have had
21 the ability to prevent any of those elections or
22 decisions as to the installation of the playground
23 equipment, the type of playground equipment, or the type
24 of safety surface that was involved?
25 MR. LAWDERMILK: Objection. Form.

231
1 A Not anything contractual and legal from their
2 franchise agreement with them.
3 Q And why is that?
4 A Because the agreement doesn't address
5 playgrounds or their installation or their supervision
6 and maintenance.
7 Q Did International Dairy Queen own the
8 Dairy Queen franchise store on Strickland Drive where
9 young Tyler Matthews was injured and subsequently died?
10 MR. LAWDERMILK: Objection. Form.
11 A No.
12 Q Did International Dairy Queen or American
13 Dairy Queen occupy the Dairy Queen franchise that was
14 located on Strickland Drive?
15 A No.
16 Q Did they lease it?
17 A No.
18 Q Did they sublease it?
19 A No.
20 Q Are playgrounds part of the underlying core
21 products and services that are referred to in the
22 contractual agreements between the franchisor, American
23 Dairy Queen, and the franchisee, Golden Triangle
24 Dairy Queen?
25 MR. LAWDERMILK: Objection. Form.

232
1 A No.
2 Q And can you explain to the ladies and
3 gentlemen of the jury what underlying core products and
4 services are?
5 A Underlying core products and services are
6 those things that are critical to the customer being
7 able to recognize a Dairy Queen when they walk in and
8 what they experience as a Dairy Queen when they consume
9 food there, and anything that relates to creating that
10 experience would be considered a core product.
11 Q Okay. What would be noncore product and
12 services that would be under the domain of the
13 franchisee or the operator of the individual store?
14 MR. LAWDERMILK: Objection. Form.
15 A Some might actually have to do with equipment
16 decisions you could make. Some might have to do with
17 some decor decisions you could make. Some might have to
18 do with the kind of people you hired, and some might
19 have to do with the kind and type of uniforms that a
20 person wore. Some might have to do with some optional
21 products that you might be able to have in your store
22 that aren't in all stores. Some might have to do with
23 decisions like whether or not you have a logoed napkin
24 or not.
25 Q Okay. Now, safety and security, would you put

233
1 that under the category of core products and services?
2 A No, I wouldn't.
3 Q Based upon your experience with franchises, is
4 it typical for the owner and occupier of an individual
5 franchise store, such as Golden Triangle Dairy Queen or
6 Bruce Allred, or the company that holds the licensing
7 agreement, such as ADQ in this case, to control the
8 safety and security of their employees and customers?
9 MR. LAWDERMILK: Objection. Form.
10 A Both from a personal standpoint with the
11 franchises that I'm involved in and from the business
12 standpoint for the franchises I have been exposed to and
13 related to as clients, these two things - security and
14 safety are left up to the franchisee.
15 Q And is that your opinion specifically for the
16 Strickland Avenue Dairy Queen in this case?
17 MR. LAWDERMILK: Objection. Form.
18 A Yes. And what happens sometimes is in
19 safety-related issues, the franchisor will say that
20 whatever the manufacturer of the equipment says to do,
21 that's what you do. Whatever a governing body says -
22 like for food safety - that's what you do. And it's
23 your obligation.
24 MR. LAWDERMILK: Objection.
25 Nonresponsive.

234
1 Q Can they force you to follow those
2 governmental regulations?
3 A The governing body often does that -
4 particularly in the area of food.
5 Q Okay. What franchises are you currently part
6 owner in?
7 A A Texaco convenience store with a Church's
8 Chicken in it, a moving company called Two men and A
9 Truck, and a Honey Glazed Ham and Deli called
10 Logan Farms.
11 Q What are some of the safety and security
12 issues that you face in those businesses?
13 A Making sure that the place is locked and
14 secured at night; making sure that the machines that
15 slice and glaze the hams, for instance, are done in the
16 appropriate fashion.
17 Q Now, does the franchisor in those particular
18 situations give you any recommendations or advice on how
19 to go about accomplishing some of those goals?
20 A Yes.
21 Q And what would happen if you totally ignored
22 that advice or recommendations?
23 A Your business would probably not do very well.
24 Q But could they force you in your particular
25 franchise situations to follow those?

235
1 A No.
2 Q And is that true for most noncore products and
3 services?
4 MR. LAWDERMILK: Objection. Form.
5 A I think it is not only true of that, I also
6 think, again, you know, of the driver's knowledge. The
7 State doesn't force us to do those things that are safe
8 for us to do.
9 MR. LAWDERMILK: Objection.
10 Nonresponsive.
11 Q Have you had an opportunity to review ADQ's
12 store operations manual?
13 A Yes.
14 Q Do you have that where you could find that
15 quickly?
16 A Yes, I think it is on the top over here in
17 this box.
18 Q Let's take a break and get that, please.
19 THE VIDEOGRAPHER: Going off the record
20 at 6:04.
21 (RECESS FROM 6:04 TO 6:06.)
22 (EXHIBIT NO. 19 MARKED.)
23 THE VIDEOGRAPHER: Back on the record,
24 the time is 6:06 P.M., August 30th, 2002 beginning of
25 Tape 4.

236
1 Q (By Mr. Lighty) Mr. Gappa, I'm going to hand
2 you what has been marked as Gappa Exhibit No. 19. Can
3 you tell me what that is?
4 A It is the Dairy Queen Store Operations Manual,
5 1990 copyright.
6 Q Have you had an opportunity to review that
7 document prior to your testimony here today?
8 A I have.
9 Q What is a store operations manual, generally
10 speaking?
11 A It documents the systems that a franchisee is
12 required to follow as part of the operating system.
13 Q And does that document give you any insight
14 into what ADQ would consider to be core operating
15 business or domain properties?
16 MR. LAWDERMILK: Objection. Form.
17 A Yes.
18 Q Okay.
19 A Yes, it does.
20 Q And as a result of your review of that
21 document, were you able to reach an opinion as to
22 ADQ's - what were some of ADQ's core operating
23 businesses and its primary domain?
24 A Well, this manual deals with sanitation and
25 the items under sanitation, it deals with the products

237
1 and how to make and serve the products, and it deals
2 with personnel management and it also deals with
3 equipment and equipment safety and one of the
4 fundamentals of success of food service, building and
5 maintenance equipment, and particularly it has
6 checklists, which is always very typical of operations
7 manuals to have checklists. It makes it easier for
8 franchisees to follow.
9 Q Is there anything in that document, Gappa
10 Exhibit 19, which references, talks about, deals with,
11 sets out, outlines, guidelines, suggestions, or anything
12 with playgrounds, playground equipment, playground
13 safety, playground installation, or safety surfaces?
14 A No. And we made reference to daily
15 checklists: Checklists for preopening, there were 22
16 items; checklists before opening, 20, what you do before
17 you open a store; shift change, 25 items; front counter
18 preclosing, 20, front counter, closing, preclosing,
19 closing; and other to-dos - 85 other to-dos.
20 Q Did those other to-dos include anything on
21 playgrounds, installation of playground materials,
22 safety surfaces, maintenance of playgrounds?
23 A They did not.
24 Q Now, did the store operations manual provide
25 for a quality, value, service, cleanliness review?

238
1 A Yes, there were 31 items in that review.
2 Q And that's been referred to previously in your
3 deposition as a QVSC, has it not?
4 A Yes, it has.
5 Q What is the purpose of a QVSC or a document
6 similar to that?
7 MR. LAWDERMILK: Objection. Form.
8 A Well, to make sure that quality, service,
9 cleanliness, and value are at the top of the mind of the
10 franchisee.
11 Q And why is it important for the franchisor to
12 monitor quality, value, service, and cleanliness?
13 A Because that's part of the essence of what a
14 franchise is - that Dairy Queen franchise.
15 Q What do you mean by that?
16 A The items on that checklist relate to things
17 that they think are of high value and that ought to be
18 paid attention to on a regular basis by the franchisee -
19 usually - well, not usually - those things that are
20 critical in the back that customers don't see and things
21 that are critical in the front that customers do see.
22 Q And is the QVSC an evaluation process?
23 A It is more of an observation process.
24 Q Administered by whom?
25 A Usually a field representative of the

239
1 franchisor.
2 Q And what are they looking for?
3 A Looking for --
4 MR. LAWDERMILK: Objection. Form.
5 A They are looking for compliance because that
6 indicates to them that the person is implementing the
7 system the way they agreed to implement the system.
8 They are making a note of any deviations so they can
9 talk to the person and counsel and guide them as why
10 they should be in compliance with the QVC.
11 Q Now, the documents that we referred to
12 earlier, the licensing agreement and subsequent
13 documents, does it mention in any of those documents the
14 right or ability for American Dairy Queen to go about
15 implementing a QVSC program?
16 A It mentions the right to inspect on a regular
17 and periodic basis and that's normal in franchising
18 because that changes and you don't want - a franchisor
19 doesn't want to be tied to a specific regular visit
20 schedule because it might -- There are some franchisees
21 they might want to visit more often than others. So,
22 they leave it flexible.
23 Q Looking back on Gappa Exhibit No. 15 or 17 or
24 18, can you find where the franchise licensing
25 agreements and the follow-up addendums allow them to

240
1 inspect?
2 A I know I saw this in here earlier. I know
3 where it is. It is not coming to my mind right now.
4 THE WITNESS: Can we go off the record
5 for a minute and find this?
6 THE VIDEOGRAPHER: Going off the record
7 at 6:13.
8 (RECESS FROM 6:13 TO 6:21.)
9 THE VIDEOGRAPHER: Back on the record,
10 the time is 6:21.
11 Q (By Mr. Lighty) Mr. Gappa, have you had an
12 opportunity to review the QVSC format and documentation?
13 A Yes.
14 Q Okay. Does the QVSC take into consideration
15 playgrounds and playground equipment?
16 A Yes.
17 Q In what manner and means does it require or
18 have inspection of playgrounds or playground equipment?
19 A Well, the item is No. 17; and it groups
20 playground and outdoor seating together and deals with
21 two categories - clean and condition.
22 Q What do you mean by "clean"?
23 A It refers to spillage, no spillage, stains,
24 product buildup or litter on the ground, around
25 equipment and/or seating.

241
1 Q So, the field representative who was looking,
2 filling out that QVSC form and looking at a playground
3 under the clean category, what are they looking for?
4 A Spillage, stains, product build-up or litter
5 in and around the equipment.
6 Q What is the other item they are looking for?
7 A Condition of equipment.
8 Q And what do you mean by that, or what does the
9 document mean by that?
10 MR. LAWDERMILK: Objection. Form.
11 A What it means by that is they are looking at
12 outside - they are looking - they are remembering that
13 they are linking outdoor seating with playground and
14 remembering that playgrounds are not addressed anywhere
15 in the operations manual or anywhere in the franchise
16 agreement. They are talking about -- The same things
17 that apply to the playground equipment would apply to
18 any outdoor seating which deals with is it scratched, is
19 it chipped, is it dented, is it rusty, and they also
20 include bike racks.
21 Q And what do they do if they find out the
22 playground equipment is scratched, chipped, dented, or
23 rusty?
24 A They would make note of it the same as they
25 would under clean for spillage, stains, product

242
1 build-up, or litter.
2 Q Okay. Have you been able to find anywhere on
3 the QVSC form where there is notation or commentary made
4 by the field representative that the playground
5 equipment meets any type of applicable guidelines, CPSC
6 guidelines, or any other type of ADQ/IDQ
7 recommendations?
8 A It is not on the QVSC.
9 Q Are there any places on the QVSC where the
10 field representative is required to make an evaluation
11 as to the safety evaluation of the playground or the
12 playground equipment?
13 A No. In fact, if safety was a part of QVSC, it
14 would most likely be QVSSC.
15 MR. LAWDERMILK: Objection.
16 Nonresponsive.
17 Q What do you mean by QVSSC?
18 A Quality, value, service, safety, and
19 cleanliness.
20 Q Generally with your experience as a
21 franchisee, who is responsible for the safety of
22 employees and customers at a local franchise-operated
23 business?
24 MR. LAWDERMILK: Objection. Form.
25 A That's the franchisee of record.

243
1 Q And what do you make that determination upon?
2 A Personal experience, experience with the
3 franchise companies that we have served in our business
4 relationship.
5 Q And after the review of the documents you have
6 seen in this case specific to the Strickland Avenue
7 Dairy Queen in Orange, who was responsible for the
8 safety of the customers and employees at their store?
9 MR. LAWDERMILK: Objection. Form.
10 A Mr. Allred.
11 Q And why Mr. Allred?
12 A Because he is the franchisee of record.
13 Q And does that include the safety of the
14 customers within the store?
15 A Yes.
16 Q Within the restaurant?
17 A Yes.
18 Q On the parking lot?
19 A Yes.
20 Q On the playground?
21 A I think I would say yes.
22 Q And why do you -- Do you have any hesitation
23 about that?
24 A No.
25 Q Looking at your report on Page 14 about the

244
1 middle, you give the opinion that ADQ acted appropriate
2 in referring the franchisees to manufacturers'
3 publications and helping to educate franchisees on the
4 possible consequences of their decisions and
5 nondecisions relative to noncore product and services
6 issues surrounding playgrounds. Do you see that?
7 A Yes.
8 Q What is your understanding of IDQ/ADQ's role
9 in attempting to educate and inform not only Bruce
10 Allred and Golden Triangle Dairy Queen, but all the
11 owner/operators of Dairy Queen franchises with
12 playgrounds as to safety issues related to those
13 playgrounds?
14 A They took initiatives that included personal
15 meetings, evaluations by experts, and written letters
16 that in every way they could, encouraged their
17 franchisees who had playgrounds to realize the
18 seriousness of following installation instructions and
19 maintenance instructions from the manufacturer and from
20 other agencies that had guidelines, as the Consumer
21 Protection Agency.
22 Q And what did ADQ or IDQ do with this
23 information after it was obtained?
24 A They disseminated it to the franchise
25 community that was involved.

245
1 Q And specific to the playground issue, what
2 were they trying to do?
3 MR. LAWDERMILK: Objection. Form.
4 A They were trying to raise the awareness and
5 put as much pressure as they could psychologically on
6 the franchisees to change their playgrounds to comply.
7 Q And what gave them the right to do that?
8 A The fact that they were in a relationship - a
9 business relationship with them.
10 Q If the franchise owner, the individual
11 franchisee who operated their own Dairy Queen, decided
12 not to follow these recommendations, suggestions, what
13 under the franchise agreements could American
14 Dairy Queen or International Dairy Queen do to them?
15 MR. LAWDERMILK: Objection. Form.
16 A They couldn't do anything to them, or they
17 most likely would have.
18 Q Why not?
19 A Because the franchise agreement did not
20 address programs.
21 Q It is silent to that issue?
22 A It is silent to that issue.
23 Q And who drafted that playground agree -- Who
24 drafted the licensing agreement?
25 A I would imagine American Dairy Queen's

246
1 attorneys.
2 Q But it would be American Dairy Queen?
3 A Yes.
4 Q It wasn't Bruce Allred who drafted that
5 agreement?
6 A No.
7 Q Again, that outlines American Dairy Queen's
8 rights and duties as well as those of the local
9 franchise owner?
10 A Yes.
11 Q And if it is not in there, American
12 Dairy Queen can't enforce it?
13 A They cannot enforce it.
14 Q Is that basically your opinion?
15 A Yes.
16 (EXHIBIT NO. 20 MARKED.)
17 Q Let me hand you what I'm going to mark as
18 Gappa Exhibit No. 20; and, if you can, identify that for
19 the record and show it to the jury as well.
20 A This is a document entitled American
21 Dairy Queen's Franchiser Duty.
22 Q And can you explain the importance of American
23 Dairy Queen's Franchiser Duty?
24 MR. LAWDERMILK: Objection. Form.
25 A Well, I'll just read what is on here.

247
1 Franchiser, American Dairy Queen, has a
2 duty which it fulfills to ensure a level of quality and
3 consistency in the underlying core products and services
4 that are represented as being identified with,
5 associated with, and attached to the Brand. In food
6 service this includes the safety of the food. Since
7 playgrounds are not part of the underlying core products
8 and services that are a Dairy Queen, they are excluded
9 from this ADQ duty.
10 Q Is that your opinion in this case?
11 A Yes, it is.
12 (EXHIBIT NO. 21 MARKED.)
13 Q I have marked you - hand you what I have
14 marked as Gappa Exhibit No. 21. Would you show that to
15 the jury and tell them what that is.
16 A Yes. This is entitled "Compliance to
17 Recommendations."
18 Q And what is the significance of that document?
19 A It notes that the January 7, 1998,
20 correspondence to GTDQ --
21 Q What is GTDQ?
22 A It is - what is it - great --
23 Q Golden Triangle.
24 A Yeah - Golden Triangle Dairy Queen. It
25 recommends and expects Golden Triangle Dairy Queen to

248
1 comply with recommendations of the independent
2 consultant's report. The report set forth the following
3 items: Surface, carpet over concrete; maintenance plan,
4 no; inspection plan, no; and the following comments:
5 There is no impact of attenuating safety surface. It
6 appears that the spacing around the equipment is less
7 than 6 feet, which is the zone requirement. The handles
8 on the spring toys are protrusions.
9 And the recommendations are that the
10 slide needs to be removed. There needs to be a safety
11 surface 6 feet around each play event, and they need to
12 develop a written maintenance and inspection plan for
13 the playground.
14 (EXHIBIT NO. 22 MARKED.)
15 Q Thank you. Mr. Gappa, have you created a
16 document which shows or summarizes the actions that were
17 taken by the individual franchise owners and operators
18 after they received the surveys, the education, the
19 information from American Dairy Queen?
20 A Yes, I have; and it is in my report.
21 Q And is this a blowup of it as Gappa Exhibit
22 No. 22?
23 A Yes, it is.
24 Q And can you explain the findings that are
25 shown in Gappa Exhibit No. 22?

249
1 A The findings are that 64 percent of the 112
2 stores have taken positive action based on the jawboning
3 diligence of ADQ and those included 10 stores were
4 closed, 43 stores removed their playground, 3 of them
5 closed their playgrounds, 16 put in new playgrounds or
6 updated the ones, while 35 took no action, and 5 refused
7 to allow a survey to be conducted.
8 What was interesting to me here is that
9 the five stores that refused to survey just indicated to
10 me that they understood that ADQ didn't have the right
11 to do it.
12 MR. LAWDERMILK: Objection.
13 Nonresponsive.
14 Q Is it your understanding that five of the
15 Texas Dairy Queens that are operated in this state would
16 not even allow the safety consultants - well, wouldn't
17 let a field representative come in to fill out the
18 safety consultant survey information form?
19 A Yes.
20 MR. LAWDERMILK: Objection. Form and
21 leading.
22 Q Of the 112 stores surveyed, how many stores
23 took no action and left the playground equipment as is?
24 A Well, 35 that allowed the survey to happen
25 took no action. So, with the five that didn't allow the

250
1 survey, there would be 40.
2 Q So, of the 112, if my math is correct, 72
3 changed the playgrounds in some form or fashion?
4 A Uh-huh, yes.
5 Q And 40 did not?
6 A 40 did not.
7 Q That took a period of time for that to be
8 implemented?
9 A Yes.
10 Q And it didn't happen overnight?
11 A It was about a year from November of '96 to
12 December of '97.
13 Q Okay. Now, you obtained that information from
14 what source?
15 A From the documents that I reviewed.
16 Q Okay. And I think you can find that in
17 Page 15 of your report. And what was the specific
18 document that you reviewed that provided you that
19 information?
20 A It was a memo dated October 10th of 2000 from
21 Brad Davis to Shrin Murthy.
22 Q Now, we know what date the memo went out -
23 October 10th of 2000. Do you have any indication as to
24 when the action on these playgrounds were taken?
25 A By the people or by the letters -- The letters

251
1 went out between November '96 to December '97.
2 Q Okay. And then how long did it take for these
3 stores - these 72 of the 112 stores to change their
4 playground in some form or fashion?
5 A Up until October 10 of the year 2000.
6 Q Is there any way you can tell the jury when
7 each store took action?
8 A No.
9 Q Do you believe that American Dairy Queen and
10 International Dairy Queen went beyond its licensing
11 relationship in an effort to encourage inspection and
12 compliance with CPS guidelines and manufacturers'
13 guidelines concerning playgrounds?
14 A Yes.
15 MR. LAWDERMILK: Objection. Form and
16 leading.
17 Q And what is that belief based upon?
18 A Well, since they had no obligation or
19 contractual relationship regarding playgrounds, anything
20 they did went beyond the contractual relationship.
21 Q And did you think that their efforts were
22 adequate in light of the relationship that existed
23 between their franchise owner and operator and their
24 abilities under their license agreement?
25 MR. LAWDERMILK: Objection. Form and

252
1 leading.
2 A Yes, I do.
3 Q And can you expound upon that?
4 A Well, I think that -- First of all, they had
5 meetings, they sent out an expert, and if the franchisee
6 didn't like the report, they even offered a 200-dollar
7 credit if the person wanted to get their own expert.
8 They just wanted the playground inspected to raise the
9 awareness of the franchisee about the issues that they
10 were exposed to and the customers were exposed to with
11 the hope that that awareness would get the franchisee to
12 act and get their playgrounds either shut down, removed,
13 or fixed.
14 Q Is it your expert opinion that American
15 Dairy Queen or International Dairy Queen could have
16 defaulted any of the Texas franchises who were under a
17 similar license agreement that we have looked at as
18 Exhibit 15 or any of the addendums for failing to follow
19 these playground or manufacturers' guidelines or CPSC
20 guidelines?
21 A No. And -- Because the first question anybody
22 asks is: Where is it in the franchise agreement?
23 Q And where is it - what is to enforce?
24 A Yeah - "Where does it mention playgrounds in
25 the franchise agreement" or "Where is the addendum that

253
1 I signed?"
2 Q Do you find anything in the franchise
3 licensing agreements or the addendums which would
4 prevent the franchise owner from installing, altering,
5 changing, or modifying the playgrounds --
6 A No.
7 MR. LAWDERMILK: Objection. Form,
8 leading.
9 Q -- without any permission or approval from
10 either IDQ or ADQ?
11 A No.
12 MR. LAWDERMILK: Objection. Form and
13 leading.
14 Q Who had the right or ability to alter, change,
15 or modify the equipment, the surfacing around the - or
16 the premises around the playground?
17 A Franchisee. It was his solely.
18 MR. LAWDERMILK: Objection.
19 Nonresponsive.
20 Q Who exercised that right in this case to
21 determine which type of equipment - playground
22 equipment, which type of safety surface to provide, and
23 where to place it on the premises on the Strickland
24 Avenue Drive?
25 MR. LAWDERMILK: Objection. Form.

254
1 A In this case Mr. Allred did.
2 Q Do you have an expert opinion that the
3 nonoccupiers and owners of the premises, in this case
4 IDQ and ADQ, acted as a reasonably and prudent
5 franchisor as could be expected under the circumstances
6 in relation to the playground safety issues involved at
7 the Orange Strickland Dairy Queen store?
8 MR. LAWDERMILK: Objection. Form and
9 leading.
10 A Yes.
11 Q And what is that opinion?
12 A That they went beyond the license agreement
13 and actually did the things we have talked about already
14 that showed great effort to raise the awareness of their
15 licensees to these issues.
16 Q Now, even with that great effort, in your
17 terms, a tragedy occurred?
18 A Yes.
19 Q But is there any way to document or determine
20 how many other similar tragedies were avoided as a
21 result of the actions of ADQ and IDQ?
22 A No, but you can only hope they were.
23 Q You charge for your services, do you not,
24 Mr. Gappa?
25 A Yes.

255
1 Q And those have been documented earlier in
2 today's deposition, have they not?
3 A Yes.
4 Q As a result of the payment of those services,
5 is it your testimony to the ladies and gentlemen of the
6 jury that you will provide information to whatever side
7 is providing or paying those services that is
8 advantageous to that side?
9 A No. It will be that I give my opinion.
10 Q Have you been prevented from looking at any
11 information that you have requested in this case?
12 A No.
13 Q Or prevented from giving an opinion that may
14 be adverse to International or American Dairy Queen?
15 A No.
16 Q Have you tried to limit your opinions to your
17 areas of expertise?
18 A Yes.
19 Q And stay out of areas that you do not hold
20 yourself out as an expert in?
21 A Yes.
22 Q And, once again and very briefly, what areas
23 do you consider yourself to be an expert witness?
24 A In those areas that relate to franchising and
25 the franchise relationship and the issues related to

256
1 getting the franchisee - training the new franchisee,
2 designing operating systems for that franchisee, and the
3 relationship after they are a franchisee and how that is
4 controlled and established.
5 Q Have you ever been provided an expert
6 opinion - another expert opinion on the - or another
7 opinion from an expert who said that - who held
8 themselves as a franchise expert in this case who has
9 given a different opinion other than yours?
10 A No.
11 Q Do you know of any other franchise experts who
12 have given an opinion on this case?
13 A I do not.
14 MR. LIGHTY: I pass the witness.
15 RE-EXAMINATION
16 BY MR. LAWDERMILK:
17 Q Will you hold up Exhibit No. 22 for the jury?
18 A (Complying with Counsel's request)
19 Q What is the date of the document which you
20 have got those statistics from?
21 A 10-10 of 2000.
22 Q Can you tell the jury what the same - what
23 statistics would have been reflected as of October of
24 1999?
25 A No.

257
1 Q Awhile ago you said that there was no way to
2 tell the jury when each store took action; is that
3 accurate - what you said?
4 A Yes, yes. I said I didn't know.
5 Q Yes. Because you have not been provided with
6 those documents, have you?
7 A No.
8 Q Will you hold up Exhibit No. 21 for the jury?
9 A (Complying with Counsel's request)
10 Q Now, that's something that you created, isn't
11 it?
12 A It is something that came from January 7,
13 1998, correspondence.
14 Q That you created after looking at that
15 January 7th, 1998, correspondence --
16 A Yeah.
17 Q -- that allegedly went to Mr. Allred, right?
18 A Yes.
19 Q And when is the first time, if you ever knew,
20 that that correspondence was sent to the wrong address;
21 or do you even know that sitting here today?
22 MR. LIGHTY: Object to the form.
23 A I do not know that.
24 Q And sitting here today, did you know that that
25 January 7th, 1998, correspondence that was allegedly

258
1 sent to Mr. Allred - do you know if it was changed by
2 Mr. Murthy or not?
3 A I do not.
4 Q Do you know what his qualifications to change
5 that document are?
6 MR. LIGHTY: Object to the form.
7 A I don't.
8 Q And as far as Exhibit 20, is that also a
9 document that you created?
10 A Yes.
11 Q Now, as far as talking -- You talked a little
12 bit earlier with Mr. Lighty about some of the
13 initiatives for safety at playgrounds that ADQ
14 undertook, didn't you?
15 A Yes.
16 Q And one of the things - of initiatives you
17 said was personal needs. Is that one of the initiatives
18 you listed?
19 A I did because I think that that's part of what
20 they did.
21 Q Yeah. When is it that they met with Bruce
22 Allred?
23 A I don't know.
24 Q But that would have been a pretty good thing
25 to do, wouldn't it have?

259
1 A Personal meetings would have been helpful.
2 Q Yeah.
3 Between franchisees and franchisors, how
4 many franchisors are there in the United States?
5 A My best guesstimate is about 5,000.
6 Q Are all the franchisor-franchisee
7 relationships exactly the same?
8 A No.
9 Q Are any of the other franchisee-franchisor
10 relationships exactly the same as ADQ's?
11 A I can't answer that.
12 Q Can you tell me of one that is?
13 A I wasn't asked to prepare that comparison.
14 MR. LAWDERMILK: Objection.
15 Nonresponsive.
16 Q (By Mr. Lawdermilk) Can you tell me one
17 franchisee-franchisor relationship that is exactly the
18 same as ADQ's?
19 A Not at this moment.
20 Q And you have never worked beyond a couple of
21 seminars 20 years ago and being hired for this case by
22 ADQ before, have you?
23 A I have not.
24 Q And you discussed at length
25 franchisor-franchisee relationships in general, correct?

260
1 A Yes.
2 Q What document shows you that ADQ is like other
3 general - other franchisor-franchisee relationships?
4 Which document that you have seen shows you that?
5 A The operations manual and the other documents,
6 frankly, that I read that just helped me understand
7 that, yes, within the range of the way franchise
8 companies operate, they operate. The relationship is
9 primarily managed with the franchise license agreement,
10 a focus on the customer, and the relationship with the
11 field people.
12 Q How many courts have allowed you to testify as
13 an expert franchise witness?
14 MR. LIGHTY: Object to the form.
15 A I couldn't answer that for you. I don't know.
16 You mean in terms of where did you testify?
17 Q Yeah, tell me one Court that allowed you to
18 testify as an expert franchise witness.
19 MR. LIGHTY: Object to the form.
20 A My answer is most of the cases never got to
21 that point where they had to ask.
22 MR. LAWDERMILK: Object as nonresponsive.
23 Q (By Mr. Lawdermilk) Has any Court ever allowed
24 you to testify as an expert franchise witness in court?
25 A I think one has.

261
1 Q Tell me --
2 A I can't. I would have to go back and do some
3 research. I don't remember. I wasn't -- I am not
4 prepared to answer that question.
5 Q Was it in Texas?
6 A I don't recall.
7 Q Okay. Now, you wrote some articles on
8 franchises, right?
9 A On franchising, yes.
10 Q Were you paid for any of those articles?
11 A No.
12 Q Did you pay to have any of those articles
13 published?
14 A No.
15 MR. LAWDERMILK: I'll pass the Witness,
16 Don.
17 RE-EXAMINATION
18 BY MR. LIGHTY:
19 Q Very briefly, Mr. Gappa, has any Court not
20 allowed you to testify as a franchise expert?
21 A No.
22 Q Now, to be fair, you don't testify for a
23 living, do you?
24 A No.
25 Q In your entire work history with franchises

262
1 which has been over 20 years, you have worked on how
2 many cases as a testifying expert?
3 A I think the number was nine.
4 Q About one every two years?
5 A About.
6 MR. LIGHTY: Thank you.
7 MR. LAWDERMILK: That's it.
8 THE VIDEOGRAPHER: Going off the record
9 at 6:50.
10 (PROCEEDINGS CONCLUDED AT 6:50 P.M.)
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

263
1 NO. B-000119-C
2 MELINDA MATTHEWS, INDIVIDUALLY )IN THE DISTRICT COURT OF
AND ON BEHALF OF THE ESTATE )
3 OF TYLER SHANE MATTHEWS, )
DECEASED MINOR; and )
4 MICHAEL MATTHEWS )
)
5 VS. )ORANGE COUNTY, TEXAS
)
6 )
)
7 WESLEY HOWARD, INDIVIDUALLY )
AND D/B/A DAIRY QUEEN
)163RD JUDICIAL DISTRICT
8
9 REPORTER'S CERTIFICATION
10 DEPOSITION OF ROBERT A. GAPPA
11 August 30, 2002
12 I, Kelly L. Bigham, a Certified Shorthand Reporter
13 in and for the State of Texas, hereby certify to the
14 following:
15 That the witness, ROBERT A. GAPPA, was duly sworn
16 by the Officer and that the transcript of the oral
17 deposition is a true record of the testimony given by
18 the witness;
19 That the deposition transcript was submitted on
20 _____________, 2002, to the witness or to the attorney
21 for the witness for examination, signature and returned
22 to me by __________________________________________;
23 That the amount of time used by each party at the
24 deposition is as follows:
25 Mr. Lawdermilk - 4 HRS.: 58 MIN.

264
1 Mr. Montgomery - 21 MIN.
2 Mr. Lighty - 1 HR: 17 MIN.
3 Mr. Rocky Lawdermilk and Mr. Dru Montgomery,
4 Attorneys for Plaintiffs
5 Mr. Don F. Lighty, Attorney for Defendants
6 INTERNATIONAL DAIRY QUEEN AND AMERICAN DAIRY
7 QUEEN CORPORATION
8 I further certify that I am neither counsel
9 for, related to, nor employed by any of the parties or
10 attorneys in the action in which this proceeding was
11 taken, and further that I am not financially or
12 otherwise interested in the outcome of the action.
13 Further certification requirements pursuant to
14 Rule 203 of TRCP will be certified to after they have
15 occurred.
16 Certified to by me this _____ of ___________, 2002.
17
18
____________________________________
19 Kelly L. Bigham, Texas RPR, CSR 4601
Expiration Date: 12-31-03
20 Charlotte Smith Reporting, Inc.
235 Orleans Street
21 P. O. Box 4049
Beaumont, Texas 77704-4049
22 (409) 839-4407
23
24
25

265
1 FURTHER CERTIFICATION UNDER RULE 203 TRCP
2 The original deposition was/was not returned to the
3 deposition officer on ____________________________;
4 If returned, the attached Changes and Signature
5 pages contains any changes and the reasons therefor;
6 If returned, the original deposition was delivered
7 to _______________________________________, Custodial
8 Attorney;
9 That $_______________ is the deposition officer's
10 charges to the Plaintiff for preparing the original
11 deposition transcript and any copies of exhibits;
12 That the deposition was delivered in accordance
13 with Rule 203.3, and that a copy of this certificate was
14 served on all parties shown herein and filed with the
15 Clerk.
16 Certified to by me this _____ day of __________,
17 2002.
18
19
____________________________________
20 Kelly L. Bigham, Texas RPR, CSR 4601
Expiration Date: 12-31-03
21 Charlotte Smith Reporting, Inc.
235 Orleans Street
22 P. O. Box 4049
Beaumont, Texas 77704-4049
23 (409) 839-4407
24
25

266
1 CHANGES AND SIGNATURE
2 PAGE LINE CHANGE REASON
3 ________________________________________________________
4 ________________________________________________________
5 ________________________________________________________
6 ________________________________________________________
7 ________________________________________________________
8 ________________________________________________________
9 ________________________________________________________
10 ________________________________________________________
11 ________________________________________________________
12 ________________________________________________________
13 ________________________________________________________
14 ________________________________________________________
15 ________________________________________________________
16 ________________________________________________________
17 ________________________________________________________
18 ________________________________________________________
19 ________________________________________________________
20 ________________________________________________________
21 ________________________________________________________
22 ________________________________________________________
23 ________________________________________________________
24 ________________________________________________________
25 ________________________________________________________

267
1 I, ROBERT A. GAPPA, have read the foregoing
2 deposition and hereby affix my signature that same is
3 true and correct, except as noted above.
4
5 _______________________________
ROBERT A. GAPPA
6
7 THE STATE OF __________)
8 COUNTY OF _____________)
9 Before me, _________________________, on this day
10 personally appeared ROBERT A. GAPPA, known to me (or
11 proved to me under oath or through ____________________)
12 (description of identity card or other document) to be
13 the person whose name is subscribed to the foregoing
14 instrument and acknowledged to me that they executed the
15 same for the purposes and consideration therein
16 expressed.
17 Given under my hand and seal of office this _____
18 day of __________, 2002.
19
20 __________________________
NOTARY PUBLIC IN AND FOR
21 THE STATE OF _________
22
23
24
25

268
1 DEPOSITION STIPULATIONS
2 No. B-000119-C
3 Deposition of: ROBERT A. GAPPA
4 The Attorneys for all parties present stipulate and
agree to the checked items as follows:
5
1. Deposition is being videotaped? Yes X No
6 Videographer: Mr. Kenneth Gartner
7 2. Deposition is taken pursuant to:
X a. Texas Rules of Civil Procedure
8 b. Federal Rules of Civil Procedure
X c. Notice
9 d. Subpoena
e. Agreement
10 f. Court Order
11 3. Objections:
a. Reserve all objections, except as to
12 form and responsiveness
b. Reserve all objections till time of trial
13 c. Make all objections at the time of the
deposition
14 d. An objection by one Defendant shall be
considered an objection by all Defendants
15
4. Signature:
16 a. Signature of Witness is waived
X b. Witness will read and sign deposition
17 X c. If deposition is not signed by time of
trial, an unsigned copy may be used as
18 though signed and timely filed
19 5. Custodial Attorney:
The deposition original will be sent to
20 MR. ROCKY LAWDERMILK for safekeeping and use at the
time of trial
21
6. Jurisdiction:
22 If necessary, the Court Reporter may
swear the Witness in a non-Texas jurisdiction;
23
7. Original deposition cost:
24 X a. Shall be borne by the Attorney asking the
first question
25 b. Shall be divided equally among:
All Plaintiffs All Defendants