McDonald's only employs people above 16 years of age
A franchise in Camberley, Surrey, which runs two outlets, admitted 20 offences involving the illegal employment of children under 16.
Surrey County Council prosecuted Ikhya Enterprises, trading as McDonald's, after officials found 10 young people working on school days until 0200 and doing double shifts on a Saturday.
In a statement, it said: "We take our responsibility as an employer seriously.
"We only hire employees above school leaving age.
"Our franchisee did hire staff below the minimum school leaving age and breached the law in terms of hours worked.
'Lack of follow-up'
"We expect our franchisees and managers to maintain the highest standards in all restaurants.
"We are deeply disappointed that this was not the case in this instance.
"In court, Kevin Izatt explained that he did have a manual system in place to prevent infringements, however there had been a lack of follow-up.
"He has children of his own and seriously regrets this lapse.
"To avoid any risk of repetition, he will no longer employ children under school leaving age."
Since January, Surrey County Council has prosecuted 11 businesses for breaching the employment laws.
Ian Hart, child employment officer, said: "We're determined that we want to work with employers, but where we can't work with employers, if that means prosecuting them that's what we will do."
'Tough stance'
Referring to the McDonald's case, he added: "This is one of the biggest prosecutions in the illegal employment of school children and it is refreshing that the court has taken such a tough stance."
The investigation at the restaurant on High Street, Camberley, and a "drive-thru" on London Road, was sparked by a complaint from a parent.
Under the Children and Young Persons Act, children aged 13 to 16 years old can only work 12 hours a week (including Saturday's) by law and must be registered with the local education authority.
Ikhya Enterprises addressed the problem, but officers later issued the company with a formal warning after monitoring the restaurants for three weeks between May and June.
Officers identified 51 breaches of regulations, involving 10 teenagers aged 15 and 16.
They found a 15 year-old girl who had worked 16 hours one Saturday, seven hours over the permitted working hours, and a 16-year-old who worked from 1700 to 0200 on a school day.
Mr Hart said: "Kids were working hours that adults wouldn't do.
"It also begs the question how a 15-year-old gets home at 2am."
It is the employer's responsibility to register children in their employment and to ensure they only work the hours permitted.