More than 50 former black McDonald’s franchise owners are suing the burger chain, claiming the company has directed them to less profitable restaurants and hasn’t given them the same support and opportunities as white franchisees.
The 52 plaintiffs, who owned around 200 U.S. stores before they were forced to sell them in the past decade, are seeking compensation of $ 4 million to $ 5 million per store, according to the lawsuit. The lawsuit was filed Tuesday in federal court in Chicago, where McDonald’s is based.
According to the lawsuit, McDonald’s directed black franchisees to stores in downtown neighborhoods with lower sales volumes and higher security and insurance costs. The company would either provide them with misleading financial information or make them decide quickly when a store becomes available, the lawsuit says.
Once black franchisees owned a store, they would be urged to rebuild or renovate in a shorter time frame than white franchisees without the rent relief and other financial support given to white franchisees, the lawsuit said. Black franchise owners have also been denied the opportunity to buy more profitable stores in better neighborhoods, he says.
As a result, claimants averaged sales of $ 2 million per year. By comparison, the average U.S. McDonald’s store grossed $ 2.7 million per year between 2011 and 2016 and $ 2.9 million in 2019, according to the lawsuit.
“Income is determined by one thing and one thing: location,” said James Ferraro, the Miami-based attorney representing the plaintiffs. “It’s a Big Mac. They are the same everywhere.
Ferraro also noted that the number of franchisees at Black McDonald’s has halved over the past two decades. The chain had 377 black franchisees in 1998; he has 186 now. At the same time, the number of franchised restaurants more than doubled to 36,000.
McDonald’s Corp. denied the allegations and defended its history with black franchisees.
“These allegations go against everything we stand for as an organization and as a partner of communities and small business owners around the world,” the company said. “Not only do we categorically deny allegations that these franchisees have been unable to succeed due to any form of discrimination from McDonald’s, but we are confident that the facts will show how committed we are to diversity and equal opportunity for the McDonald’s system, including through our franchisees, suppliers and employees. ”
McDonald’s has a troubled history with black franchisees. In 1969, activists boycotted four McDonald’s in Cleveland until the company sold them to black owners. In 1983, a black franchise owner from Los Angeles sued the company for discrimination; McDonald’s eventually paid him $ 4.5 million.
In 1996, McDonald’s management recognized that black franchisees were not achieving parity with their white counterparts and resolved to make changes. Don Thompson, the company’s first black president and CEO, served from 2012 to 2015.
But accusations of discrimination continued. In January, two Black McDonald executives sued the company. They claimed McDonald’s had kept advertising away from black customers, rated black-owned stores more harshly than whites, and implemented business plans that discriminated against black franchisees.
At the time, McDonald’s said it didn’t agree with the characterization of its actions. He noted that 45% of its corporate officers and all of its field vice-presidents are people of color.