(Reuters) – McDonald’s Corp MCD.N was struck Thursday by a potentially multibillion-dollar lawsuit filed by black franchise owners who accused the fast food giant of racial discrimination for directing them to sub-stores. efficient.
The proposed class action lawsuit led by James and Darrell Byrd, brothers of four McDonald’s restaurants in Tennessee, was filed by the law firm representing 52 former black franchisees who filed a similar lawsuit on August 31.
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McDonald’s has been accused of placing black franchisees in undesirable downtown locations with high security and insurance costs and below average sales, and of driving many franchisees away by not supporting them as debts increase and profits decrease.
Jim Ferraro, an attorney for the plaintiffs, estimated that McDonald’s has 186 black franchisees in the United States, up from a peak of 377 in 1998, which own more than 700 stores.
The lawsuit, filed in federal court in Chicago, where McDonald’s is based, seeks damages of $ 4 million to $ 5 million per store, potentially totaling more than $ 3 billion.
In a statement, McDonald’s USA said it has a “clear stake” in the success of franchisees, and has invested significantly in Byrds franchises after encountering difficulties. McDonald’s has said it will defend itself against the lawsuit.
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McDonald’s has taken action this year to address concerns about its workplace culture, including updating its corporate values for the first time since 2008.
He denied treating black franchisees any differently, while acknowledging that he wanted his franchise ranks to diversify. McDonald’s has also denied allegations of racial discrimination in a January lawsuit filed by two black executives.
“They were part of a massive public relations campaign to clean up their image,” Ferraro told reporters on a conference call. “It’s actually a good thing, on one level, but not good enough.”
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McDonald’s last week asked to dismiss the lawsuit of former franchisees, which claims up to $ 1 billion in damages, saying it exposed the risks of owning stores and failed to bankrupt anyone.
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The case is Byrd et al v McDonald’s USA LLC et al, US District Court, Northern District of Illinois, No. 20-06447.
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Report by Jonathan Stempel in New York; Editing by Aurora Ellis and Leslie Adler