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Suit: McDonald's 'Intentionally' Hurt Black Franchisees

Plaintiffs say they were steered into difficult situations, while white franchisees weren't
By Arden Dier,  Newser Staff
Posted Sep 1, 2020 10:35 AM CDT

(Newser) – More than 50 former franchisees accuse McDonald's of racial discrimination in a lawsuit that follows a similar complaint by Black executives. Also filed in federal court in Illinois, the latest suit claims Black franchisees were set up to fail with misleading financial information that steered them into undesirable locations in low-income neighborhoods, where sales were low and operating costs were high, per the Wall Street Journal. The plaintiffs say their $2 million average annual revenue was $700,000 below the national average between 2011 and 2016. Several of the 52 owners in 18 states say they've since lost their businesses. They were "intentionally and covertly deprived ... of the same rights enjoyed by white franchisees," according to the complaint, which claims there are now just 186 Black operators in the US, down from 377 in 1998, as a result of discriminatory practices.

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McDonald's disputes that, saying all franchisees are given help to succeed, and that the proportion of Black franchisees has remained largely the same over the years. It also claims some plaintiffs made regular profits before retiring, per the Journal. "We categorically deny the allegations that these franchisees were unable to succeed because of any form of discrimination by McDonald's," the company says, per CNBC. The suit seeks $4 million to $5 million for each of the more than 200 locations formerly operated by the franchisees, for a combined $1 billion. Some owners say they were forced into renovations not required of white franchisees and had to pay extra costs in security and insurance, per Reuters. Others describe limited offerings, retaliation, and unfair grading. (The earlier suit claimed McDonald's had "declared war against the African American community.")

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