Former Black Franchisees Sue McDonald's Alleging Discrimination
By Heather Haddon
Several dozen former McDonald's Corp. franchisees sued the
burger giant, alleging that it unfairly treated Black owners by
selling them subpar stores and failing to support their
The lawsuit, filed Monday night in the U.S. District Court for
the Northern District of Illinois, accused McDonald's of steering
Black franchisees to restaurants in undesirable locations in
inner-cities for years. Those restaurants were destined to fail,
and often had lower sales and higher operating costs, according to
The former Black franchisees say their annual average sales of
$2 million were $700,000 below the national average for U.S.
McDonald's owners between 2011 and 2016, according to the suit.
Many of the 52 former owners from 18 states, including Georgia,
Texas and New York, said they lost their businesses in the past
McDonald's denied the allegations of discrimination against
franchisees and said they didn't reflect the company's work as a
partner in the small business community.
"We are confident that the facts will show how committed we are
to the diversity and equal opportunity of the McDonald's system,
including across our franchisees, suppliers and employees," the
company said in a statement Tuesday.
McDonald's Chief Executive Chris Kempczinski said in a message
to U.S. employees, franchisees and suppliers Tuesday morning that
he personally takes seriously any allegations that the company
hasn't lived up to its values. "Based upon our review, we disagree
with the claims in this lawsuit and we intend to strongly defend
against it," said Mr. Kempczinski in the video message viewed by
The Wall Street Journal.
According to the lawsuit, the number of Black operators in the
U.S. fell to 186 this year from a high of 377 in 1998 because of
what it described as the company's racial discriminatory practices.
"McDonald's intentionally and covertly deprived plaintiffs of the
same rights enjoyed by white franchisees," according to the
complaint. The suit seeks compensatory damages for owners of $4
million to $5 million per store for the more than 200 locations
they once operated.
McDonald's said the allegations that it evaluates Black
franchisees differently were false. It said the total number of
owners fell amid consolidation in the past several years, but that
Black franchisees as a proportion of the roughly 2,000 restaurant
owners remain largely unchanged. It added that the former
franchisees who are suing the company operated restaurants in a
variety of communities, and many retired after regularly making
The lawsuit comes at a sensitive time for McDonald's, which is
under pressure to address concerns about its workplace culture. In
January, two Black executives who say they experienced racial
discrimination filed a lawsuit against the company, allegations
McDonald's has denied.
Write to Heather Haddon at email@example.com
(END) Dow Jones Newswires
September 01, 2020 08:41 ET (12:41 GMT)
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