Black former franchises sue McDonald's for discrimination.

Nov 26, 2020

Group of 52 former Black franchise operators suing McDonald's for racial discrimination. The lawsuit accused McDonald's of systematically discriminating against Black franchise operators by offering better financial support and more favourable locations to their white counterparts. As per the complaint, McDonald's systematically steered the plaintiffs towards stores in a location that required more security and made less in sales. These allegations fly in the face of everything we stand for as an organization.  Franchisees operate 95% of McDonald's located in the US.  

The lawsuit also said that McDonald's asked Black franchise operators to renovate or rebuild their restaurants within a short period than their White counterparts, and offered them less financial support. The number of Black franchise operators has declined, from nearly 400 in 1998 to less than 200 today, the lawsuit said, citing data from McDonald's and the National Black McDonald's Operators Association.

McDonald's said that it determines how to offer financial relief on a case-by-case basis and does not offer different financial terms to its Black franchise operators. It also said that over the years, franchisees of all races have exited the system and that the representation of Black franchisees has remained largely unchanged.

The alleged discrimination widened the cash flow gap between Black and White franchisees, according to the suit. Each of the roughly 200 stores mentioned in the suit suffered an average of between $4 million and $5 million in compensatory damages, according to the complaint.

The company said that cash flow has been getting better at restaurants operated by Black franchisees, and added that it is committed to working with franchisees to make improvements.

In January, two Black McDonald's executives filed a lawsuit against McDonald's, alleging that the company had racially discriminated against them.

"Our actions are rooted in our belief that a diverse, vibrant, inclusive and respectful company makes us stronger," the company said in response to the January lawsuit at the time, adding "while we disagree with characterizations in the complaint, we are currently reviewing it and will respond to the complaint accordingly." It also said that nearly half of its US corporate officers are people of colour.

McDonald's has since filed a motion to dismiss the January suit, which is pending.

The allegations of racism come at a time when the company's workplace culture is under the spotlight.

McDonald's cut ties with former CEO Easterbrook last year for engaging in a consensual relationship with an employee. Now, the company is attempting to claw back his severance, arguing that he lied about the scope of his relationships and should have been terminated with cause. Easterbrook's lawyers filed a motion to dismiss the lawsuit, saying the company doesn't have grounds to take back the severance package because it had evidence of his relationships on company servers.