Lawsuit Alleges Racial Discrimination Against Black Franchisees by McDonald’s

by Nick

McDonald’s Corp is facing legal action from 52 Black former franchise owners, who claim the fast-food giant discriminated against them by directing them to economically disadvantaged, high-crime areas, setting them up for failure.

In a lawsuit seeking up to $1 billion in damages, the plaintiffs allege that McDonald’s failed to provide Black franchisees with profitable restaurant locations and equal growth opportunities compared to their white counterparts, despite the company’s public commitment to diversity and supporting Black entrepreneurship.


According to the complaint, McDonald’s imposed standard 20-year franchise agreements on the plaintiffs, placing them in stores with high security and insurance costs, and average annual sales $700,000 below the national average from 2011 to 2016, often resulting in bankruptcy.


Attorney Jim Ferraro, representing the plaintiffs, stated in a phone interview, “It’s systematic placement in substandard locations because they’re Black. Revenue at McDonald’s is governed by one thing only: location.”


The lawsuit was filed in federal court in Chicago, McDonald’s headquarters, where the company denied allegations of differential treatment toward Black franchisees or that discrimination hindered their success.


While McDonald’s may recommend store locations, franchisees ultimately make the decisions, according to the company.

In a video message to employees, Chief Executive Chris Kempczinski emphasized McDonald’s commitment to diversity, equity, and inclusion, stating, “Our franchisee ranks should and must more closely reflect the increasingly diverse composition of this country and the world.”

Despite McDonald’s recent update of its corporate values with a focus on diversity, the number of Black franchisees has reportedly declined from 377 to 186 since 1998, according to Ferraro.

This lawsuit follows another discrimination lawsuit filed by two Black executives in January, also in Chicago, alleging harsh grading of stores and coercive tactics that disproportionately affected Black franchisees.

The legal action underscores the ongoing challenges faced by Black entrepreneurs within the McDonald’s franchise system, raising broader questions about racial equality and corporate responsibility.


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