Fifty-Two Black Franchisees Sue McDonald’s for Corporate Discrimination

This is a developing story from the law firm of Kelley Ferraro, LLC, managed by attorneys John Murphy and James Ferraro.

More than 50 Black franchisees claim that the McDonald’s company created a culture of corporate discrimination against Black franchisees, a culture that these former franchisees describe as “financial suicide missions.” On the other hand, they claim that corporate support, time and resources were given to white franchisees. The $1 billion racial discrimination lawsuit further claims that this “systematic and covert racial discrimination” resulted in Black franchisees having to sell or close more than 200 McDonald’s locations over the last two decades.

The chief executive officer of McDonald’s, Chris Kempczinski, responded to the lawsuit, stating: “We disagree with the claims in this lawsuit, and we intend to strongly defend against it.”

The Black franchisees further claim that the corporate discrimination has existed for decades. They say that the discrimination resulted in their loss of the same or similar opportunities that white franchisees had. The lawsuit goes on to describe a cultural environment that put more pressure on Black franchisees to do such things as conduct remodeling or renovation projects, but without the same time and financial resources that were being routinely offered to white franchisees.

The lawsuit remarks that the number of McDonald’s Black franchisees in operation, from 1998 to today, has fallen from 377 to 186. This is a 51% decline in Black franchisees over the last 22 years, despite the fact that the total number of McDonald’s restaurants in the United States has increased in that time. Attorney James Ferraro notes that, during this same time period, the total number of franchised restaurants actually doubled.

This is not the first time that the McDonald’s company has come under scrutiny for discrimination of Black franchisees. It has a long history, starting with the 1969 boycotts of McDonald’s in Cleveland for not allowing Black franchisees, and the 1983 lawsuit by a Los Angeles Black franchisee, which McDonald’s eventually settled for $4.5 million. Cases like these led to McDonald’s announcing in 1996 that it identified that Black franchisees were not being afforded the same opportunities and support, and it vowed to change that.

Just recently, two Black McDonald’s executives filed a lawsuit against the company. In January 2020, the two executives claimed that McDonald’s moved advertising away from Black customers, was harder within their audits and reporting of Black franchisees and had an overarching corporate strategy that benefited white franchisees but placed more hardships on Black franchisees.

The lawsuit was filed in federal court in Chicago on September 1, 2020. McDonald’s national headquarters is located in Chicago.

References:

The Washington Post, September 1, 2020. “Black former franchisees sue McDonald’s for discrimination”. https://www.washingtonpost.com/national/black-former-franchisees-sue-mcdonalds-for-discrimination/2020/09/01/590a751e-ec3a-11ea-bd08-1b10132b458f_story.html

The New York Times, September 1, 2020. “Black Former Franchisees Sue McDonald’s for Discrimination”. https://www.nytimes.com/aponline/2020/09/01/business/ap-us-mcdonalds-discrimination.html