Over 50 Black former McDonald’s franchise owners are suing the fast food chain, alleging the company steered them towards less-profitable restaurants and neglected to give them the same support and opportunities as white franchise owners.
According to the lawsuit, 52 plaintiffs, who owned around 200 McDonald’s restaurant locations around the U.S. before they were forced to sell them over the last 10-years, are asking for $4 to $5 million in compensation per store.
The lawsuit alleges that McDonald’s steered Black franchise owners to stores in inner-city areas with lower sales volumes, higher security risks, and higher insurance costs. McDonald’s would also provide them with misleading financial information or push them to decide quickly when a store became available, the suit alleges.
The suit says that Black franchisees would be asked to rebuild or remodel within a shorter period of time than white franchisees and were not given the rent relief or other financial support white franchisees had access to. Black franchise owners were also denied the opportunity to purchase more profitable stores in better neighborhoods, according to the suit.
Because of these obstacles, the Black franchise owners averaged sales of approximately $2 million per year. By comparison, the average U.S. based McDonald’s restaurant brought in $2.7 million a year between 2011 and 2016 and $2.9 million in 2019.
“Revenue is determined by one thing and one thing only: location,” said James Ferraro, the Miami-based attorney representing the plaintiffs. “It’s a Big Mac. They’re the same everywhere.”
The number of Black McDonald’s franchises owners has decreased by half over the last 20 years. In 1998 there were 377 Black franchisees, now there are 186. During the same time period, the number of franchised restaurants has more than doubled to 36,000.
McDonald’s Corp. denied the allegation and defended its history with black franchisees.
“These allegations fly in the face of everything we stand for as an organization and as a partner to communities and small business owners around the world,” the company said. “Not only do we categorically deny the allegations that these franchisees were unable to succeed because of any form of discrimination by McDonald’s, 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.”