Story at a glance
- A class action suit against McDonald’s alleges the company does not provide the same economic opportunities to Black franchisees as white franchisees.
- This follows former McDonald’s employees filing a sexual harassment class action suit earlier this year.
Iconic American fast food chain McDonald’s was hit with a new class action lawsuit accusing the company of racial discrimination.
Reuters reports that 52 individual franchise owners, all Black Americans, allege that McDonald’s officials steered them into economically depressed and high-crime areas, setting them up to fail.
The complaint further specified that the restaurant chain has not made more profitable and safe locations available to Black franchisees, denying them the same professional growth opportunities that white franchisees receive.
The complaint asks for $1 billion in damages, outlining an untenable work agreement that consisted of the same 20-year franchise lease agreement that demanded higher security and insurance costs than other franchises in safer locations. These expenses, compounded with other factors, resulted in an average of $2 million annual sales — about $700,000 less than McDonald’s franchises’ national average.
Profit loss combined with high expenses usually led to bankruptcy for these franchisees.
Attorney Jim Ferraro, who is representing the 52 plaintiffs, told reporters that revenue is primarily determined by location.
“It’s systematic placement in substandard locations, because they’re Black,” he explains. “Revenue at McDonald’s is governed by one thing only: location.”
The suit was filed in Chicago federal court.
Officials at McDonald’s issued a statement on Tuesday categorically denying the charges.
“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 statement reportedly read.
Ferraro asserts, however, that the number of Black franchisees has shrunk to 186 from 377 since 1998.
This is a small fraction of the approximate 13,837 franchises counted in the U.S. as of 2019.
McDonald’s has had an increasingly embattled year, contending with another lawsuit alleging rampant sexual misconduct among franchisee locations.
Its former CEO, Steve Easterbrook, was ousted when it was revealed that he engaged in a sexual relationship with subordinate employees.
McDonald’s is currently suing Easterbrook, alleging lying and fraud during the initial investigation.