McDonald’s has been sued for up to USD billion by over 50 former franchise owners for racial discrimination. The 52 Black former franchise owners claimed that the fast-food giant denied them the same opportunities as their White counterparts and systematically placed them in ‘substandard locations.’ The plaintiffs said that they were deliberately pushed out of the system leading to low performance of their restaurants in comparison to the national norm. The move hindered their profitability and growth, they alleged. They claimed that the company violated federal anti-discrimination laws and breached their contracts. The suit has been filed in federal court in Illinois, where McDonald’s is headquartered.
Around 200 restaurants operated by plaintiffs were left in the last decade. The complaint said that the food giant sent Black franchisees in low-income neighborhoods. These areas typically had higher insurance and security cost and lower volume sales. They claimed that their average annual revenue was USD 2 million. This was at least USD 700,000 below the national average during the period of 2011 and 2016. The plaintiffs said that they suffered average losses of USD 4 million to USD 5 million per location. The lawsuit claims that the numbers of Black persons holding the franchisees have declined as they were treated unfairly.
The plaintiffs’ attorney James Ferraro said that the revenue model of the McDonald’s is solely based on location. “McDonald’s is based on only one faction and this is location. It has nothing to do with the taste. No one goes to a different McDonald’s just the Big Macs are better. People always go the closed McDonald’s, period,” Ferraro said. The lawsuit alleges that operations faced retaliation when they rejected offers to continue with the restaurants in the low-income neighborhood. It also said that they were provided misleading projections. McDonald’s has denied the claim and said that it only recommended locations. “These allegations are baseless and we are committed to equal opportunities to our franchisees,” it said in a statement.