52 Black ex-franchisees sue McDonald’s for discrimination

Locations, growth among complaints; company denies the charges.

More than four dozen former franchise owners, all Black, have accused McDonald’s of “systematic and covert racial discrimination” and setting them up to fail, despite the company’s public commitment to racial equality.

In a federal lawsuit filed late Monday, the 52 plaintiffs allege the company intentionally placed their restaurants in economically depressed and high-crime locations that had higher operating costs, frequent employee turnover and lower sales. The conditions positioned them for lower profits and failure — a “financial suicide mission,” the lawsuit said.

The plaintiffs, whose franchises date to 1981 and who left the company within the past decade, also allege that McDonald’s:

■ Retaliated against Black franchisees who rejected being placed in high-crime communities.

■ Denied them financial support and assistance often afforded to white franchisees.

■ Excluded Black franchisees from growth opportunities at restaurants in more profitable communities where white franchisees were often placed.

■ Had no justification for its pattern of denying Black franchisees better franchise opportunities over the years.

■ Unfairly graded operations at Black-owned restaurants, which led to poor internal reviews and pushed out Black franchisees.

■ Misled Black franchisees into purchasing franchises in difficult locations.

McDonald’s denied the allegations, saying they “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.

“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,” the company said in an emailed statement.

James Ferraro, the Florida-based lawyer representing the plaintiffs, said the “notion that McDonald’s is a friend of the Black entrepreneur is complete fiction,” according to a news release. “McDonald’s has been hemorrhaging Black franchisees for decades due to blatant and implicit racial discrimination. The company will now be held accountable.”

The plaintiffs are seeking compensatory damages from $4 million to $5 million per store for the more than 200 locations operated by the former franchisees. The complaint, which seeks a jury trial, was filed in the U.S. District Court for the Northern District of Illinois Eastern Division, where McDonald’s is based. The plaintiffs operated franchises in Georgia and 18 other states, according to the complaint.

The plaintiffs are seeking compensatory damages from $4 million to $5 million per store for the more than 200 locations operated by the former franchisees.

GENE J. PUSKAR / ASSOCIATED PRESS The 52 Black plaintiffs operated franchises in Georgia and 18 other states, according to the complaint, which seeks a jury trial in U.S. District Court in Illinois.