52 Black Ex-Franchisees File $1B Racial-Discrimination Lawsuit, One Claims McDonald’s Sent Them On ‘Financial Suicide Missions’

52 Black Ex-Franchisees File $1B Racial-Discrimination Lawsuit, One Claims McDonald’s Sent Them On ‘Financial Suicide Missions’

Fifty-two Black ex-franchisees filed a $1 billion racial-discrimination lawsuit against McDonald’s. Acquiring McDonald’s locations as a Black franchisee was a ‘financial suicide mission,” one said. (AP Photo/Gene J. Puskar, File)

McDonald’s discriminates against Black franchise owners according to 52 ex-franchisees who are suing the fast-food giant for $1 billion.

Former Black McDonald’s franchise owners claim in the suit that the company recommended locations for them that came with higher costs and lower sales than average. The plaintiffs owned about 200 stores before being forced to sell them during the last 10 years. They said their losses averaged between $4 million and $5 million per location, CNBC reported.

McDonald’s steered Black franchisees to stores in inner-city neighborhoods with lower sales volumes and higher security and insurance costs, the lawsuit claims. Also, the company provided Black franchisees with misleading financial information or pressured them to decide quickly when a store became available.

“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.”

According to the complaint, the plaintiffs averaged annual sales of $2 million. This is at least $700,000 less than McDonald’s national average of $2.7 million annual sales per restaurant between 2011 and 2016 and $2.9 million in 2019, CBS 47 Fox 30 Action News Jax reported.

“One franchisee in the complaint described acquiring McDonald’s locations as a Black franchisee as a ‘financial suicide mission,’” Business Insider reported.

On top of this, the number of Black McDonald’s franchisees dropped by 50 percent over the last 20 years, according to attorney Ferraro. In 1998, McDonald’s had 377 Black franchisees. Now it has just 186. Meanwhile, the number of franchised McDonald’s restaurants more than doubled to 36,000.

The lawsuit claims most of the problems can be traced to Christopher John Kempczinski, president and CEO of McDonald’s Corporation, former CEO Steve Easterbrook and Charles Strong, the chief field officer.

“The lawsuit alleges under the leadership of Easterbrook at McDonald’s Corporation and Kempczinski at McDonald’s USA, the McDonald’s companies engaged on a racist course of conduct, and ‘publicly abandoned its commitment to racial equality on a company-wide basis,’” North Dallas Gazette reported.

“Where the company has total control over its message, McDonald’s under Easterbrook and Kempczinski proclaimed a commitment to gender diversity but conspicuously omitted any mention of a corresponding commitment to diversity based on race,” the suit claimed.

Besides a decrease in the number of Black franchisees, the number of African-American executives in the top ranks of McDonald’s operations fell from 42 in 2014 — the year before a new management regime took over — to seven in 2019, North Dallas Gazette reported.

Although McDonald’s Corp. has denied all of the allegations in the suit, there have been at least two other racial discrimination lawsuit filed against McDonald’s in 2020. 

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Two Black McDonald’s executives sued the company earlier this year, claiming McDonald’s shifted advertising away from Black customers, graded Black-owned stores more harshly than white ones, and implemented business plans that had a discriminatory impact on Black franchisees, Action News Jax reported.

“It seems the fat-food giant is also a racist giant. #BoycottMcDonalds #BlackLivesMatter” JohnE. @Quaferu tweeted.