McDonald’s Corp has been sued by 52 Black former franchise owners who accused the fast food giant of racial discrimination by steering them to depressed, crime-hidden neighbourhoods and setting them up for failure. ( Thomson Reuters 01/09/2020)
In a complaint seeking up to $1 billion US in damages, the plaintiffs said MacDonald’s has not offered profitable restaurant locations and growth opportunities to Black franchisees, belying its public commitment to diversify and Black entrepreneurship.
The plaintiffs said MacDonald’s saddled them under its standard 20 year franchise agreements with stores requiring high security and insurance costs, and whose $2 million average annual sales from 2011 to 2016 where $700,000 below the nationwide norm. Bankruptcy often resulted, they said.
“It’s systematic placement in substandard locations, because the are Black, ” Revenue at MacDonald’s is governed by one thing only: location. “
The lawsuit was filed in the federal court in Chicago, Where MacDonald’s is based.
MacDonald’s denied treating Black franchisees differently, or that they wrler unable to succeed because of discrimination. It also said that while it may recommend store locations, franchisees make the decisions.
“MacDonald stands for diversity , equality and inclusion,” Cheif Executive Chris Kempczinski said in a video to employees. “Our franchisee ranks should and must more closely reflect the increasingly diverse composition of this country and the world.”
BLACK OWNERSHIP HAS HALVED , LAWYER CLAIMS.
The plaintiffs sued five weeks after MacDonald’s updated its corporate values, pledging a greater focus on diversity.
More than 90% of MacDonald’s 14,400 US. restaurants were recently operated by about 1, 600 franchisees. Ferraro, however, said the number of black franchisees had fallen to 186 from 377 since 1998. MacDonald’s still denied the claims in separate discrimination lawsuit.
The allegation included that MacDonald’s used harsh grading of Stores and other “strong-arm” tactics that drove a disproportionate number of Black franchisees out of its system.