Black Former McDonald’s Operators sued the company for discrimination

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There are at least 50 black former McDonald’s operators suing the fast-food giant for racial discrimination. They alleged a pattern of misconduct that widened a gap of economic success between the franchisees and their white counterparts. The lawsuit was filed in US District Court on Tuesday. It alleges that the company’s systematic and covert racial discrimination denied 52 franchisees the equal opportunity to economic success by sending operators into financial suicide missions armed with the company’s misleading financial information and burdened with high operating costs that forced them to close. Plaintiffs in the federal anti-discrimination lawsuit alleged that McDonald’s profits from its black customers yet places black franchisees in locations that are destined to fail, with low-volume sales and high operating costs, leading to consistent profit shortfalls or losses, preventing franchise growth, and forcing franchise owners to back out.

The former franchise operators claim that discriminatory practices, including requirements to invest in their restaurants resulted in an increased cash flow gap between black and white franchisees that more than tripled from 2010 to 2019. Plaintiffs say that their average annual sales of $2m were more than $700,000 less than national sales averages from 2011 to 2019. The lawsuit claims, “As a result, the historic high of approximately 400 black McDonald’s franchisees in 1998 has been more than cut in half. At the same time, from 1998 to date, the total number of McDonald’s franchised restaurants more than doubled. The plaintiffs operated more than 200 restaurants and left the company between 2010 and 2020. Point to be noted that the lawsuit seeks up to $1bn in damages.

The lawsuit follows the company’s recent diversity pledge in response to widespread protests against systemic racism in the wake of police killings of black Americans. The company said in a statement on 30^th July, “It is causing a reckoning and demand for action that is long overdue. The public outcry has elevated and renewed our attention and deep responsibility to make changes that drive equitable opportunity for all”. A McDonald’s spokesperson said following the lawsuit, “The company is confident and 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”.