McDonald’s is facing a new lawsuit from Black former franchisees who say they faced decades of discrimination at the fast-food chain were denied equal opportunity to economic success compared to their white peers.
A complaint filed by 52 former McDonald’s franchisees on Tuesday in the US District Court for the Northern District of Illinois is seeking more than $1 billion, collectively, in direct damages from McDonald’s.
Franchisees in the complaint said they faced “systematic and covert racial discrimination,” with the company denying them the same opportunities as their white counterparts.
McDonald’s has to approve all new franchisees, and the lawsuit argues it “systematically steered” Black franchisees to buy locations in Black neighborhoods. These locations tend to have higher insurance and security costs while bringing in less revenue.
One franchisee said in the complaint that Black franchisees were at such a significant disadvantage that acquiring McDonald’s locations as a Black franchisee was a “financial suicide mission.”
The franchisees say they lost more than 200 McDonald’s locations over the past decade because of misconduct by the company. The franchisees are seeking compensatory damages averaging $4 million to $5 million a store, with collective damages of more than $1 billion.
Dozens of other Black franchisees have been forced out of the chain over the past two decades, according to the complaint. The complaint says there are only 186 Black McDonald’s franchisees, down from 377 in 1998.
“But for Plaintiffs’ race, McDonald’s would have offered Plaintiffs profitable restaurant locations, opportunities for growth and expansion, on equal terms as White franchisees, rather than forcing them out after decades of sweat and tears dedicated to the franchise,” the complaint says.
McDonald’s representatives “categorically deny” the allegations.
