NEW YORK (US) – As many as 52 Black former franchise owners have filed a lawsuit against McDonald’s Corp accusing the firm of racial discrimination by bringing them to crime-ridden neighbourhoods and purposely denying opportunities to grow.
The plaintiffs are seeking $1 billion in damages and they accuse the fast-food giant of not offering profitable outlet locations and growth opportunities to Black franchisees, acting contrary to its public commitment to promote diversity and Black entrepreneurship.
In the complaint, they accused McDonald’s of saddling them under its mandatory 20-year franchise agreements which require the outlets to have high security and insurance costs. Their $2 million (1.49 million pounds) average annual sales from 2011 to 2016 were $700,000 below the nationwide norm. This often triggered bankruptcy.
“It’s systematic placement in substandard locations, because they’re Black,” said their lawyer Jim Ferraro. “Revenue at McDonald’s is governed by one thing only: location.”
They lodged the complaint at the Chicago federal court five weeks after McDonald’s revised its corporate values, vowing to ensure greater focus on diversity.
McDonald’s CEO Chris Kempczinski had said in June that diversity was “critically important” and needed to touch “every single aspect” of its business.
He said the firm “created more millionaires within the Black community than probably any other corporation on the planet, but there’s still work to do.”
However, Ferraro trashed the claim, terming it “total hogwash”. He said the number of Black franchisees has fallen to 186 from 377 since 1998.
In the US, more than 90% of McDonald’s 14,400 restaurants are operated by about 1,600 franchisees.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.
