Lawsuit claims McDonald’s discriminates against Black franchisees

CHICAGO — Over 50 Black former McDonald’s franchise owners filed a lawsuit against the company claiming that it recommended locations with higher costs and lower sales.

52 plaintiffs, who owned around 200 stores before being forced to sell them over the last decade. According to CNBC, the plaintiffs said their losses on average were between $4 million and $5 million per location.

The suit was filed Tuesday in federal court in Chicago, where McDonald’s is based.

The lawsuit alleges that McDonald’s steered Black franchisees to stores in inner-city neighborhoods with lower sales volumes and higher security and insurance costs. The company would provide them with misleading financial information or push 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’ average annual sales of $2 million was more than $700,000 under McDonald’s national average of $2.7 million between 2011 and 2016 and $2.9 million in 2019.

Ferraro also noted that the number of Black McDonald’s franchisees has fallen by half over the last two decades. The chain had 377 Black franchisees in 1998; it has 186 now. At the same time, the number of franchised restaurants has more than doubled to 36,000.

McDonald’s Corp. denied the allegation and defended its history with Black franchisees.

This is at least the third racial discrimination lawsuit filed against McDonald’s this year. In January, two Black McDonald’s executives sued the company. They claimed 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.

In 1998, Black McDonald’s franchisees peaked at 377. In 2020 there are only 186 Black franchisees despite McDonald’s increasing stores from 15,086 to 36,059.

Read more on the lawsuit here.

The Associated Press contributed to this story.

Cox Media Group