Suit filed against McDonald's for racial bias against Black franchisers

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Suit filed against McDonald's for racial bias against Black franchisers

Fifty-two former Black franchisers of McDonald’s have sued the company, alleging racial discrimination. According to these former franchise holders, McDonald’s directed them to open franchisees in seedy neighbourhoods.

The ex-franchise holders also allege that because of this policy of the company, they not able to sustain the franchisees which eventually crumbled. The suit of these ex-franchisers seeks $1 billion in damages from the company.

The case will be heard in the Chicago federal court. The city is also the headquarters of the company.

Does McDonald's practice and preach different things?

The suit notes that McDonald’s had a bias towards white franchisers which was seen in the locations of their restaurants.

The suit also mentions that while both African-American and white potential franchisers received the same terms, the cost-to-benefit ratio favoured the white franchisers and not the former. McDonald’s, however, rejected the accusation against it.

Via a statement, the company said, “We are confident that 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”.

Speaking with the press, the complainants’ advocate Jim Ferraro pointed out, “It’s systematic placement in substandard locations, because they’re Black. Revenue at McDonald’s is governed by one thing only: location”.

The complaint also includes numbers for better comparison. Per the same, while Black franchisers were forced to incur heavy overhead costs for security and insurance to sustain the 20-year franchise deal, their average sales for the six-year period between 2011 and 2016 was merely $2 million.

This figure is as much as $700,000 lower than McDonald’s national average. Eventually, not only these franchisees were forced to shut down but they were also forced into bankruptcy. McDonald’s has repeated on several occasions that it strives for racial equality and empowerment regardless of racial bias.

In June 2020, the company’s Chief Executive Officer (CEO) Chris Kempczinski had highlighted how McDonald’s had helped better the lives of Black people through its initiatives. Countering figures that the number of Black franchisers of McDonald’s had come down from 377 to 186, in the years between 1998 and now, Kempczinski added, “(McDonald’s) created more millionaires within the Black community than probably any other corporation on the planet, but there’s still work to do”.