Like many corporations as of late, McDonald’s doesn’t have a problem saying the words “Black Lives Matter,” but voicing support for a movement that’s currently more popular than it ever has been is easy. The real question is whether or not the fast-food giant is practicing what it preaches when it comes to the fight against racial injustice within its own walls. A lawsuit filed by more than 50 Black ex-McDonald’s franchise owners claims the answer to that question is no.
Reuters reports that 52 former Black franchise owners recently filed a lawsuit in a Chicago federal court against McDonald’s Corp., alleging that the popular chain restaurant systematically placed them in “substandard locations” where growth and profitability are hindered and owners are left with high insurance costs and restaurants that perform below the national average.
In a complaint seeking up to $1 billion of damages, the plaintiffs said McDonald’s has not offered profitable restaurant locations and growth opportunities to Black franchisees on the same terms as white franchisees, belying its public commitment to diversity and Black entrepreneurship.
The complaint said McDonald’s saddled the plaintiffs under its standard 20-year franchise agreements with stores requiring high security and insurance costs, and whose $2 million average annual sales from 2011 to 2016 were $700,000 below the nationwide norm. Bankruptcy often resulted, they said.
“It’s systematic placement in substandard locations because they’re Black,” Jim Ferraro, the attorney representing the plaintiffs, said in a phone interview, CNBC reports. “Revenue at McDonald’s is governed by one thing only: location. It has nothing to do with the taste of a Big Mac. You don’t go to a different McDonald’s because the Big Macs are better. You go to the closest McDonald’s, period.”
Of course, McDonald’s denies all accusations of racial discrimination.
“These allegations fly in the face of everything we stand for as an organization and as a partner to communities and small business owners around the world,” McDonald’s said in a statement, according to CNBC. “Not only do we categorically deny the allegations that these franchisees were unable to succeed because of any form of discrimination by McDonald’s, 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.”
It’s worth noting that this isn’t the first lawsuit filed against McDonald’s alleging racism. In January, a lawsuit was filed by two of the fast-food chain’s senior executives who claimed they were subjected to racial discrimination, a hostile work environment, and retaliation after they spoke out against the treatment they said they received. That lawsuit also alleged that Black franchise owners were being discriminated against.
During a June interview on CNBC’s Mad Money with Jim Cramer, McDonald’s CEO Chris Kempczinski responded to accusations of racism leveled at the company by giving off big Miss Millie “I’ve always been good to you people” energy.
“Probably, McDonald’s has created more millionaires within the Black community than probably any other corporation on the planet, but there’s still work to do,” Kempczinski said without offering any evidence to back the claim.
According to Reuters, Ferraro called bullshit on the claim, saying it is “total hogwash” and that the number of Black franchisees has fallen to 186 from 377 since 1998.
Last December, Business Insider interviewed a number of Black McDonald’s franchise owners who also claimed to be discriminated against.
From Business Insider:
Black franchisees told Business Insider that their stores net $68,000 less a month, on average, than McDonald’s overall franchisee average.
According to documents from the National Black McDonald’s Operators Association obtained by Business Insider, this cash flow gap more than doubled from 2012 to 2017, going from less than $24,600 to about $60,600.
As McDonald’s overall franchisee count has shrunk, the number of black franchisees at the company has declined significantly. There were 304 black franchisees at the company at the end of 2008, according to NBMOA documents. NBMOA documents showed that number had dropped to 222 by the end of 2017. Today, two franchisees said, black franchisees make up fewer than 200 of the roughly 1,700 franchisees at McDonald’s.