McDonald’s Denies Racial Allegations Made by Black Former Operators

    Chain said struggles are ‘simply not a basis for a claim against McDonald’s.’

    Fast Food | October 2020 | Ben Coley
    McDonald's fries package on a gravel background.
    Unsplash/Lucas van Oort
    In March 2019, McDonald’s launched the Black and Positively Golden marketing campaign, the largest Black marketing campaign at McDonald’s in the last 16 years.

    McDonald’s asked a federal court Friday to dismiss a lawsuit accusing it of racial discrimination against Black operators, citing the claims have no merit.

    The move was the fast-food chain’s first response to a lawsuit filed August 31 by 52 Black former franchisees who said the company forced them into impoverished areas and didn’t provide equal opportunities. The plaintiffs owned more than 200 stores between 1988 and 2018. The lawsuit is seeking roughly $1 billion, or damages averaging $4 million to $5 million per store.

    The filing referred to McDonald’s alleged behavior as “systematic and covert racial discrimination.”

    In its response, the restaurant refuted each claim, saying the franchisees “have not stated a viable claim of intentional race discrimination.” McDonald’s noted the allegations don’t fall within the statute of limitations, but added that even if they did, the operators “have not plausibly alleged either an intent to discriminate by McDonald’s or but-for causation.”

    “Plaintiffs’ Complaint relies upon vague and conclusory allegations that are insufficient to support a plausible inference that McDonald’s engaged in a nationwide conspiracy to discriminate against its Black franchisees or that Plaintiffs would have been treated differently but-for their race,” the company said in the filing.

    In addition to the push toward poor neighborhoods, the lawsuit also alleged that plaintiffs were provided misleading financial data and were excluded from buying stores on the open market in retaliation for rejecting offers in the unfavorable locations.

    The lawsuit referred to it as “financial suicide missions.” McDonald’s denied this claim, and said the company wants every franchisee to perform well.

    “At its core, Plaintiffs’ claim is that they should have been more successful. But success is promised to no one, and Plaintiffs’ struggles—while regrettable—are simply not a basis for a claim against McDonald’s,” the company said. “The allegations in the Complaint are wholly inconsistent with McDonald’s legacy of opportunity for diverse members of its franchise system, and if this matter were to go to trial, the facts would show that they are meritless.”

    The operators also take issue with the decreasing number of Black franchisees. According to data in the court documents, the number of Black franchisees has dropped from 377 in 1998 to 186 in 2020. However, McDonald’s said there’s been a decrease in franchise ownership across all demographic groups, and the representation of Black operators has remained the same proportion.

    The Wall Street Journal reported in September that McDonald’s is assessing diversity across the company and that it returned funding to its African-American employee council. The chain said it will report diversity goals annually.

    In March 2019, McDonald’s launched the Black and Positively Golden marketing campaign, the largest Black marketing campaign at McDonald’s in the last 16 years.

    CEO Chris Kempczinski said in an interview on CNBC that McDonald’s has probably created more Black millionaires than any other company in the world, but that “there’s still work to do.”