McDonald’s Just Won A Major Decision Against Black Franchise Owners
McDonald's had a case dismissed in which black franchise owners were suing over claims the company put them in lower-income neighborhoods with stores that earned less money.
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A lawsuit recently brought against McDonald’s by 52 Black franchise owners has been dismissed by a federal judge in Chicago. The plaintiffs alleged that the company had set them up to operate in low-income neighborhoods with high crime rates. The owners claimed that McDonald’s “set them up for failure,” reported Black Enterprise.
Although McDonald’s was able to temporarily pause the lawsuit, the Chicago judge gave the plaintiffs until Oct. 21 to amend their complaint. The judge gave no explanation as to why he dismissed the case. The franchisees claimed that their McDonald’s locations weren’t as profitable as those locations belonging to white owners.
The 52 plaintiffs added that their McDonald’s poverty-stricken locations didn’t present any growth opportunities, despite working under the same terms as their white franchisee counterparts. The restaurant company has committed to supporting Black entrepreneurs and diversity, but the Black franchisees believe that they were set up for failure. The lawsuit in question is demanding up to $1 billion in damages.
In defense of its business practices, McDonald’s vehemently denied the claims that the Black franchisees brought up in the suit, citing their public support for diversity. The company stated that franchisees have the freedom to choose to open up a restaurant wherever they’d like. The restaurant chain stated that they offer guidance and support for franchise owners who need help selecting a location.
Last September, McDonald’s lost another lawsuit brought against them by Byron Allen’s Allen Media Group (AMG) and Weather Group, LLC. The plaintiffs, in this case, claimed that McDonald’s racially discriminated against them by refusing to create an advertising contract with the companies, which are black-owned media companies. The lawsuit alleges that McDonald’s, whose Black consumers represent 40 percent of annual sales, spends less than $5 million advertising on Black-owned media companies.
The massive $10 billion lawsuit will go to trial by May of 2023. McDonald’s legal team had filed a Motion to Dismiss, but a judge in California denied the motion. In the lawsuit, McDonald’s is accused of racial stereotyping, particularly through its advertising tiers. The plaintiffs claimed that a separate “African-American” tier with a smaller budget and unfavorable pricing exists, and that the CEO’s salary of $11 million is more than twice what the restaurant chain spends on Black-owned media advertising.
McDonald’s, which is considered the leader in global food sales, boasts over 39,000 locations worldwide. The well-known golden arches bring in annual revenue of over $100 billion. The company spends $1.6 billion a year on advertising, making the $5 million spent on Black-owned media seem paltry.
The lawsuit brought up by the 52 Black franchisees began in 2020. The judge dismissed the lawsuit in a written order. McDonald’s may have the upper hand at the moment unless the plaintiffs file a successfully amended complaint later this month.
According to Reuters, an unnamed spokesperson said that “the plaintiffs had no facts to support their arguments,” which helped dismiss the lawsuit against McDonald’s. The restaurant chain argued that they have always strived to attract franchisees from diverse communities, and according to Black Enterprise, stated that “Discrimination has no place at McDonald’s.” When reached for comment, the plaintiffs’ lawyers did not answer any questions.
