CHICAGO — A group of Black former McDonald’s franchise owners are suing the fast food giant, alleging that they were “misled and denied equal opportunity to economic success by McDonald’s systematic and covert racial discrimination,” according to court documents obtained by Spectrum News.
The group of 52 plaintiffs filed the suit on Monday in Chicago, where McDonald’s national headquarters is located.
The lawsuit alleges that the company pushed Black franchise owners into crime ridden, unsafe neighborhoods where their restaurants were “doomed to fail.” The lawsuit also claims McDonald’s denied financial support to Black franchisees and in turn provided white franchisees with financial support, and retaliated against Black franchise owners who pushed back on what they perceived as unfair treatment.
“Revenue, at McDonald’s, is based on one factor and one factor only: location,” plaintiffs’ attorney James Ferraro told CNBC in an interview. “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.”
The filing also shows that the plaintiffs’ average yearly sales were around $2 million—about $700,000 less than the McDonald’s national average of $2.7 million between 2011 and 2016, and $2.9 million in 2019.
The complaint seeks up to $1 billion in damages.
McDonald’s denies the allegations, saying the company is committed to the values of diversity and inclusion.
“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 Corporation said in a statement obtained by Spectrum News.
“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," the statement added.
In a video message released to employees and suppliers, McDonald’s CEO Chris Kempczinski reiterated that he believes the claims are false — but also said he wants the allegations investigated “thoroughly and objectively.”
“As you may have seen, a group of our former franchisees filed a lawsuit alleging that McDonald’s limited their ability to succeed and grow within our system,” Kempczinski said in the video. “You should know I take seriously and personally any suggestion that our organization has not lived up to our values. My priority is always to seek the truth. When allegations such as these occur, I want them investigated thoroughly and objectively.
“That’s been our approach to this situation. Based upon our review, we disagree with the claims in this lawsuit and we intend to strongly defend against it,” Kempczinski continued.
Kempczinski acknowledged that the company “can go further” in addressing diversity, adding that McDonald’s “must more closely reflect the increasingly diverse composition of this country and the world.”
It’s a slightly different statement than one Kempczinski offered in June of this year, when he joined CNBC’s "Mad Money" to discuss the fast food giant's diversity measures.
“I’m proud to say we’ve probably created more millionaires within the Black community than probably any other corporation on the planet, but there’s still work to do,” Kempczinksi told host Jim Cramer.
A month later, Kempczinksi rolled out diversity initiatives to benefit corporate leaders, franchise owners, and vendors. The new programs deal with bias in hiring, increasing diversity among leadership, and reducing roadblocks among diverse suppliers.
The latest complaint against McDonald’s came just five weeks after the company unveiled its new diversity initiatives, though the plaintiffs’ attorney told CNBC the company was notified of the lawsuit in early June.