More Than 50 Former Black Franchisees Sue McDonald's for Decades of Racial Discrimination

Former Black McDonald's franchise owners filed a federal lawsuit on September 1, demanding economic justice from McDonald's for denying them the same opportunities as White franchisees and steering them to economically depressed and dangerous areas where low-volume sales, high rent and operating costs guaranteed failure.

52 plaintiffs filed a lawsuit with the U.S. District Court for the Northern District of Illinois Eastern Division.

"The notion that McDonald's is a friend of the Black entrepreneur is complete fiction," said James L. Ferraro, the lawyer representing the plaintiffs. "McDonald's has been hemorrhaging Black franchisees for decades due to blatant and implicit racial discrimination. The company will now be held accountable."

The claims include over 200 stores with compensatory damages that average between $4 million and $5 million per store, exclusive of punitive damages.

Ferraro said in early February when his firm first started investigating the case, it was clear his clients experienced serious racial injustice.

The historic high of 377 Black McDonald's franchisees in 1998 has been more than cut in half.

Today, there are only 186 Black franchisees left standing. Meanwhile, over the same period, from 1998 to 2019, McDonald's has increased its stores from 15,086 to 36,059.

The cash flow gap for Black franchisees more than tripled from 2010 to 2019, per National Black McDonald's Operators Association ("NBMOA") data.

The plaintiffs’ average annual sales of $2 million was more than $700,000 under McDonald's national average of $2.7 million between 2011 and 2016 and $2.9 million in 2019.

Ferraro said the filing tells 52 different heartbreaking stories of Black men and women who were employers, philanthropists and community leaders before they were forced out of business through McDonald's gross violations of federal law by:

• Steering Black franchisees to inner-city neighborhoods with low volume sales, high security and insurance costs and constant employee turnover.

• Retaliating against Black franchisees for rejecting strong-arm offers to continue operations in crime-ridden neighborhoods.

• Denying Black franchisees meaningful assistance during financial hardships while White franchisees were routinely given such support.

• Excluding Black franchisees from the same growth opportunities found at safer, higher-volume, lower-cost stores offered to Whites.

• Failing to provide any legitimate business reasons for repeated denials of franchise opportunities over many years.

• Unfairly grading the operations of Black restaurants, which resulted in poor internal reviews, effectively pushing Black franchisees out of the McDonald's system by denying them the eligibility for growth and favorable franchise terms.

• Providing misleading projections which induced Black franchisees to purchase undesirable franchises.

"Each and every one of these businessmen and women tell a story of dashed hopes and lost dreams. The world will soon see how these 52 people of color risked everything on the Golden Arches only to be kept down, marginalized and driven to ruin. Black lives matter on the streets, in our communities and they matter in Corporate America," Ferraro said.