Fifty-two former McDonald’s franchisees who say they faced decades of discrimination at the fast-food chain are suing McDonald’s for more than $1 billion.
The suit was filed in the U.S. District Court for the Northern District of Illinois Tuesday, according to Yahoo. Franchisees say in the complaint that they faced “systematic and covert racial discrimination,” with McDonald’s denying them the same opportunities as their white counterparts.
The lawsuit also argues McDonald’s “systematically steered” Black franchisees to buy locations in Black neighborhoods that tend to have higher insurance and security costs while bringing in less revenue. One franchisee wrote in the complaint that Black franchisees were at such a significant disadvantage that acquiring a McDonald’s as a Black franchisee was “financial suicide.”
The franchisees say they lost more than 200 McDonald’s locations over the past decade because of misconduct by the company. Dozens of of other Black franchisees were forced out of the chain over the past two decades. According to the complaint, there are only 186 Black McDonald’s franchisees, down from 377 in 1998.
The complaint added the plaintiffs’ average annual sales of roughly $2 million were more than $700,000 lower than McDonald’s national average of $2.7 million from 2011 to 2016 and $2.9 million in 2019.
“These differences are statistically significant and are the result of Defendants’ racial bias and barriers within the McDonald’s franchise system,” the complaint states.
In a video message to employers and suppliers Tuesday, McDonald’s CEO Chris Kempczinski responded to the allegations.
“When allegations such as these occur, I want them investigated thoroughly and objectively,” Kempczinski said. “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.”
In a statement to Business Insider, McDonald’s categorically denied the allegations, saying that they “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.”
In July, the fast-food chain promised to improve diversity at all levels of its systems, including franchisees and suppliers.