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Franchising Industry Updates

McDonald’s Calls Franchisees’ Lawsuit ‘Illogical’

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More than 50 Black former McDonald’s franchisees filed a lawsuit alleging the company steered them to low income neighborhoods where they had higher security and insurance expenses and lower sales. (iStock/jetcityimage)

In September, 52 Black former McDonald’s franchisees filed a lawsuit alleging that the fast-food giant denied them the same opportunities as White operators, steering Black franchisees to low-income neighborhoods where they had higher security and insurance expenses and lower sales.

McDonald’s asked a judge to dismiss the racial discrimination lawsuit filed by former franchisees on Oct. 23, saying it wants every operator in its system to thrive. The company said the plaintiffs’ complaint relies on “vague and conclusory allegations” and fails to provide viable claims of intentional race discrimination, breach of contract and fraud, according to CNBC.

“Plaintiffs’ case is based on the illogical theory that McDonald’s went into business with Black franchisees for the sole purpose of seeing them fail, despite the company’s obvious interest in franchisees maintaining successful and profitable restaurants,” said Loretta Lynch, the former attorney general and current legal counsel for McDonald’s on the case.

McDonald’s added that the statues of limitations for the claims has expired based on when the operators exited the franchise. In Illinois, where the lawsuit was filed, the statute of limitations for discrimination during a contract is four years.

The former franchisees say their losses are $4 million to $5 million per location on average. The lawsuit comes on the heels of a number of racial discrimination actions against McDonald’s, including one in January filed by a couple of executives who said the company abandoned the Black market and drove certain franchisees out the system, according to reports.

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