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What’s happening with McDonald’s and Black franchise owners?

On Behalf of | Jan 5, 2022 | Fraud And Misrepresentation

As a company, McDonald’s used to be lauded for marketing strategies to encourage Black business owners to buy into their franchise.

Now, it seems like there may have been a lot of smoke and mirrors involved in their promises. A number of Black franchisees have recently brought lawsuits against the corporate burger chain, based on what they claim are clearly racially motivated policies that have cost them a fortune.

A recent lawsuit with a Black owner of a McDonald’s franchise highlights the problems

The Black owner of a franchise that spanned both Ohio and Pennsylvania just settled a $33.5 million lawsuit based on what he called racial discrimination in its treatment of franchisees. (McDonald’s claims that they merely bought the owner out, paying no more than the 14 restaurants were worth.)

According to the allegations – which have been echoed by more than 50 other Black franchisees, McDonald’s openly steered Black owners into low-income, high-crime areas where they:

  • Incurred security costs that white-owned stores did not
  • Had to pay higher insurance premiums
  • Had more difficulty finding the staffing that they needed
  • Were denied loans for remodeling and upkeep that were easily granted to white owners
  • Were refused the opportunity to buy additional stores in affluent areas

Altogether, the lawsuit alleged that “Black owners average around $700,000 less in annual sales per store than white owners.”

Issues like these are important to keep in mind – and researching a franchise before you get deeply invested is very important. If you’re considering buying into a franchise or you believe that your existing franchisor is treating you unfairly, it may be time to explore your legal options.