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The Black owner of over a dozen McDonald’s franchises in Ohio is suing the fast food chain accusing it of using discriminatory racial-steering practices that cause Black franchise owners to make hundreds of thousands of dollars less than their White counterparts.
Plaintiff Herbert L. Washington says McDonald’s steered him and others into franchises located in distressed, predominantly Black neighborhoods that garnered a much lower profit than other stores. The company used this practice to allegedly exploit Black business owners.
“McDonald’s steered Black would-be franchisees into Black neighborhoods with low-volume sales and disproportionately high overhead costs,” the lawsuit asserts. “This discriminatory company policy allowed McDonald’s to capitalize on the lower real-estate prices in disadvantaged areas and increase sales in the Black community, while shifting the costs and risks to Black franchisees relegated to those urban areas.”
White franchise owners were allegedly given McDonald’s stores that were newer, safer and got a higher volume of customers. This discriminatory practice resulted in a huge sales gap.
“Black owners average around $700,000 less in annual sales per store than White owners,” asserts Washington. “This is not a coincidence. Nor is it because Black franchisees are comparatively worse at running businesses. The precipitous decline in Black franchisees and persistent disparity in cash flow are the direct and proximate result of McDonald’s ongoing policies of racially disparate treatment.”
Though this lawsuit is not a class action, Top Class Actions reports on lawsuits filed over discrimination and systemic racism. Similar claims against McDonald’s were made in a class action lawsuit filed by Black franchisees in Tennessee last year. In addition, McDonald’s has been accused of discriminating against Black workers in a class action lawsuit filed in Illinois. TCA will watch this lawsuit and report on notable developments.
Lawsuit: McDonald’s Discriminates Against Black Franchise Owners
“While McDonald’s has joined the chorus of brands releasing hollow solidarity statements in support of Black Lives Matter and has launched a marketing campaign to profit from that movement, it has done nothing to change its own internal policies that perpetuate systemic racism by disadvantaging and squeezing out its Black franchise owners,” alleges the lawsuit.
Washington says he was the largest Black McDonald’s franchise owner in the United States just a few short years ago; however, noting his success, the corporation targeted him, forcing him out of profitable locations and replacing him with White franchisees.
“McDonald’s coupled these efforts with demands for him to make massive capital investments into the same restaurants it was working to take from him: expenditures that would inure to the benefit of the White franchisees in whose hands McDonald’s would approve his stores to land,” alleges the plaintiff.
McDonald’s effort to squeeze out Black owners has allegedly worked, with Black franchisees in the company’s system dropping from 377 in 1998 to just 186 Black franchise owners currently. During the same time McDonald’s stores have more than doubled.
Washington says that he tried to stand up to the fast-food giant, but discrimination against him only intensified as a result.
“One store at a time, McDonald’s continues to deprive Mr. Washington of the fruits of his lifetime of labor,” states the lawsuit. “He brings this action to end the unequal treatment, stop the retaliation, and recover damages for the discrimination he has endured.”
The lawsuit is seeking damages, along with injunctive relief.
McDonald’s responded to the lawsuit today putting the blame back on Washington for his store struggles.
“This situation is the result of years of mismanagement by Mr. Washington, whose organization has failed to meet many of our standards on people, operations, guest satisfaction and reinvestment,” the company reportedly said in a statement.
Are you a Black McDonald’s franchise owner? What do you think about the allegations of discrimination? Tell us about your experience in the comment section below!
The plaintiff is represented by Joseph C. Peiffer, Kevin P. Conway, Ashlie Case Sletvold, and David M. Abdullah of Peiffer Wolf Carr Kane & Conway, LLP.
The Black McDonald’s Franchise Owner Discrimination Lawsuit is Washington v. McDonald’s USA, LLC, et al., Case No. 4:21-cv-00367-BYP, in the U.S. District Court for the Northern District of Ohio Eastern Division.
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4 thoughts onBlack McDonald’s Franchise Owner Says The Chain Uses Discriminatory Racial Steering
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Mr. Washington failed his McDonald’s stores MISERABLY!! He was a terrible franchisee. He ran his stores into the ground and is blaming it on McDonald’s Corporation.