McDonald’s Settles Discrimination Lawsuit With Black Franchise Owners
McDonald’s Corp. settled a discrimination lawsuit from two Black franchisees who operated four restaurants in Tennesee, one of several similar lawsuits filed in recent years that accused the fast-food giant of racial discrimination.
James and Darrell Byrd came to an agreement with McDonald’s on Friday (Dec. 10), Bloomberg reported. The brothers sought as much as $5 million per store for their business losses. However, they dropped the lawsuit and left the company’s franchise system in exchange for McDonald’s buying all four restaurants for $6.5 million, which McDonald’s said was “a fair price.”
The lawsuit claimed that McDonald’s routinely steered Black franchise owners to underperforming stores in economically undesirable urban locations that had high insurance costs. They also alleged that the company systemically denied equal opportunities for growth and financial assistance to Black franchisees compared to their white counterparts.
“Discrimination has no place at McDonald’s and while we were confident in the strength of our case, this settlement enables all to move forward with an amicable resolution and in a manner that is consistent with our values,” the company said in a statement.
In siding with McDonald’s, U.S. District Judge Harry Leinenweber ruled that the Byrds failed to show that the company was biased toward Black store owners, but he appeared to acknowledge that historic racism existed.
“The court does not mean to imply that McDonald’s operations over the years have not been tainted by the brush of racism,” Leinenweber wrote.
In June, a federal judge had dismissed the lawsuit but said the Byrds could amend their complaint, CNBC reported.
On Dec. 8, just a few days before the settlement, McDonald’s announced a new diversity initiative to “increase the number of franchisees from all backgrounds, including historically underrepresented groups, in McDonald’s U.S. and all McDonald’s international operated markets.”
The company pledged $250 million over five years in the United States to provide alternative financing for candidates who have difficulty obtaining funding from traditional sources to buy a McDonald’s restaurant.
This new initiative also comes in the aftermath of other discimination lawsuits.
In February, Herbert Washington, a Black franchisee accused McDonald’s of placing him into low-volume restaurants in Black neighborhoods and then compelling him to downsize his business, CNBC reported.
Washington is McDonald’s largest Black franchise owner in the United States, according to CNBC. In 2017, he owned 23 restaurants, which were reduced to 14 at the time of his lawsuit.
“When I stood up for myself and other Black franchisees, McDonald’s began dismantling my life’s work, forcing me to sell one store after another to white operators,” Washington stated, according to CNBC.
McDonald’s countered that allegation saying, “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.”
In September 2020, a separate lawsuit from 52 Black former McDonald’s franchise owners accused the company of steering them to under-performing restaurants and failed to support them at the same level as that they supported white franchisees, the Associated Press reported.
