More than 50 Black former McDonald’s franchisees filed a $1 billion racial discrimination lawsuit against the fast food corporation this week.
The lawsuit was filed with the U.S. District Court for the Northern District of Illinois on Tuesday, Sept. 1. The plaintiffs, who ran some 200 franchises are seeking a jury trial and $4 million to $5 million in compensation per restaurant, which could add up to more than $1 billion in damages.
In the complaint, the former franchisees claimed McDonald’s sabotaged their businesses by saddling them with “locations that are destined to fail.”
The documents argued Black franchisees were sent on a “financial suicide mission” because the restaurants yielded lower sales and higher security and insurance bills.
“It’s systematic placement in substandard locations, because they’re Black,” Jim Ferraro, a lawyer representing the plaintiffs told Reuters during in a phone interview this week. “Revenue at McDonald’s is governed by one thing only: location.”
The Black franchisees claimed they were denied financial assistance when they experienced hardships, while white owners were helped. Black franchisees were also denied opportunities to grow their businesses, the court filing says.
As a result of this treatment, the plaintiffs argue, the number of Black franchisees has declined in the past twenty years. There were 377 Black-owned franchises in 1998 and now only 186 remain. Business Insider reported the percentage of Black franchisees dropped from 13.4 percent to 12.5 percent between 2007 and 2017.
“But for Plaintiffs’ race, McDonald’s would have offered Plaintiffs profitable restaurant locations, opportunities for growth and expansion, on equal terms as White franchisees, rather than forcing them out after decades of sweat and tears dedicated to the franchise,” the lawsuit read.
McDonalds denied the allegations in a statement.
“These allegations 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,” the company said.
“Not only do we categorically deny the allegations that these franchisees were unable to succeed because of any form of discrimination by McDonald’s, we are confident that the facts will show how committed we are to the diversity and equal opportunity of the McDonald’s System, including across our franchisees, suppliers and employees,” the statement continued.