The lawsuit, filed in the U.S. District Court for the Northern District of Illinois, alleges that McDonald’s steered Black franchisees to open their restaurants in undesirable locations of inner cities – meaning areas where a lot of Black people live.
These Black former franchisees claim their restaurants were destined to fail because they brought in lowers sales and had higher operating costs. Stores that should have brought in about $2.7 million annually, the suit claims, only brought in about $2 million.
Many of these former business owners say their stores closed within the past four years because they underperformed, all due to being located in Black neighborhoods. These stores were located in 18 different states, including Georgia, Texas and New York.
While back in 1998 there were 377 McDonald’s locations franchised by Black people, that number has since fallen to 186. This, plaintiffs claim, is evidence that McDonald’s wanted Black franchisees to fail because the company supposedly hates Black people.
“McDonald’s intentionally and covertly deprived plaintiffs of the same rights enjoyed by white franchisees,” the suit alleges, seeking anywhere from $4 to $5 million in compensatory damages per failed store.
Even after shelling out millions to Black Lives Matter (BLM) following the George Floyd incident, McDonald’s continues to be under fire by Blacks who insist the burger joint has had it out for them since the beginning.
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When Blacks experience any problems, the cause is always racism
In response to the suit, McDonald’s says it is “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.”
In other words, McDonald’s is denying all allegations, instead pinning consolidation within the company for an overall decrease in store ownership all across the board. Both Black-run and white-run McDonald’s stores have seen closures over the years, and yet the percentage of those still open and run by Blacks has remained roughly the same, the company insists.
One of the first restaurants to ever sell franchises to Black people, McDonald’s has faced a barrage of complaints from Blacks who say the company should have done more to help their stores succeed. And apparently some company executives agree, according to the suit.
In a letter from 1996, Tom Dentice, a former McDonald’s executive vice president, wrote that many Black store owners did not achieve the same level of success as their white counterparts. This, he alleged at the time, was due to the fact that McDonald’s is racist against Blacks.
“I am personally tired by the lack of progress by my company,” Dentice contended.
Soon after, a parity agreement was made between the company and its franchise stores that some Black owners say helped their stores. But in 2002, the National Black McDonald’s Operators Association approached the company again to negotiate for more help.
“The trajectory of the treatment of African American owners is moving backwards,” wrote Larry Tripplett, head of the group, in a letter sent to McDonald’s just last year.
In another lawsuit, Black store owners accused McDonald’s of providing them misleading financial information in order to misguide them into purchasing bad stores in the least desirable locations. This same suit claimed that McDonald’s required lofty investments into these stores for renovations or rebuilds in too-short time periods compared to white-owned stores.
Countering this, McDonald’s has said that franchisees are not placed into stores, but rather have the option to choose whatever locations they wish. Further, most restaurant sales occur directly between franchises, meaning McDonald’s as a corporation is not typically directly involved.
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