A group of 52 former McDonald's (NYSE: MCD) are suing the fast-food chain alleging discriminatory practices. According to the group, comprised entirely of black former franchisees, the company shifted them to less-profitable locations and were less supportive of their operations than those operated by white franchisees.
The group of plaintiffs have alleged that they were pushed towards stores in inner-city locations that had lower sales and higher risks, which also drove up security and insurance costs. According to the complaint, the franchisees were also misled with improper financial information and encouraged to secure a location as soon as it opened up.
Other allegations include a time crunch when franchisees were asked to remodel stores, having far less time to carry out projects than white franchisees. It has also been alleged that the franchisees received less financial support than white franchisees.
"McDonald's intentionally and covertly deprived plaintiffs of the same rights enjoyed by white franchisees. But for plaintiffs' race, McDonald's would have offered plaintiffs profitable restaurant locations ... rather than forcing them out after decades of sweat and tears dedicated to the franchise." Says the complaint.
Ferraro Law Firm, which is representing the plaintiffs, is seeking between $4-5 billion in compensation, plus damages.
McDonald's has since denied the allegations.
"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. We are confident that the facts will show how committed we are to the diversity and equal opportunity of the McDonald's System." The company said. "It is also highly inaccurate to suggest that McDonald's evaluates Black franchisees differently than other franchisees or offers Black franchisees different financial terms than other franchisees."
McDonald's is in the midst of other litigation as well. The company's ongoing legal battle with former CEO Steve Easterbrook made headlines after the company slammed him for being "morally bankrupt" after Easterbrook sought to dismiss the lawsuit being levied against him.