McDonald's fires back against Black ex-franchisees' $1 billion racial-discrimination suit, calling claims 'illogical' and 'self-serving speculation'

Kate Taylor
·4 min read
Trump McDonald's
McDonald's is under fire. Hollis Johnson/Business Insider

McDonald's shot back against a racial-discrimination lawsuit filed by Black former franchisees. 

The fast-food giant filed a motion to dismiss the suit in the US District Court for the Northern District of Illinois Eastern Division, on Friday. The filing comes nearly two months after fifty-two Black ex-franchisees sued the company, claiming they were forced to close or sell more than 200 McDonald's locations because of "systematic and covert racial discrimination."

Read more: 52 Black ex-franchisees file a $1 billion racial-discrimination lawsuit against McDonald's, claiming the company sent them on 'financial suicide missions'

Loretta Lynch
Loretta Lynch is defending McDonald's in the case. REUTERS/Shannon Stapleton

"The essence of Plaintiffs' Complaint is that McDonald's—whose entire business model depends on a wide network of successful franchisees—had a secret strategy spanning decades to undermine Black owner-operators across the country," reads the filing by McDonald's legal counsel, led by former US attorney general Loretta Lynch. 

"Plaintiffs offer nothing in support of this extraordinary theory beyond vague and conclusory assertions, self-serving speculation on "information and belief," and a handful of personal anecdotes," the filing continues. 

McDonald's motion to dismiss argues that ex-franchisees' complaint — which it calls "illogical" — falls short in a number of ways.

Attorneys argue franchisees fail to plausibly allege McDonald's intentionally discriminated against Black franchisees or that the company committed fraud by hiding information it had a duty to disclose. Further, McDonald's argues that franchisees' claims fall outside the statues of limitations. 

Lynch said in a statement that "there are legal deficiencies in the complaint that merit dismissal at this early stage in the court proceedings."

"We take the allegations in this case very seriously," McDonald's said in a statement, saying that the company is moving forward with actions to foster an equitable environment for franchisees, suppliers, and employees. 

Black franchisees allege McDonald's sent them on "financial suicide missions" 

ronald mcdonald ballon Mcdonald's
McDonald's Black former franchisees say the company treated them unfairly. Andrew Kelly/Reuters

McDonald's Black former franchisees argued in the complaint that they lost more than 200 McDonald's locations over the last decade due to the company's misconduct. One franchisee called acquiring McDonald's locations as a Black franchisee a "financial suicide mission," because of the unequal treatment franchisees faced. 

According to the complaint, there are currently only 186 Black McDonald's franchisees, down from 377 in 1998. While McDonald's overall franchisee count has also dropped, Black franchisees say they have been disproportionately impacted. Business Insider previously reported that from 2007 to 2017, Black franchisees went from making up 13.4% of all McDonald's US franchisees to 12.5% of all US franchisees.

Read more: Inside McDonald's Black franchisees' decades-long quest for equality that led to a $1 billion racial-discrimination lawsuit

Former franchisees said in the complaint that McDonald's "covertly" restricts Black franchisees to locations with higher costs and lower sales. Black franchisees are primarily offered opportunities to own older stores in Black neighborhoods, according to the complaint. 

"We're always taking on the worst stores," Juneth Daniel, one of the former franchisees suing McDonald's, told Business Insider last year.

"They had serious problems with having to be staffed, if they weren't being robbed," Daniel added. "But you want into the system, you want it to be a McDonald's owner-operator. So, you took the bad to hopefully get to a better place.

The complaint also argues Black franchisees were offered fewer growth opportunities while facing harsher renovation requirements and inspections than their white counterparts. 

"We have said for many, many years as African American operators, there's two standards," Ken Manning, one of the plaintiffs in the case, told Business Insider last year. "There is one for us and there's one for our general market operators."

Read the original article on Business Insider