Black McDonald’s Franchise Owners Say Company Should Do More to Address Income Inequality Amid Settlement of Discrimination Lawsuit

McDonald’s Corp. reached a deal on Friday with two black franchise owners who sued the company, alleging the company was giving preferential treatment to white franchisees. Black McDonald’s operators are calling on the company to invest more in minority owners.

Brothers James and Darrell Byrd, operators of four McDonald’s restaurants in Tennessee, sued McDonald’s in October 2020, claiming the company had pushed black franchisees to areas that are “financial suicide missions.”

Court documents say the brothers filed a lawsuit because they could not “allow other Black McDonald’s franchisees to be misled and hurt by the same pipeline of discrimination that plagued black franchisees for decades “.

Specifically, the lawsuit claims that McDonald’s is directing black franchisees to areas with higher overhead costs, where white operators refuse to open a restaurant.

The lawsuit was filed on behalf of the Byrds and 186 other black franchise owners across the country.

They sought damages of $ 4 million to $ 5 million for each store across the country for the “targeted discrimination.”

But the brothers have dropped the lawsuit and will quit the McDonald’s system after the company agreed to buy their restaurants for $ 6.5 million, Bloomberg reported.

“Discrimination has no place at McDonald’s and while we were confident in the strength of our case, this settlement allows everyone to move forward with an amicable resolution and in a manner consistent with our values, ”the company said in a statement.

The statement said the court did not find McDonald’s had broken the laws.

McDonald’s announced ahead of the settlement that it would invest $ 250 million in minority homeowners through loan assistance, recruiting and training programs.

The company pledged on Dec. 8 to fund loans for women and other minorities over the next five years in the United States.

“We have made it clear that our ambition is to foster fair opportunities for every franchisee and have made significant progress on this front,” said Bill Lowery, vice president of diversity and ombudsman at McDonald’s, in a statement.

But on Monday, an association of black franchise owners called on the company to do even more to support black operators.

“McDonald’s must overcome the systemic barriers to success that existing black franchisees currently face,” said Larry Tripplett, CEO of the National Black McDonald’s Operators Association.

“Without permanent change to address existing inequalities, new generations of franchisees will be faced with extraordinary debt, enormous financial challenges and unable to become meaningful contributors to the communities they serve.”

Many Black McDonald’s franchise owners are choosing to exit the system, Business Insider reported in 2019. In 2008, there were 304 black franchise owners, but in 2017 that number fell to 222.

Meanwhile, the gap between the amount of money white franchisees earn and what black owners earn each month continues to grow.

In 2012, the difference in monthly cash flow between black and white franchisees was $ 24,600 per month and in 2017 it was around $ 60,600.

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