52 Black Former Franchisees Sue McDonald's Alleging Discrimination : Live Updates: Protests For Racial Justice The lawsuit says Black franchisees were steered toward neighborhoods where sales are lower while costs are higher. The franchisees ended up with less money and faced harsher scrutiny, it says.
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52 Black Former Franchisees Sue McDonald's Alleging Discrimination

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52 Black Former Franchisees Sue McDonald's Alleging Discrimination

52 Black Former Franchisees Sue McDonald's Alleging Discrimination

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STEVE INSKEEP, HOST:

Dozens of former franchise owners are suing McDonald's. They are Black business people who allege McDonald's denied them, quote, "equal opportunity to economic success." We should note that McDonald's has been a financial supporter of NPR, and we cover them just like any other company, including news they may not like. NPR's Alina Selyukh is covering this story. Good morning.

ALINA SELYUKH, BYLINE: Good morning.

INSKEEP: Hey. According to the lawsuit, how did McDonald's deny equal opportunity to people?

SELYUKH: There are various claims, but the main one is that McDonald's steers Black franchisees toward certain neighborhoods with less-profitable stores, which is a long-running allegation. As you can imagine, location is a key for fast-food restaurants. And in this federal lawsuit by 52 Black former franchisees, they say they were rushed or otherwise pushed toward older and underperforming restaurants, which meant they had to absorb bigger costs for security, staff turnover, store upkeep. The lawsuit calls them financial suicide missions.

And the franchisees say they often faced roadblocks when trying to purchase more lucrative locations. The plaintiffs say, for example, their average annual sales fell $700,000 short of a nationwide norm and that McDonald's should've known that this was not random but a result of historical racial barriers. And they're seeking a total of up to a billion dollars in damages.

INSKEEP: Wow. How is McDonald's responding to this accusation that they steered Black owners to certain locations?

SELYUKH: They - the company said in a statement that it categorically denies this. They're denying that, quote, "these franchisees were unable to succeed because of any form of discrimination by McDonald's." The company issued a rebuttal of the lawsuit, saying, for example, that some of these plaintiffs retired after running profitable restaurants and even recorded and issued to the press a video address by CEO Chris Kempczinski to staff and business partners.

(SOUNDBITE OF ARCHIVED RECORDING)

CHRIS KEMPCZINSKI: I think it's important in moments like this to remind ourselves what we do stand for. McDonald's stands for diversity, equity and inclusion.

INSKEEP: I'm sure they would like to stand for that, but what is the history here?

SELYUKH: Well, the history is fairly complicated. I spoke with Marcia Chatelain, a historian at Georgetown University who wrote a book called "Franchise: The Golden Arches In Black America." And she says McDonald's was one of the first chains to start selling restaurants to Black franchisees to begin with, but versions of this complaint that Black franchisees are getting steered into African American neighborhoods and then limited to them - it has endured since the '60s.

MARCIA CHATELAIN: The filing has the benefit of 50 years of history in which these tensions have been raised and mediated in a number of ways. But this may be the first time that a lawsuit of this size has forced a public reckoning.

SELYUKH: In the '80s, there was a lawsuit with similar allegations from one franchisee, which ended after McDonald's bought him out of the chain. In the '90s, Chatelain says the National Black McDonald's Operators Association negotiated an agreement with the company to open up more opportunities for Black franchisees, but a few years later, the group indicated the progress stalled.

INSKEEP: How is McDonald's addressing this moment of racial reckoning across the country?

SELYUKH: Well, they have pledged to boost racial diversity within the ranks of the company, like many others. They are facing another lawsuit by two Black senior executives who accuse McDonald's of driving out both African American leaders and franchisees. The company has fought these allegations. And Chatelain points out McDonald's often tends to respond to criticism of today by talking about accomplishments of the past, about their diverse workforce, the successes of some people within the system. But it will be telling to see how they handle the lawsuit now.

INSKEEP: NPR's Alina Selyukh, thanks so much.

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