Yahoo Finance McDonald's calls for dismissal of Black ex-franchisees discrimination lawsuit
McDonald’s (MCD) has asked a judge to dismiss a racial discrimination lawsuit from a group of Black former franchisees who say the fast food chain put them out of business.
52 Black ex-franchisees who operated more than 200 stores across 18 US states have been seeking as much as $1bn (£767m) in damages.
In a Chicago federal court filing the company argued it made the obligations and risks of owning a franchise clear, which was “fatal” to the claim it defrauded the 52 plaintiffs.
In the landmark suit, filed at the end of August, McDonald’s is accused of selling them underperforming stores with low sales and higher security costs. The plaintiffs claim the company deprived them of the same growth opportunities offered to white franchisees.
The plaintiffs also claim that there had been an “exodus” of black franchisees from the fast food chain’s system over the last couple of years as McDonald’s is placing them in economically bereft neighbourhoods.
Meanwhile, the fast-food giant said that it had no incentive to let any of its locations fail as it would hurt the overall business. It also dismissed the former franchisees’ claims saying it was “illogical, as it suggests the company somehow has an interest in undermining its franchisees and seeing them fail.”
Loretta Lynch, legal counsel for McDonald’s in the Crawford litigation, said: “As we argue in our motion, there are legal deficiencies in the complaint that merit dismissal at this early stage in the court proceedings. Plaintiffs’ case is based on the illogical theory that McDonald’s went into business with Black franchisees for the sole purpose of seeing them fail, despite the company’s obvious interest in franchisees maintaining successful and profitable restaurants.
“Should this case proceed, the facts will show that discrimination did not inhibit the plaintiffs’ success as franchisees.”
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In August, McDonald’s chief executive Chris Kempczinski denied treating Black franchisees differently and told staff that its franchisee ranks “should and must more closely reflect the increasingly diverse composition of this country and the world.”
Chicago based McDonald’s, said that many of the claims fall outside the statute of limitations, and that there was a lack of proof it made or broke promises that would support plaintiffs’ “expansive” claim of longstanding, companywide discrimination.
The fast food chain also accused the 52 former franchisees of relying on “vague anecdotes that fail to specify who did what to them and when.”
“On its face, this claim is illogical as it suggests the company somehow has an interest in undermining its franchisees and seeing them fail,” McDonald’s said.
“Success is promised to no one, and plaintiffs’ struggles—while regrettable—are simply not a basis for a claim against McDonald’s,” the filing said.
In January, McDonald’s denied a separate discrimination lawsuit filed by two Black executives who allege they suffered “systematic but covert” discrimination in the Chicago court.
Watch: Former franchisees sue McDonald’s for racial discrimination
