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McDonald's is looking to dismiss a discrimination lawsuit filed in August against the fast-food restaurant chain by a group of 52 Black former franchisees.
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The company is accused of steering Black franchisees toward non-profitable restaurant locations and not offering growth opportunities to Black franchisees on the same terms as White franchisees. The lawsuit seeks damages of $4 million to $5 million per store for the previous owners of more than 200 locations.
"McDonald’s proclaims a commitment to racial equality, profits from its Black customers, yet places Black franchisees in locations that are destined to fail, with low-volume sales and high operating costs, leading to consistent profit shortfalls or losses, impeding Black franchisees’ efforts to grow as they acquire other stores, necessary for success under McDonald’s own franchise model, to force Black franchisees out, repeating this pattern of misconduct over and over again," the lawsuit states.
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According to the new filing in Chicago federal court, McDonald's argues that the complaint relies on “vague and conclusory allegations” and fails to provide viable claims of intentional race discrimination, breach of contract and fraud. The company noted that franchise agreements "made clear the obligations and risks of owning a McDonald’s restaurant," which they say is "fatal" to plaintiffs' fraud claim.
“On its face, this claim is illogical as it suggests the company somehow has an interest in undermining its franchisees and seeing them fail,” the company added. “Success is promised to no one, and plaintiffs’ struggles – while regrettable – are simply not a basis for a claim against McDonald’s.”
In addition, McDonald's says that the statute of limitations for the claims has expired based on when the operators exited the franchise. The statute of limitations for discrimination during a contract in Illinois is four years.
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Loretta Lynch, the former U.S. attorney general and a lawyer representing McDonald's in the case, told FOX Business the 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," Lynch added.
A spokesperson for McDonald's stressed that the company takes the allegations "very seriously."
"McDonald’s is a values-led organization committed to diversity and equitable opportunity, and the claims made by plaintiffs fly in the face of everything we stand for as an organization," the spokesperson said. "We will defend against this lawsuit even as we move forward with the actions needed to foster an environment where equitable opportunity is part of the lived experience for McDonald’s franchisees, suppliers and employees."
A representative for the plaintiffs did not return FOX Business' request for comment by the time of publication.
The group of franchisees is the latest to accuse McDonald's of workplace discrimination, following a previous lawsuit filed in January by two of the company's Black executives.
While the company denies claims that it treats Black franchisees differently, CEO Chris Kempczinski reportedly told employees in August that its franchisees “should and must more closely reflect the increasingly diverse composition of this country and the world,” according to Reuters.
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