McDonald's Faces Lawsuit Over Alleged Discrimination Against Black Franchisees, Staff

Two African American executives at McDonald's Corp MCD have filed a lawsuit against the company, accusing it of discriminating against its black franchisees and staff, reports Business Insider.

What Happened

A lawsuit was filed against McDonald's on Tuesday in the North District Court of Illinois by Vicki Guster-Hines and Domineca Neal, two of the company’s executives, who alleged they experienced racial discrimination at the fast-food giant.

The executives, who work for McDonald's in Dallas, also alleged they faced retaliation for speaking out against the company’s discriminatory conduct towards its black franchisees and staff.

The lawsuit alleged discrimination at McDonald's worsed under the former CEO Steve Easterbrook, who took charge in 2015. The situation did not improve after Easterbrook was forced to leave the company over his relationship with an employee, and Chris Kempczinski took over as the CEO in November 2019.  

"The disproportionate loss of nearly one-third of the African American franchisees in the Easterbrook and Kempczinski era was intentional or, in the alternative, it was in reckless disregard of plainly foreseeable consequences of business decisions," said the two executives in the court documents.  

Why It Matters

Charges brought against McDonald's on Tuesday’s lawsuit mirrors earlier claims by the company’s black franchisees that they face unequal treatment within the company.

Last year, McDonald's black franchisees claimed their stores earn $68000 less a month versus McDonald's overall franchisee average.

Earlier in 2019, the head of National Black McDonald's Owners Association (NBMOA), McDonald's black franchisee group, Larry Tripplett, said, “The trajectory of the treatment of African American Owners is moving backwards.”

What’s Next

McDonald’s refused to accept the charges of discrimination.
“At McDonald’s, our actions are rooted in our belief that a diverse, vibrant, inclusive and respectful company makes us stronger,” said a McDonald’s representative in a statement on Wednesday.

Price Action

Shares of McDonald’s rose 1.60% to close at $205.91 on Wednesday.