McDonald’s to pay $33.5M to Black franchisee who sued fast-food giant for racial discrimination

McDonald’s has agreed to pay $33.5 million to a Black franchisee who filed a racial discrimination lawsuit against the fast-food giant in February. According to the Associated Press, Herb Washington, who is a former baseball player, accused the company of favoring White owners and not affording him the opportunity to purchase restaurants in more opulent areas.

At the time of filing the lawsuit, Washington owned 14 McDonald’s restaurants, Face2Face Africa reported. He was also once the fast-food giant’s largest Black franchise operator in the United States.

In a statement on Thursday, the fast-food giant said the money it was paying Washington was for 13 franchises, and it was “no more than what we deem a fair price for the value of the restaurants.”

“While we were confident in the strength of our case, this resolution aligns with McDonald’s values and enables us to continue focusing on our commitments to the communities that we serve,” McDonald’s said. The fast-food giant also claimed, “discrimination has no place at McDonald’s.”

Per the settlement agreement, Washington will drop the racial discrimination lawsuit and cease to be a McDonald’s franchisee. In the lawsuit, the former baseball player had claimed Black McDonald’s owners were pushed to operate franchise stores in “distressed, predominantly black” areas, BBC reported.

Washington claimed the fast-food chain took action against him after raising his grievances and repeatedly thwarted his growth. He also cited instances including the company preventing him from purchasing a White franchise owner’s stores and not providing him with financial assistance packages his White counterparts received.

“McDonald’s has targeted me for extinction. The arches are in full-scale retaliation mode against me,” Washington said at the time, adding that the company had forced him to sell some of his stores in order to receive contract extensions for others.

Per the lawsuit, Washington said the situation exacerbated when the company’s former head, Steve Easterbrook, assumed office in 2015, BBC reported. Under Easterbrook, the lawsuit alleges the company introduced policies that were “designed to force black franchisees out of the McDonald’s system.”

The lawsuit cited a decline in the number of Black-owned McDonald’s stores, claiming it had reduced to 186 from 377 since 1998. The suit also alleged White-owned franchises averagely make $700,000 more in annual sales as compared to Black-owned stores.

This is also not the first time the company has been accused of discrimination. Last year, over 50 former Black franchise owners reportedly filed a lawsuit against McDonald’s alleging the company pushed them to franchise stores in unfavorable locations. The Black owners claimed they had to dig deep into their pockets to cover security and insurance costs, and the company did not support them with rent assistance for renovations though White owners were allegedly offered that support, the Associated Press reported.

Last week, McDonald’s reportedly announced a $250 million package to support and hire franchisees from minority communities.