McDonald’s agrees to pay $33.5M to Black franchise owner to settle discrimination lawsuit
The burger chain told theGrio the settlement amount was "no more than what we deem a fair price for the value of the restaurants."
McDonald’s Corp. has reached a $33.5 million settlement agreement with the owner of several of its Midwest region franchise locations who sued the company earlier this year for alleged discrimination.
Retired Major League Baseball player and McDonald’s franchise owner Herbert Washington, who is Black, filed his lawsuit against the burger chain in February.
Washington owned 14 McDonald’s franchise locations in Ohio and Pennsylvania when he filed his lawsuit, according to a copy of the complaint obtained by theGrio. The lawsuit accused the chain’s corporate leaders of steering him to less-profitable franchise locations in lower-income, predominantly Black neighborhoods due to his race.
“In addition to redlining Black franchisees into largely low-volume stores in impoverished communities, McDonald’s has consistently discriminated against Black franchisees,” the lawsuit stated.
McDonald’s told theGrio via email on Friday that Washington had agreed to sell his franchises back to the company and drop his lawsuit in exchange for the $33.5 million. The company said the settlement amount was “no more than what we deem a fair price for the value of the restaurants.”
“Discrimination has no place at McDonald’s,” the company said via email. “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.”
Washington’s attorney did not immediately respond to Friday night calls from theGrio requesting comment on the settlement. The allegations made in Washington’s lawsuit are similar to the ones made by a group of 52 Black former McDonald’s franchise operators who filed their own lawsuit against the company in September of 2020.
In their lawsuit, the ex-franchise owners accused McDonald’s of providing better financial support and restaurant locations to white franchisees. Their lawsuit is still pending, according to James Ferraro, the group’s attorney.
“The parties are talking,” Ferraro told theGrio on Friday, declining to comment further.
McDonald’s CEO Chris Kempczinski previously sent a video to the company’s US employees in response to the ex-franchise owners’ lawsuit, according to CNN Business.
“We disagree with the claims in this lawsuit and we intend to strongly defend against it,” Kempczinski said at the time. But Kempczinski also said McDonald’s can do more to increase the diversity of its franchise owners.
“Our franchisee ranks should and must more closely reflect the increasingly diverse composition of this country,” he said. “We are committed to being better allies, better sponsors and better leaders.”
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