The fast food giant McDonald’s has been hit by a lawsuit after a store owner accused the company of racial discrimination.
A former athlete who owns 14 branches of McDonald’s in Ohio has filed a law suit against the company, stating that the chain gave better opportunities to White store owners.
Herb Washington outlined in the lawsuit how Black store owners were relegated “to the oldest stores in the toughest neighbourhoods”. This, Mr. Washington stated, meant that “Black franchisees would never expect the levels of success that White franchisees could expect”.
Mr. Washington further stated that the fast food chain has “targeted [him] for extinction” as a result of raising concerns about racial discrimination.
The lawsuit showed that the number of Black franchise owners has fallen over the last 23 years from 377 to 186. Conversely, during the same time frame, the number of McDonald’s chains has doubled to 40,000 stores.
Mr. Washington made claims of a “two-tiered system” and reported that the chain forced him to sell seven of his stores to White owners over previous years.
These claims have been echoed in previous lawsuits with over 50 former franchise owners making similar claims to that of Mr. Washington’s.
McDonald’s have since refuted these claims and cited “mismanagement” on the part of Mr.Washington:
Herb Washington is facing business challenges that we don’t want for anyone in our system. It’s why we’ve invested significantly in his organisation and offered him multiple opportunities over several years to address these issues.
This situation is the result of years of mismanagement by Mr. Washington, whose organisation has failed to meet many of our standards on people, operations, guest satisfaction and reinvestment. His restaurants have a public record of these issues including past health and sanitation concerns and some of the highest volumes of customer complaints in the country.
Sarah Evans, Partner at Constantine Law, said:
Franchising is and has been an attractive business model for expanding established brands, where the owner of the brand has a high degree of control over the business model. The contract between the franchisor (the brand owner, such as McDonalds) and the franchisee is a commercial, not a personal or employment contract, and the franchisee is not an employee – so is not necessarily protected from discriminatory acts by the brand owner.
Individuals who work for the franchised business – so for example someone serving food in McDonalds, will most likely be an employee or worker and will have the protection of UK anti-discrimination law, but against the franchisee, not the brand owner: any claim would not be against McDonalds for example, but against the franchise that employs them.
HR advisors to franchised businesses should also be mindful that the franchise will be liable for certain types of third party discriminatory acts, and should make sure that the business is not being directed by the brand owner to adopt discriminatory practices which will open the franchisee up to liability.