A pair of Black McDonald’s franchisees have agreed to exit the system as part of a settlement reached this month ending their discrimination lawsuit against the Chicago-based burger giant.
McDonald’s said it has agreed to pay James and Darrell Byrd $6.5 million for the four restaurants they operate in the Nashville area.
The company said that the price “is no more than what we consider to be a fair price for the value of the Byrds’ restaurants.”
A federal judge agreed to dismiss the lawsuit on Friday at the request of both sides. McDonald’s emphasized that the court “did not find that the company violated any laws.”
“Discrimination has no place at McDonald’s and while we were confident in the strength of our case, this settlement enables all to move forward with an amicable resolution and in a manner that is consistent with our values,” the company said in a statement.
The Byrds’ lawsuit was one of three filed against the company by current and former operators who accuse the company of favoring White operators by giving them more assistance and access to better locations.
At the heart of such actions was data from the National Black McDonald’s Owners Association saying that the number of Black franchisees in the system had been cut in half since 1998, to 200 from 400.
The Byrds’ lawsuit specifically said that McDonald’s steered Black franchisees to Black neighborhoods with higher costs for security, insurance and turnover, noting that White franchisees refused to operate restaurants in those neighborhoods. They also argued that a White operator was given favorable treatment and allowed to buy profitable locations.
McDonald’s had argued that the allegations on their face made no sense as the company cannot succeed unless its operators succeed.
Still, the company last week announced plans to recruit a more diverse franchisee base, including a five-year, $250 million investment designed to provide alternative sources of financing for these new operators to buy stores.
The burger giant, which has about 13,800 U.S. locations, is not generally adding them domestically, meaning these new operators will need to buy existing restaurants. Sources have told Restaurant Business that the company has been buying up some restaurants that are put up for sale, with the intent of flipping them to other operators.
The franchisee lawsuits have come along with other actions against the chain, with discrimination lawsuits filed by employees, vendors and executives in addition to the operators. One such lawsuit, from media mogul Byron Allen, was dismissed late last month though that action could be amended and brought back.
In addition, shareholders have demanded the company undertake a civil rights audit.
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