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McDonald’s Must Do More to Help Black Franchise Owners, Group Says

By Leslie Patton

As association of Black owners of McDonald’s Corp. franchises says the company needs to do more to reduce the inequities they face, beyond the $250 million that the fast-food chain is providing for new minority store owners.

McDonald’s last week pledged to do more to recruit, train and invest in minority franchisees, including offering them loan assistance. In its statement Monday, the National Black McDonald’s Operators Association said it’s encouraged by the moves but added that minority restaurant owners still face structural difficulties. 

McDonald’s Corp. signage stands above a restaurant in Carrolton, Kentucky. U.S. same-store sales fell 1 percent, an improvement from a 4.1 percent decrease in September.

“McDonald’s needs to address the systemic barriers to success that are currently facing existing Black franchisees,” said Larry Tripplett, chairman and chief executive officer of the association, which was founded more than four decades ago. “Without permanent change to address existing inequities, new generations of franchisees will be saddled with extraordinary debt, huge financial challenges, and unable to become meaningful contributors to the communities they serve.”

Black franchisees collectively earn lower profits than non-Black McDonald’s franchisees “due to systemic inequalities at McDonald’s Corp.” and this gap is “unacceptable,” the group said. It said it’s working with company leadership to address these issues. 

“We’ve made clear that our ambition is to foster equitable opportunity for every single franchisee, and have made significant progress on this front,” Bill Lowery, vice president of diversity and ombudsman at McDonald’s, said in a statement. The Chicago-based company “deeply values” its relationship with the association, and will continue to work with it and all franchise groups to foster wealth and business success from restaurant ownership.

“While the realities of restaurant ownership and economics go far beyond racial composition, over the last two years alone we’ve worked collaboratively on actions that have improved average profits for Black franchisees,” Lowery said. 

Of the company’s roughly 39,000 restaurants globally, 93% are owned and operated by franchisees. The company on Dec. 8 said it will be more inclusive in finding and training possible franchisees in the U.S. and international markets. McDonald’s pledged to help finance loans for women and other new franchisees from underrepresented groups over five years in the U.S. 

Companies are increasingly being held accountable after last year’s Black Lives Matter protests over racial and social injustices. Last week, McDonald’s settled a lawsuit in which it was accused of discrimination by the Black franchise operators of four of its restaurants in Tennessee. 

More stories like this are available on bloomberg.com.

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