McDonald's Franchise - Billion Dollar Lawsuit and Dirty Little Secret

McDonald's just hit with a lawsuit up to 1 Billion dollars launched by black former franchise owners. It's ex CEO was also recently fired for "inappropriate" behavior and having intimate relationships with employees.

McDonald's was in fact one of the many corporations that publicly supported BLM. But as you may have noticed, many of these mega-corporations actions often do not reflect their words.

McDonald s claims they have created more black millionaires than any other company. The lawsuit however suggests that McDonald's corporate has systematically placed black-owned franchise locations in bad locations, and gave the good locations to white owned franchisees. The claim states revenue at McDonald's is contingent on only 1 thing, that is location, and allegedly black owned restaurants earned on average $700,000 less than the a typical McDonald's due to being placed in substandard locations. If you watch this channel you know margins are not huge in McDonald's and just because you make 2 million dollars doesnt mean you make money after paying expenses. Allegedly many black owners had to declare bankruptcy.

Franchisees noted that the decisions made became all about the shareholders while franchisees were left in the cold. And we see this often with huge brands, after they become huge they sell or go public and the nice little franchise turns toxic towards franchisees. We've covered franchises in the past like Subway and Tim Horton's where the exact same thing happened. If you want to buy a franchise - find a nice emerging brand -and ride that sweet spot while it still has a family atmosphere.

It's also interesting that over the past 20 years, black ownership of franchise locations has actually dropped from over 350 black owners to only 186 today. That's about half of what that number once was. Another lawsuit filed earlier this year suggested that close to 100 black franchisees left while under the control of Ex-CEO Steve Easterbrook.

Steve Easterbrook was the Chief Executive of McDonald's up until 2019 however he was fired for having inappropriate relations with at least three fellow employees. They found dozens of explicit images sent to his home computer from work, including photos of employees. He also approved a stock grant worth hundreds of thousands of dollars to one of his romantic partners. Now the rascal deleted the images from his phone, but lo and behold, all this stuff stays on the company servers as evidence. Mr Easterbrook was fired and only received about half a years salary as severance pay or about $675,000. He may also receive about 40 million dollars in stock options and other compensation. McDonald's is suing Easterbrook to try and get that money back.

Easterbrook is seemingly the tip of the iceberg as another 500 million dollar lawsuit alleges that McDonald's failed to protect its female employees at a store level from harassing co-workers. Teenage workers are the most common targets of this abuse and critics suggest the organization is simply mirroring what was going on at the top of the organization.

You may recall back in 2014 in a similar racially charged lawsuit McDonald's franchise owner fired multiple black employees for no other reason than the store had supposedly too many black employees. The 11 employees had collective tenure of over 50 years, and solid work records. They were subject to ongoing racist comments, and a toxic work environment. When these 11 employees contacted McDonald's corporate, they were told to deal with the individual franchise owner as there was nothing they could do. This case was settled and pretty much swept under the rug of McDonald's history.

https://youtu.be/-IHcp8Pl_X4- I'm Lovin it McDonalds song -
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