Black franchisee accuses McDonald's of racial discrimination

The Black owner of 14 McDonald's franchises says the company favors White owners and denied him the chance to buy restaurants in more affluent communities, according to a civil rights lawsuit filed Tuesday in federal court in Ohio.

The suit, filed by former professional baseball player Herbert Washington, alleges that the Chicago-based fast-food chain discriminated against him, leading to a $700,000 sales gap between Black- and White-owned McDonald's franchises.

Franchises in low-income neighborhoods cost more to operate, have higher employee turnover and are not as profitable, alleges Washington, a former Michigan State University track star who played for parts of two seasons with the Oakland Athletics in the mid-1970s.

"By relegating Black owners to the oldest stores in the toughest neighborhoods, McDonald's ensured that Black franchisees would never achieve the levels of success that White franchisees could expect," the lawsuit said. "Black franchisees must spend more to operate their stores while White franchisees get to realize the full benefit of their labors."

More than 50 former Black McDonald's franchise owners made similar claims in a lawsuit filed against the company in October, saying they were forced to sell around 200 stores over the last decade.

"Targeted me for extinction"

During a video news conference on Tuesday, Washington said he had been fighting a two-tiered system since he bought his first franchise in Rochester, New York, 40 years ago. He at one point owned 27 restaurants but was made to sell seven stores over the last several years to White owners, Washington said.

He now owns 12 restaurants in northeast Ohio and two in Pennsylvania. He blames his advocacy on behalf of Black McDonald's owners for his troubles with the company.

"McDonald's has targeted me for extinction," Washington said. "The arches are in full-scale retaliation mode against me."

McDonald's denied the assertions. In a statement to CBS MoneyWatch, McDonald's said Washington was "facing business challenges." The company "invested significantly in his organization" while granting him numerous chances over the years to address the issues, McDonald's added.

"This situation is the result of years of mismanagement by Mr. Washington, whose organization has failed to meet many of our standards on people, operations, guest satisfaction and reinvestment," according to the company.

According to the lawsuit, the number of Black McDonald's franchise owners in the U.S. stands at 186 today, down from 377 in 1998. The company said in response that while the total number of its U.S. restaurants has risen from around 12,500 at the end of 1998 to 14,000 today, the percentage of stores owned by Blacks "is broadly unchanged."