By Heather Haddon 

McDonald's Corp. on Friday asked a federal judge to dismiss a lawsuit accusing it of selling Black owners subpar stores and failing to support their businesses, saying that it wasn't in the company's interest to have its franchisees fail.

In the company's first response to the lawsuit filed in late August, McDonald's said the ex-franchisees' discrimination allegations against the company were vague and pointed to no specific facts or promises broken.

McDonald's said in its court filing Friday that it provides extensive resources to its franchisees to succeed in their businesses, but it's up to owners to run their businesses well and contracts drawn up with operators outline the risk in running one of its restaurants.

"Success is promised to no one, and plaintiffs' struggles -- while regrettable -- are simply not a basis for a claim against McDonald's," the company said in the filing.

McDonald's has had to defend its company record on race this year. After a legacy of supporting Black executives and franchisees, the company faces two discrimination lawsuits. The company has denied the allegations in both suits.

The company says it has begun to assess diversity across its ranks, and that in recent months it held discussions with the National Black McDonald's Operators Association about how to improve member cash flow. Black owners have said their sales are lower than those at the average U.S. McDonald's.

The lawsuit filed Aug. 31 in the U.S. District Court for the Northern District of Illinois accused McDonald's of steering Black franchisees to restaurants in undesirable locations in inner cities for years. It argued that those restaurants were destined to fail, and often had lower sales and higher operating costs.

The suit alleged that the number of Black owners in the U.S. has fallen because of what it described as the company's racial discriminatory practices. It seeks damages for former owners of $4 million to $5 million per store for the more than 200 locations they once operated.

In its response, McDonald's said it was implausible that it had a "secret strategy" to undermine Black owners, as it profits off its franchisees' gains. The company added that many franchisees left their stores so long ago that their claims don't fall within the statute of limitations.

McDonald's said in a statement Friday that it takes the claims in the suit seriously, and it will defend itself as it seeks to create equal opportunities for all of those who work with the company.

McDonald's legal defense includes former U.S. Attorney General Loretta Lynch, a Democrat who served during the Obama administration. "The facts will show that discrimination did not inhibit the plaintiffs' success as franchisees," Ms. Lynch said in a statement.

Attorneys for the Black ex-owners have said they are confident in the strength of their lawsuit, and that it draws on the experiences of 52 former franchisees from 18 states. They say that many of those owners lost their businesses in the past four years.

Write to Heather Haddon at heather.haddon@wsj.com

 

(END) Dow Jones Newswires

October 23, 2020 14:18 ET (18:18 GMT)

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