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27 More Black Ex-Franchisees Join Racial Discrimination Lawsuit Against McDonald’s
*MIAMI – Twenty-seven new plaintiffs, all former Black McDonald’s franchisees, joined an ongoing federal lawsuit against the fast-food chain claiming the company engaged in systemic discrimination and denied them the same opportunities as White franchisees.
The new amended complaint now has 77 named plaintiffs in the lawsuit originally filed by 52 Black former franchisees on Sept. 1, 2020.
The claims now include nearly 300 stores with compensatory damages that average between
$4 million and $5 million per store, exclusive of punitive damages.
The plaintiffs allege McDonald’s sold itself as a recruiter and developer of Black talent, profited from its Black consumer base and maintained a two-tier system that pigeonholed unsuspecting Black owners and assigned them horrible locations guaranteed to fail.
This suit comes on the heels of a federal class action lawsuit filed October 29 by current Black franchisees.
“McDonald’s is now fighting a four-front legal war. They are being sued by current and former Black operators, Black employees and senior executives,” said James L. Ferraro, the lead attorney for both the current and former franchisee lawsuits. “As the pool of plaintiffs grow, there will be more pressure on the company to dispense with the public relations ploys and focus on how it can help its Black employees and franchisees.”
At the same time there are calls for state pension funds to drop McDonald’s stock. States like New York, California, Ohio and Florida have massive investments in McDonald’s. In Tennessee, Rep. Joe Towns has requested Treasurer David H. Lillard to divest the state’s holdings and reallocate the money toward companies “practicing good corporate citizenship.”
Ferraro said all these challenges are coming together because the company has turned a blind eye to obvious racial problems while promoting its public image.
McDonald’s once boasted a high of 377 Black franchisees in 1998. That number now stands at 186 even though McDonald’s has increased its stores from 15,086 to 36,059. The cash flow gap for Black franchisees more than tripled from 2010 to 2019, per National Black McDonald’s
Operators Association (“NBMOA”) data.
Plaintiffs’ average annual sales of $2 million was more than $700,000 under McDonald’s national average of $2.7 million between 2011 and 2016 and $900,000 under the national average of $2.9 million in 2019.
The lawsuit claims McDonald’s was ruthless in steering Black operators toward the oldest, most decrepit stores in the toughest neighborhoods routinely rejected by Whites franchisees. This severely limited opportunities for expansion and growth, and far too often set in place a chain of events – low cash flow, decreased equity, debt and bankruptcy – that led to financial ruin.
The plaintiffs argue McDonald’s violated federal civil rights laws by:
- Excluding Black franchisees from the same growth opportunities found at safer, higher- volume, lower-cost stores offered to Whites.
- Retaliating against Black franchisees for rejecting strong-arm offers to continue operations in crime-ridden
- Denying Black franchisees meaningful assistance during financial hardships while White franchisees were routinely given such
- Failing to provide any legitimate business reasons for repeated denials of franchise opportunities over many
- Unfairly grading the operations of Black restaurants, which resulted in poor internal reviews, effectively pushing Black franchisees out of the McDonald’s system by denying them the eligibility for growth and favorable franchise
- Providing misleading projections which induced Black franchisees to purchase undesirable franchises.
The amended complaint was filed with the U.S. District Court for the Northern District of Illinois Eastern Division. To download the complaint, click here.
Black Billionaire (Robert Smith) Has to Pay Back $140M After Admitting to Tax Evasion / VIDEO
*Robert Smith, the richest Black person in America, will have to give a hefty amount of his wealth back to the IRS.
According to reports, the amount is almost $140 million based on tax evasion tactics that Smith has admitted to using after he was exposed following a four-year U.S. tax investigation by The Department of Justice and the Internal Revenue Services. Smith, 57, has been cooperative with the two powerful government agencies.
Forbes magazine recently published on its online platform that Smith avoided prosecution because he agreed to cooperate in a case against Houston businessman Robert Brockman, who has been accused of using a number of entities in the Caribbean to hide $2 billion in income.
For his own part, Smith is not running away from the wrongdoing of evading taxes. He said over a three-year period, he failed to file accurate reports of foreign bank and financial accounts, known as FBARs.
Smith , who is CEO of the private equity firm Vista Equity Partners based in Texas, has been called a brilliant businessman, chemical engineer, and investor. His net worth has been estimated at $7 billion.
For the most part, Smith has been flying under the radar because his name was not a household name, per se. Yet, he was picked up by public radar in 2019, when he gave the commencement speech at Morehouse College in Atlanta. During the speech, he shocked all in attendance, especially the college’s graduating class, when he promised to pay off each graduate’s student loan debt. It was estimated to total $34 million.
Al Harrington & ‘Smoke: Marijuana + Black America’ (EUR Exclusive/Watch)
*This week BET rolls out “Smoke: Marijuana + Black America,” narrated and executive-produced by Nasir “Nas” Jones.
The original documentary, examines marijuana’s cultural, social, economic and legal impact on American society and the Black community. Told through the lens of aficionados, policymakers, advocates and innovators in the booming legal cannabis industry. EUR correspondent Fahnia Thomas spoke with former NBA player and cannabis investor Al Harrington about Viola, Harris and Mary Jane.
FT: Why did you want to be a part of “Smoke?”
AH: We don’t have a lot of representation in this cannabis space. There aren’t a lot of places to get information especially from someone like myself that’s an operator in multiple states. I want people to understand my journey and the journey of people of color. It’s a tough place, it’s not easy and we’re not always welcomed into the space.
We have to understand the history of cannabis and how Black people played a part in where we are today as a society. All of our freedoms were taken away and all of our lives were mostly impacted negatively around the cannabis plant. Now there’s this new billion dollar industry we don’t have a real position in. We don’t have a seat at the table and that’s a crime. There’s enough money to go around for everybody. There needs to be more inclusion of people of color. If it wasn’t for the sacrifices we made – our freedoms – we wouldn’t be having these conversations.
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FT: What struggles have you faced and continue to face in the cannabis industry?
AH: It’s been about 10 years since I first started and one of my first challenges was being able to differentiate good advice from bad advice. I had attorneys who told me the wrong things to do and I don’t think they did it on purpose, they just didn’t know. A lot of these rules are up to your interpretation. Also, I was still playing in the NBA when I started [getting into the cannabis industry] and I had keep to myself in a position where I didn’t lose my contract or get locked up. Then, once I started to scale the business I realized how hard it was to fund a business. Some would think with the resources I have it should be easy – like everyone is going to give me money – but that wasn’t the case. When I think about how difficult it was for me to raise money, I could only imagine how difficult it would be for someone who isn’t a celebrity or athlete. How would they ever be able to participate in this industry? It’s so expensive to be a part of it.
FT: Your company Viola launched an incubator program to provide small Black owned businesses resources within the cannabis industry, how can people apply?
AH: Through our website – when they hear the incubator program a lot of people think I’m randomly picking people, it’s not like that. It’s way more difficult. We’re looking for entrepreneurs that are already in the space, have started a business and they need resources to be able to scale it up, like back office support. They can use our platform to elevate their business. Even some people operating in the gray market that have really solid brands but are in states that don’t have their programs fully built out yet, can’t find enough resources – like capital to get a license. So we would say, ‘join us and use my license to be able to get on the right side of the business and grow from there.’ Maybe they have a following and they just need a license or a grow space or access to distillate. Viola would be able to get those resources to them.
FT: “Smoke” features testimonies from other notable individuals like Vice President-Elect Kamala D. Harris, what can you share about her role?
AL: She has a history of locking up people of color and at the end of the day you can’t blame her because she was doing her job. I like that she has grown from her way of thinking…throwing the book at guys for low level drug offenses – and now is trying to figure out how we can expunge these records and give these guys an opportunity to really come back into society and be successful. When you go to jail and you serve your debt to society as they say and you come home it follows you. It could eventually force you back into a life of crime. I know some of the things she is focusing on is expungement, re-entry and changing the way we look at cannabis and the stigma.
“Smoke: Marijuana + Black America” premieres on BET Wednesday, November 18 at 10pm ET/PT.
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