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McDonald’s said Wednesday it is launching an initiative to recruit new franchise owners from underrepresented communities and will offer millions in financing to help those who struggle to get funding.
The fast-food giant says it will dedicate $250 million over five years to help potential franchisees in the U.S. who have difficulty getting funding from other sources to buy a McDonald’s restaurant.
McDonald’s, which has been accused of racial discrimination by dozens of Black former and current franchise owners in the last two years, says the global initiative is part of a broader effort to make its leadership and supplier network more inclusive and to ensure its franchisees reflect the communities in which they operate.
“Upfront entry costs are a barrier to entry for many entrepreneurs who may have limited access to capital,” Chris Kempczinski, McDonald’s President and CEO, said in a message to employees that was viewed by USA TODAY. “This barrier may be particularly felt by candidates from different backgrounds, including from historically underrepresented groups. To address the issue, we will seek to reduce upfront equity requirements for eligible franchisee candidates.”
The company says it will reach out to community-based organizations and other groups to identify potential restaurant owners and provide training and support for new franchisees.
“This will help new franchisees get off to a strong start, and give all franchisees an equal opportunity to grow,” Kempczinski said, adding that development programs will be expanded to all restaurant owners.
Lawsuits and walkouts
McDonald’s has announced various diversity goals and measures amid numerous allegations of racial discrimination by Black franchise owners and employees.
In September 2020, 52 Black former McDonald’s franchisees sued the fast-food giant, alleging they faced racial discrimination that included being steered to restaurants with lower profit potential and being denied the same financial support as their white peers.
And last fall, three current and former McDonald’s employees filed a civil rights complaint accusing managers at a local McDonald’s of using racially derogatory terms and giving fewer hours and more extreme discipline to Black employees than it did to their white co-workers.
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According to a separate discrimination complaint filed in February by Herbert Washington, another Black franchisee, the number of Black McDonald’s owners dropped from 377 in 1998 to 186 this year. McDonald’s responded that the share of restaurants with Black owners was “broadly unchanged” during that time period.
Currently, the company says that 29.6% of franchise owners in the U.S. identify as Asian, Black or Hispanic, while roughly 30% are women.
ln February, the company said it was setting goals to boost the number of women in its senior leadership worldwide from 37% to 45% in four years, and to achieve gender parity by the end of 2030. It is aiming to increase the number of top leaders from historically underrepresented groups from 29% to 35% by the end of 2025.
USA TODAY has asked companies in the S&P 100, which is comprised of the largest and most valuable corporations in the nation, to turn over their EEO-1 reports, forms that detail how many women and people of color work throughout an organization. The forms must be submitted each year to federal regulators who have refused to disclose them to the public.
McDonald’s provided its 2018 EEO-1 to USA TODAY, but declined to release its 2019 and 2020 EEO-1 reports saying it planned to do so in the first quarter of next year.
McDonald’s has also faced numerous complaints about sexual harassment, with workers staging walkouts in several cities to call for the workforce to unionize to help address the issue.
Contributing: Jessica Guynn, The Associated Press
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