McDonald's to Pay $33.5M to Black Franchise Owner Who Said They Treat White Owners Better

McDonald's will pay $33.5 million to Herb Washington, a Black franchise owner who said the company treated white owners better.

In a statement Thursday, McDonald's said the amount it was giving Washington for his 13 franchises was "no more than what we deem a fair price for the value of the restaurants," Cleveland.com reported.

"While we were confident in the strength of our case, this resolution aligns with McDonald's values and enables us to continue focusing on our commitments to the communities that we serve," the company said, noting that "discrimination has no place at McDonald's."

Washington agreed to drop his lawsuit and no longer be a franchise owner as part of the settlement agreement.

Washington filed a lawsuit in February in U.S. District Court in Youngstown, Ohio. Having owned 14 McDonald's franchises in Ohio and Pennsylvania at the time, he said the company refused him the chance to purchase restaurants in more affluent areas while white owners were treated more favorably, according to the Associated Press.

The lawsuit said McDonald's attempted to move Washington toward restaurants in poorer areas and that "Black owners average around $700,000 less in annual sales per store than white owners."

"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, AP reported. "Black franchisees must spend more to operate their stores while White franchisees get to realize the full benefit of their labors."

Washington had 27 restaurants at one point but said in a video news conference in February he was forced by McDonald's to sell seven of them over several years to white owners, according to AP.

McDonald's, Herb Washington, Settlement, Racial Bias Lawsuit
McDonald's will pay $33.5 million to Herb Washington, a Black franchise owner who said the company treated white owners better. Washington agreed to drop his lawsuit and no longer be a franchise owner as part of the settlement agreement. Above, a McDonald's restaurant on July 28, 2021, in Houston. Brandon Bell/Getty Images

The news outlet reached out to attorneys for Washington in Cleveland and New Orleans for comment.

Last week, the company announced it would spend $250 million over five years to recruit and support franchise owners from minority communities, the news outlet reported.

In September of 2020, more than 50 Black former franchise owners sued the company with similar allegations. That suit said the Black owners were offered to buy stores in poor areas that had higher security and insurance costs and were denied things like rent assistance during renovations that they said white owners were given.

Washington is a former Michigan State University track star who played for parts of two seasons with Major League Baseball's Oakland Athletics in the mid-1970s.

The Associated Press contributed to this report.