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McDonald's agrees to buy Black franchisee Herb Washington's 13 restaurants for $33.5 million in exchange for lawsuit dismissal.

McDonald’s settles Herb Washington bias lawsuit in $33.5M deal

Purchase of 13 restaurants is in exchange for dismissal of Black franchisee’s discrimination claims

McDonald’s has settled a lawsuit filed earlier this year by Herb Washington, a Black franchisee who had claimed racial discrimination, by agreeing to pay $33.5 million for the former baseball pro’s restaurants.

“In exchange for his agreement to exit the McDonald’s system and dismiss his pending litigation, McDonald’s has purchased the 13 restaurants owned by Herb Washington for $33.5 million, which is no more than what we deem a fair price for the value of the restaurants,” the Chicago-based company said in a statement, adding that the court found no laws were violated.

“Discrimination has no place at McDonald’s,” the company said in the emailed statement. “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.”

Washington filed the U.S. District Court lawsuit in Youngstown, Ohio, in February, claiming the company of "racial discrimination and retaliation against him as a Black franchisee."

“The lawsuit contended that the restaurant chain relegated Black franchisees to its oldest stores in its urban neighborhoods,” reported, adding that the suit claimed “those like Washington would never reach the successes of their white peers.”

Washington’s lawsuit was among a number that the burger giant faced.

In September 2020, more than 50 Black former franchisees of McDonald’s sued the Chicago-based chain for millions in damages, alleging the company misled them about economic opportunities of being an operator.

“McDonald’s proclaims a commitment to racial equality, profits from its Black customers, yet places Black franchisees in locations that are destined to fail with low-volume sales,” according to the lawsuit filed in the U.S. District Court for the Northern District of Illinois.

Earlier this month, McDonald’s announced plans to invest $250 million over five years to provide financing alternatives designed to build a more diverse base of operators.

The program, which will be tailored to specific markets, will seek to reduce upfront equity requirements for eligible franchise candidates, the company said. McDonald’s also said it would leverage its network of banking partners to increase access to financing options.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

TAGS: Franchising
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