According to the International Franchise Association, an estimated 18 million U.S. workers currently work at a franchise. This equates to roughly “one out of eight U.S. private-sector jobs.” The franchise model has long been regarded as a successful business model that provides for the growth and financial security of both the franchisor company and individual franchisee. However, the future of franchising in the U.S. may soon look very different as one of the largest and most successful franchises was recently named as a defendant in a workplace discrimination lawsuit.
Approximately 90 percent of McDonald’s Corporate restaurants are franchises. Traditionally, individual franchise stores are considered separate business entities from a franchisor. This distinction protects a franchisor from being legally responsible for the business operations at franchise locations including acts of alleged employment discrimination and harassment as well as wage and hour disputes.
However, ten former McDonald’s employees have named the fast-food giant in a discrimination lawsuit, asserting the corporation’s company wide policies exert a level of control over individual franchise locations that equates to responsibility for actions that occur at individual franchise locations.
The former employees have filed a lawsuit in which they accuse McDonald’s of committing acts of sexual harassment, racial discrimination and wrongful termination. According to the lawsuit, the workers assert they were subjected to groping, racial taunts and other acts of egregious discrimination before being told by managers that “too many black people” worked at the franchise locations, one of which was also described by a manager as being “ghetto.”
If the plaintiffs, in this case, are successful in pursuing legal action against and holding McDonald’s Corporate responsible, it could open the floodgates for similar action in several other lawsuits that are currently pending against individual McDonald’s franchise stores.
Source: The Huffington Post, “Workers Sue McDonald’s For Discrimination, Opening New Front In Franchise Fight,” Dave Jamieson, Jan. 22, 2015