The franchise agreement creates a particular dependence: the franchisee invests its capital, but it is the franchisor that decides which restaurant is offered, where, and on what terms the franchisee may acquire others. Since 2020, several groups of former US franchisees have been challenging in the courts the way McDonald's exercised this power. Most of these cases are still ongoing: what follows reports allegations and procedural decisions, not facts that have been adjudicated.
The Crawford case and its aftermath
On 31 August 2020, 52 former African-American franchisees, operators of about 200 restaurants, brought proceedings before the federal court for the Northern District of Illinois on the basis of 42 U.S.C. § 1981, which prohibits racial discrimination in contracts. They claimed more than 800 million dollars. An amended complaint brought the number of plaintiffs to about 77.
What they allege: McDonald's allegedly steered them systematically towards less profitable locations - disadvantaged neighbourhoods, higher insurance and security costs -, denied them the same growth opportunities and financial support as white franchisees, and made the acquisition of a profitable restaurant conditional on taking over run-down establishments.
What McDonald's replies: CEO Chris Kempczinski stated: “We dispute the allegations in this lawsuit and intend to vigorously defend ourselves.” In an October 2020 filing, its lawyers described the theory as “illogical”, arguing that it “suggests the company somehow has an interest in undermining its own franchisees and seeing them fail”.
What a judge has actually decided: on 28 September 2022, Judge Steven C. Seeger granted the motion to dismiss the amended complaint - but allowed the plaintiffs to rewrite it. It is therefore not a final dismissal on the merits. The debate concerns in particular the limitation period applicable to section 1981. Two related cases, Manning (48 plaintiffs) and King (31 plaintiffs), are pending before the same judge; in September 2025, the parties were still dealing with procedural issues, with no date set for a hearing on the merits.
The Byrd case: dismissed, then settled
The brothers James and Darrell Byrd, operators of four restaurants in the Memphis area, had brought a similar action. Judge Harry Leinenweber dismissed it in June 2021, finding that they had not shown a difference in treatment compared with non-Black owners. On 10 December 2021, a settlement ended the dispute: McDonald's bought back the four restaurants for 6.5 million dollars and the Byrds left the network. The company then stated:
“Discrimination has no place at McDonald's and, while we were confident in the strength of our case, this settlement allows everyone to move forward towards an amicable resolution.”McDonald's, December 2021 - original in English
The company stressed that it had not been found liable for any violation. It also announced a commitment of 250 million dollars over five years in favour of franchisees from minority backgrounds.
Byron Allen's advertising dispute
Separate from the previous cases, the litigation brought on 20 May 2021 by media businessman Byron Allen claimed 10 billion dollars. His argument: McDonald's confined his channels to an “African-American” advertising segment with a much smaller budget; according to the complaint, less than 5 million dollars out of a 1.6 billion dollar advertising budget in 2019 went to Black-owned media.
On 4 December 2024, Judge Fernando Olguin denied McDonald's motion for summary judgment - describing his decision as a “close call” - and allowed a jury trial. In June 2025, a few weeks before the hearing, the parties settled. The terms were not disclosed and no wrongdoing was admitted.
The franchisees organise
Another, less discussed fact says something about the state of relations within the network. In autumn 2018, more than 400 US operators met in Tampa and founded the National Owners Association - the first independent and self-funded operators' association in the brand's US history. Its leader, Blake Casper, a third-generation operator, highlighted the loss of control over menu prices:
“Our ability to set our menu prices is perhaps one of the last levers we have left.”Blake Casper, National Owners Association, 2018 - original in English
McDonald's responded: “We always welcome and are committed to constructive and collaborative dialogue with our franchisees.”
The Antibes echo
The central grievance in these proceedings - the allocation of locations and the protection of the trading area - is the very one Bernard Collorafi raised in 1997, when he contested the establishment of a restaurant in his catchment area and McDonald's reminded him of the absence of territorial exclusivity in his contract. The legal systems differ, and so do the facts; the question put to the head of the network is of the same nature.
Why location is the crux of the dispute
The central complaint of these operators is not that they were treated less well on a day-to-day basis: it is that they were steered towards restaurants located in low-volume areas with high operating costs. In other words, the dispute concerns the catchment area - the area from which customers come - and the way locations were allocated.
The reason location decides everything lies in the structure of the model. In the arrangement designed by Harry Sonneborn, the operator does not only pay a fee based on its sales: it also pays rent to the network, which holds the lease. Rent, however, is a fixed cost: it is due whether or not the restaurant does well. A bad location therefore does not reduce costs proportionally - it crushes the margin.
In all these cases, the defendant is McDonald's Corporation - the company that allocates locations and prescribes standards. For anyone wishing to check the status of these disputes, the “Legal Proceedings” section of the 10-K annual report, filed each year with the SEC, lists the significant proceedings.