Beginning with a single inner-city Rochester McDonald’s franchise, Herb Washington went on to become one of the fast-food giant’s largest and most successful franchisees. But the experience left a sour taste in his mouth.
On Tuesday, Washington filed a federal lawsuit accusing McDonald’s Corp. of systemically discriminating against him and other Black franchisees.
Washington’s complaint asks the court to award him full compensatory damages including for “pain, suffering, mental anguish, emotional distress, humiliation,” and also grant remedies including “injunctive relief and disgorgement and restitution.”
A onetime NCAA champion sprinter at Michigan State University, Washington parlayed his success as a college track star into a career with the Oakland Athletics, becoming Major League Baseball’s first and only designated runner.
His unique baseball career was brief. He did well in 1974 in his first year with the team. But after a flub in the ’74 World Series, the A’s released him after 13 games in 1975.
Washington, who had given up a budding career as a broadcaster to answer the A’s call, then built a career as one of McDonald’s most fruitful franchisees and at one time was the restaurant chain’s largest U.S. Black franchise operator.
But while he did well for McDonald’s, the fast-food chain has hardly returned the favor, the former track star alleges.
McDonald’s denies that it in any way ill-treated Washington.
“Mr. Washington owns multiple restaurants positioned to deliver growth. However, mismanagement of restaurants put his success at risk,” the company claims in a statement.
A Rochester start
Washington’s more than four decades as a McDonald’s franchisee began in 1980, when at the age of 29 he opened his first McDonald’s on West Main Street in Rochester. The location was not his choice, Washington claims in the 50-page lawsuit he filed in federal court in the Northern District of Ohio, where he now lives and owns restaurants.
A Michigan native with no prior connection to Rochester, “McDonald’s steered him to (the Rochester) store in a distressed, predominantly Black neighborhood, giving him no other option to enter the McDonald’s system,” the court action claims.
The corporation went on to “redline” Washington by letting him expand only to less-profitable locations in poor neighborhoods, he alleges.
The fast-food giant still maintains the discriminatory practices that held him back, Washington claims, systemically favoring white owners over him and other Black operators when it doles out the best and most profitable franchise opportunities.
Washington expanded his McDonald’s operation here to four locations.
Successful in Rochester and recognized for business acumen, Washington was named chairman of the Buffalo Federal Reserve Bank board and later was appointed to the New York branch of the Federal Reserve, his court complaint states. But though he wanted to grow his Rochester-area chain, after two decades, he had managed to expand to only five stores.
Size matters a lot in the McDonald’s franchise business, Washington’s court complaint states.
“Owning multiple stores … allows a franchisee to maintain sufficient cash flow across all stores to weather unexpected expenses at any one location and to make customary investments in facilities and equipment. Owning many stores also allows franchisees to absorb the financial impact of McDonald’s initiatives and mandates, from offering certain products to overhauling the entire physical appearance of the store,” the filing explains.
While McDonald’s let Rochester-area white franchisees add a store a year to their portfolios, the company for years kept Washington’s allotment at two inner-city locations, the court complaint states. Then, when in the 1990s Washington struck a bargain with a white owner to acquire franchise rights to McDonald’s stores in Geneva and Dansville, a regional supervisor nixed the deal and instead handed the locations to a white operator.
Move to Ohio
In 1998, Washington sold his Rochester stores and bought 25 Youngstown, Ohio-area McDonald’s franchises from Sam Covelli, an owner of 50 restaurants in Ohio and Pennsylvania. The purchase made Washington McDonald’s largest Black franchisee.
But, according to Washington’s court papers, his transition to Ohio was “rocky,” largely because Covelli who had poached managers and workers from the franchises he had sold to Washington to work at rivaling Panera Bread franchises Covelli had acquired.
Washington protested the violations. The dispute continued for 15 years before an arbitrator ruled in Washington’s favor. During that period, McDonald’s offered Washington “no support or
assistance as he battled to succeed while Covelli Enterprises hired away the star
talent from his stores to work at Panera,” Washington’s court complaint states.
McDonald’s contends in a statement that it has offered much support and assistance to Washington, whose difficulties are “the result of years of mismanagement by Mr. Washington, whose organization has failed to meet many of our standards on people, operations, guest satisfaction and reinvestment. His restaurants have a public record of these issues including past health and sanitation concerns and some of the highest volumes of customer complaints in the country.”
Washington disputes those claims. McDonald’s gave his stores poor evaluations as part of an effort to deny him renewals of franchise agreements and force him to sell locations to white operators, his court action maintains.
McDonald’s gives poor evaluations to Black franchisees’ operations to justify its pattern of discrimination against Blacks, Washington’s court action alleges. Reviews resort to “a variety of subjective metrics such as whether a franchisee has a good attitude or is cooperative,” the complaint contends.
The company’s alleged bias is part of a pattern of systemic discrimination dating at least to 1955, when McDonald’s first set up a franchise system, Washington’s court action claims.
McDonald’s initially granted franchises only to white operators, allowed franchisees to refuse to serve Black patrons and sued the National Association of Colored People and the Student Non-Violent Coordinating Committee when those organizations protested. McDonald’s abandoned such policies in 1968 only after the Rev. Martin Luther King Jr.’s assassination, the legal brief states.
Today, counters McDonald’s in a statement, nearly 30 percent of its U.S. franchisees are ethnically diverse and cash flow at restaurants of Black operators continues to improve. The company points to a Diversity, Equity & Inclusion campaign it kicked off in July as evidence of its commitment to boosting Black franchise ownership and ensuring such owners’ success.
Not so, Washington’s court action alleges. Black ownership of McDonald’s franchises has declined “precipitously,” while Black franchisees’ stores—which typically require more expensive updating than newer, white-owned stores and are more often located in high-crime areas—average some $700,000 a year less in sales per store than white-owned locations.
Such disparities, the court brief alleges, are not the result of Black owners’ poorer business skills, but are “the direct and proximate result of McDonald’s ongoing policies of racially disparate treatment.”
Will Astor is Rochester Beacon senior writer.