Memphis-area McDonald's operators Jim Byrd and Darrell Byrd have agreed to sell their McDonald's franchises as part of a "discriminatory practices" lawsuit settlement with the corporation. (Courtesy photo)

McDonald’s Corporation has reached a financial settlement with two Shelby County-based franchise owners after they sued the corporation for “discriminatory practices.”

Brothers James Byrd and Darrell Byrd, operators of four McDonald’s in Shelby County, filed suit against McDonald’s more than a year ago. The suit claimed, in part, that the company relegated minority franchisees to communities that are “financial suicide missions.”

James Byrd confirmed on Monday afternoon (Jan. 3) that a settlement had been reached, but declined to speak further concerning the matter, citing a gag order that forbids the brothers from discussing specific terms of the agreement.

According to a report released by Bloomberg, the Byrds agreed on Dec. 10 to drop the suit and leave the McDonald’s system as the company agreed to buy their restaurants for $6.5 million. The Byrds had originally sought damages of between $4 million to $5 million for each store.

The Byrds alleged that McDonald’s gave preferential treatment to white franchisees and – beyond the lawsuit – were calling on the company to invest more resources into minority owners.

Court documents reflect that the Byrds considered the suit necessary because they “could not allow other Black McDonald’s franchisees to be misled and injured by the same pipeline of discrimination that has plagued Black franchisees for decades.”

Specifically, the suit claimed that the corporation deliberately steered Black franchisees to areas with higher overhead costs where white operators refuse to open a restaurant.

McDonald’s Corporation – in a released statement – touted the agreement as a way to move forward for all parties.

“Discrimination has no place at McDonald’s, and while we were confident in the strength of our case, this settlement enables all to move forward with an amicable resolution and in a manner that is consistent with our values,” the statement read.

McDonald’s was not found to have violated any laws, the statement noted.

McDonald’s announced before the settlement that it would commit to investing $250 million in minority owners through loan assistance programs, recruitment and training. Loans for women and other minorities over the next five years for American franchises were announced on Dec. 8.

“We’ve made clear that our ambition is to foster equitable opportunity for every single franchisee, and have made significant progress on this front,” Bill Lowery, vice-president of diversity and ombudsman at McDonald’s, said after the agreement.

In recent years, McDonald’s has been dealing with numerous legal challenges similar to the one brought by the Byrds.

In September 2020, 50-plus Black former McDonald’s franchise owners sued the company, alleging they were steered to less-profitable restaurants when white franchisee owners were given more support and opportunities. The suit was filed in federal court in Chicago, where McDonald’s is based.

In mid-December 2021, McDonald’s agreed to pay $33.5 million to Herb Washington, a former baseball player, who owned more than a dozen restaurants in Ohio and Pennsylvania. Washington filed suit last February, asserting the company has treated white owners more favorably and denied him the opportunity to buy restaurants in more affluent communities.

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

As it did in the case with the Byrds, McDonald’s issued a statement in the Washington settlement about its confidence in the company’s position and about how the resolution aligned with its values while allowing a continued focus on serving communities.

That statement also asserted that “discrimination has no place at McDonald’s.”