The business of franchises is a great investment for ownership. However, McDonald’s has fallen by the wayside in ensuring that their black franchisees have a fair shot at obtaining the same opportunities for cash flow and development as their white counterparts.
The National Black McDonald’s Owners Association is reporting that black franchisees experience a $60,600 cash flow gap in comparison to the wealthier, white franchisees.
In 2012, the cash flow gap was at an average $24,600. An influx of black franchisees are starting to leave the company as they see their opportunities for growth dwindle.
In 2008, McDonald’s had onboard 304 black franchisees. By 2017, the count had dropped to 222. In 2019, black franchisees make up less than 200 of the 1,700 McDonald franchise owners.
Sources report that the four year reign of CEO Steve Easterbrook created significant barriers for black franchisees. Black franchisees’ growth was stifled as they experienced resistance from obtaining stores in economically efficient and profitable locations.
Easterbrook’s strategic plan to revamp the McDonald’s brand with modernized renovations proved to be very expensive for many black franchisees, who were limited to low selling locations.
There is also a lack of representation for black people, specifically, on the corporate side of McDonald’s. The black executives that were present were terminated or left the company during a recent restructuring.
Larry Tripplett, CEO of the National Black McDonald’s Owners Association, released a letter stating that McDonald’s “trajectory of the treatment of African American Owners is moving backwards” and suggested that the golden arches company was steps behind its competition in this area.
When McDonald’s was questioned about the lack of black representation present on the executive level and in ownership, the company told CNBC that “the decrease in African American franchisees is also broadly proportional to the decrease in the overall number of franchisees at McDonald’s over the last several years.”
McDonald’s may under-deliver when it comes to placing black people in top positions that would actually positively impact the black community, but they excel at carrying the torch for diversity at the entry-level or “frontline” positions. The company has even been recognized by magazines Black Enterprise, Essence and Ebony as one of the top diverse companies.
“[It is] our top priorities that all McDonald’s franchises in all communities have the opportunity to prosper, grow and achieve their business ambitions,” McDonald’s released in a statement to the Business Insider. “These efforts are rooted in our core belief that diversity and a vibrant, inclusive and respectful McDonald’s makes us stronger…McDonald’s is proud to create opportunities for entrepreneurship, economic growth and mobility in communities across the country.”
