A McDonald’s restaurant near Times Square, NYC on July 29th, 2023.
Adam Jeffery | CNBC
McDonald’s plans to start virtual focus groups with some of its owners and operators as part of an ongoing civil rights audit, as per a message to franchisees seen by CNBC.
The memo stated that the fast food giant has enlisted the services of the WilmerHale law firm to conduct the examination of its practices.
Shareholders approved a proposal last year, presented by SOC Investment group, for a civil rights audit. SOC Investment group insisted that McDonald’s previous plans did not adequately address civil rights concerns regarding franchisees, which represent 95% of the company’s U.S. restaurants.
The aim of the audit is to assess whether McDonald’s policies have any adverse effects on its U.S. stakeholders, including franchisees, employees, suppliers, and customers.
WilmerHale will be collaborating with Perception Strategies, a respected research and consulting group specializing in issues of identity and belonging, to gain a better understanding of the experiences of owner/operators across the country. This collaboration will assist the company in promoting fairness and opportunity within its system.
“As part of this initiative, Perception Strategies will conduct a Climate and Belonging Assessment to gain deeper insights into the experiences of our U.S. Owner/Operators,” the memo continued.
The memo mentioned that selected franchisees will be invited to participate in one-hour virtual focus groups conducted by Perception Strategies. It assured the owners that neither McDonald’s nor any of its employees will partake in the groups or the selection process.
The process is voluntary, and the identities of the participants will not be shared with McDonald’s. The memo also stated that each focus group will consist of no more than 12 individuals. Some owners have expressed concerns about these 12-person panels and the possibility of retaliation by the company.
McDonald’s emphasized its high corporate governance standards and a long-standing commitment to being responsive to shareholders. The company is eager to review the results of the WilmerHale audit. The audit has been ongoing since last year’s shareholders’ meeting and is currently gathering feedback from various stakeholders.
McDonald’s is undertaking this audit while making changes to its franchising structure and restaurant grading system in recent years. In December 2021, the company pledged to increase the representation of diverse franchisees and committed $250 million over the next five years to support these candidates in financing their restaurants.
McDonald’s has faced lawsuits from current and former Black franchisees, accusing the company of racial discrimination. One of the lawsuits was dismissed, while another, brought by former MLB player Herb Washington, resulted in a $33.5 million settlement.
In addition, media mogul Byron Allen has filed two separate lawsuits against McDonald’s alleging discrimination in its advertising practices. McDonald’s has retaliated by filing a motion for sanctions against Allen’s media companies, claiming that one of the suits is “frivolous” and “filled with allegations that he knows are false.”
The company has also committed to increasing its advertising spending with Black-owned media from 2% to 5% of its ad expenses by 2024. In its response to Allen, McDonald’s stated that it is on track to meet these goals.
Other major companies, including Citi, Starbucks, Amazon, and Airbnb, have conducted civil rights and racial equity audits in recent years. Apple shareholders also approved a proposal for a similar assessment last year.
Correction: Amazon is conducting an independent racial equity audit. A previous version of this article incorrectly stated the nature of the audit.
