McDonald’s will launch focus groups with owners as part of its civil rights review

MC Donalds will begin virtual focus groups with some owners and operators as part of an ongoing civil rights review, according to a message to franchisees seen by CNBC.

The fast food giant hired law firm WilmerHale to audit its practices, the memo said.

Last year, in a close vote, shareholders approved a proposal from SOC Investment Group to conduct a civil rights review. At the time, SOC asked shareholders to support the measure ahead of the company’s The annual meeting said: “McDonald’s plans do not adequately address the company’s impact on civil rights by largely ignoring concerns about franchisees, who make up 95% of its US restaurants.”

The purpose of the audit is to determine whether the company’s policies have a negative impact on McDonald’s stakeholders in the United States, including franchisees, employees, suppliers and customers.

WilmerHale will work with Perception Strategies, a “nationally recognized research and consulting group focused on issues of identity, dignity and belonging,” to improve our understanding of the experiences of owner-operators across the country and help the company “continue to promote fairness and opportunity in our system,” the memo said.

“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 document added that the evaluation would include inviting randomly selected franchisees to participate in hour-long virtual focus groups about their experiences. The notice also assured owners that neither McDonald’s nor other company employees would participate in the groups or the selection process.

The memo said the process was voluntary and the identities would not be shared with McDonald’s, and another statement said the groups would include no more than 12 people. One owner told CNBC that some franchisees have expressed concern about the 12-member board and possible retaliation from the company.

McDonald’s said it has high standards of corporate governance and a long history of responsiveness to shareholders and looks forward to reviewing the outcome of the WilmerHale review. The process began last year after the 2022 AGM and is now gathering feedback from a range of stakeholders.

The review comes as McDonald’s has made changes to its franchise structure and restaurant rating system in recent years. In December 2021, McDonald’s pledged to recruit more franchisees from diverse backgrounds and committed $250 million over the next five years to help those candidates finance a restaurant.

Current and former black franchisees have sued the company for racial discrimination. One of the lawsuits was dismissed, while a lawsuit filed by former MLB player Herb Washington resulted in a $33.5 million settlement from McDonald’s.

The company also faces two separate lawsuits from media mogul Byron Allen accusing him of discrimination in his advertising practices. McDonald’s has pushed back against Allen in recent weeks, filing a request for sanctions against the media companies Allen owns. It said one of his lawsuits was “frivolous” and “filled with allegations he knows to be false.”

The company has also committed to increasing its advertising spend on Black-owned media from 2% to 5% of its advertising spend by 2024. The response to Allen said it was on track to achieve these goals.

Other major companies, including Citi, Starbucks and Airbnb, have conducted civil rights audits in recent years, and last year shareholders at Apple and Amazon approved proposals for similar assessments.