Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D. Ill.: Suit alleging racial discrimination against Black McDonald’s franchisees dismissed in large part, (Sep 29, 2026)

By Donielle Tigay Stutland, J.D.

All but one claim of a single franchisee was dismissed.

The federal district court in Chicago, Illinois dismissed in large part a suit brought by 31 Black McDonald’s franchisees alleging Black that McDonald’s steered them into underperforming stores in high-crime neighborhoods and then treated them worse than White franchisees in inspections, rent relief, renovations, growth opportunities, rewrites, and store sales, in violation of 42 U.S.C. §§ 1981 and 1982 and Illinois fraudulent-concealment law. The court largely dismissed all §§ 1981 and 1982 claims, after determining that they were either time barred or failed to state a claim. The court dismissed the fraudulent concealment claims of all franchisees, finding they failed for at least five reasons, including the fact under Illinois law, a franchisor-franchisee relationship does not create a fiduciary relationship and, therefore, does not give rise to a duty to disclose. The court denied the motion to dismiss for one § 1981 claim for a singular franchisee, Faye Hobley, who alleged that McDonald’s offered her a store at a 14% rental rate and later offered the same store to a White operator at 11% (King v. McDonald’s USA, No. 1:20-cv-05132 (N.D. Ill. Sep. 25, 2026)).

Background. Named plaintiff Ralph King and 30 other Black franchisees sued McDonald’s, alleging pervasive race discrimination. The franchisees claim that McDonald’s encouraged them to buy struggling stores in bad neighborhoods. And then, after the black franchisees bought the restaurants, McDonald’s allegedly treated them unfavorably compared to white franchisees, with respect to inspections, rent relief, renovations, growth opportunities, rewrites, and store sales.

The first complaint included wide-ranging allegations about discrimination against black franchisees. McDonald’s allegedly steered Plaintiffs into purchasing underperforming restaurants in crime-ridden areas and did so based on false pretenses. And then, McDonald’s treated black franchisees worse than white franchisees, by offering less support and making greater demands.

The franchisees filed their complaint on August 31, 2020, but they entered into a tolling agreement with McDonald’s on June 8, 2020. An amended complaint followed on November 16, 2020. On September 22, 2022, the Court delivered an oral ruling granting the motion to dismiss. However, the franchisees were granted leave to amend. Two groups of franchisees filed two competing “second amended complaints” and the court severed the case, creating this King action with 31 plaintiffs, and the related Manning v. McDonald’s, with 48 plaintiffs. A third related case, McPherson v. McDonald’s, with only one plaintiff, was filed later.

Following the case being severed, the King Plaintiffs brought three claims in their second amended complaint: (1) race discrimination involving contracts under section 1981; (2) race discrimination involving property under section 1982; and (3) fraudulent concealment. King v. McDonald’s, 20-cv-5132 (N.D. Ill.) The SAC for the King case has 31 plaintiffs, and each plaintiff brought multiple claims, too. For example, Ralph King brought three claims, and so did each of the other 30 plaintiffs in the King case. Stressed the court, “That’s 93 claims.”

The court repeatedly emphasized that the SAC was both “too much and too little.” The Opinion even went further, “As an aside, the King complaint pushed – if not crossed – the line of what’s acceptable and manageable under the Federal Rules. The complaint is over 130 pages long and contains many hundreds of paragraphs. It contains more paragraphs than the Gettysburg Address contained words, by a wide margin. Even the stiffest cup of coffee cannot get a reader through a complete read without an intermission, and maybe a refill.”

Before detailing its analysis of the allegations claimant by claimant, the court first noted that, “The complaint basically alleges that McDonald’s engaged in a complex, nationwide, far-reaching, decades-long scheme to undermine black franchisees and remove them from the McDonald’s system.” Further, for each claimant, the court had to address two questions: Is the claim timely? And does it state a claim?

Statute of limitations. While going claimant to claimant, the court first dismissed all claims that were time barred. The court noted that under § 1981 the statute of limitations is two years for pre-contract-formation conduct and four years for post-contract-formation conduct. Additionally, for § 1982 the statute of limitations is two years and for fraudulent concealment the statute of limitations is five years in Illinois. (735 ILCS 5/13-215).

Additionally, this court concluded that the continuing violation doctrine and equitable tolling do not apply. The court indicated that the statute of limitations runs from the date of the tolling agreement on June 8, 2020. A two-period applies to pre-contract-formation conduct, and a four-year period applies to post-contract-formation conduct.

As such, the court concluded that Count I is dismissed as untimely for all pre-contract-formation conduct. Further, all post contract-formation conduct that predates June 8, 2016, is dismissed as untimely.

Failure to state a claim. For all claims that were determined to be timely, the court next analyzed whether they were pleaded sufficiently to state a claim. The court detailed that To state a discrimination claim under section 1981, a plaintiff must allege that the defendant “had the intent to discriminate on the basis of race,” and that “the discrimination concerned the making or enforcing of a contract.” The court noted that Section 1981 only covers instances of purposeful discrimination, and a plaintiff also must plead but-for causation.

The court found that the franchisees' allegations of disparate-impact allegations were insufficient. Additionally, the court found that the allegations of discrimination were conclusory, such as franchisees were denied rent relief or extra inspections; franchisees were blocked from preferred sales, or franchisees were required to make renovations. The court found that the allegations did not raise a plausible inference that race was the but-for cause.

Claimant Hobley. With respect to one franchisee, the court concluded that a claim was pleaded. The complaint also alleges that McDonald’s offered a store to Claimant Hobley at a rental rate of 14%, which she rejected. “The VP who made the offer to Mrs. Hobley responded that ‘the rent is, what the rent is.’” Sometime later (the complaint doesn’t say when), McDonald’s offered the same store to Leonard at an 11% rental rate, but earlier offered the same store to Mrs. Hobley at a 14% rental rate. She alleged that McDonald’s offered a store to her at one price, but offered the same store to a white owner operator at a lower price. Wrote the court, “That’s a claim.”

Fraudulent concealment. The court held that the franchisees’ claims for fraudulent concealment failed, “for at least five reasons.” First, the court found that the complaint is untimely to the extent that it alleges that McDonald’s breached a duty before Plaintiffs became franchisees. The claim is untimely for any conduct before June 8, 2015. But all of the Plaintiffs became franchisees before 2015. Second, the complaint fails to the extent that it alleges that McDonald’s breached a duty to disclose before Plaintiffs became franchisees. A party to a contract does not have a freewheeling duty to disclose information to the other party during contract negotiations. McDonald’s had no duty to disclose information about the relative financial performance of black franchisees and white franchisees before Plaintiffs signed franchise agreements.

Third, under Illinois law, a franchisor-franchisee relationship does not create a fiduciary relationship and, therefore, does not give rise to a duty to disclose. (See Siemer v. Quizno’s Franchise Co. LLC, 2008 WL 904874, at *7 (N.D. Ill. 2008)). Fourth, the franchise agreement forecloses any claim about misrepresentations or omissions about the profitability of the restaurants, as it expressly states, “No representation has been made by McDonald’s as to the future profitability of the Restaurant.” And finally, fifth, a plaintiff must satisfy the heightened pleading standard of Rule 9(b) when bringing a fraudulent concealment claim. Here, the court determined that the franchisees have failed to allege “the who, what, when, where, and how of the alleged fraud.” The court dismissed the claims for fraudulent concealment.

The Case is No. 1:20-cv-05132.

Judge: Seeger, S.

Attorneys: Daryl D. Parks (The Ferraro Law Firm) for Ralph King. Patricia Brown Holmes (Riley Safer Holmes & Cancila LLP) for McDonald’S USA and McDonald’S Corp.

Companies: McDonald’S USA and McDonald’S Corp.

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