(Reuters)

McDonald’s Corp has temporarily beaten back a lawsuit by 52 Black former franchise owners who claim the fast-food chain set them up for failure by steering them toward crime-ridden, low-income neighbourhoods.

A federal judge in Chicago dismissed the 2020 lawsuit in a written order last week, but gave the plaintiffs until October 21 to file an amended complaint. The judge did not explain why he dismissed the case.

The plaintiffs claim McDonald’s has not offered profitable restaurant locations and growth opportunities to Black franchisees that were on the same terms as white franchisees, despite its public commitment to diversity and Black entrepreneurship. They are seeking up to US$1 billion in damages.

McDonald’s has denied wrongdoing and has said that, while it may recommend store locations, franchisees make the final decisions.

The company in a statement provided by a spokesperson said the case was dismissed “because the plaintiffs had no facts to support their arguments”.

“Discrimination has no place at McDonald’s, and we remain steadfast in our dedication to taking action to attract and support franchisees who represent the diverse communities we serve,” the company said.

Lawyers for the plaintiffs did not immediately respond to a request for comment.