united-states discrimination
Can a private company refuse to sell a franchise to someone solely based on being black?
<p>This question was a result of a recent conversation regarding Chick-fil-A only selling their franchises to Christians. I thought that was discriminatory, but was told a private company can do anything they want because they are privately owned. I find this very hard to believe is the case in 2021. Can anyone shed some light on this subject?</p>

<blockquote>
<p>Can a private company refuse to sell a franchise to someone solely
based on being black?</p>
</blockquote>
<p>No.</p>
<p>Racial discrimination in franchising by a private company in the United States is prohibited by 42 U.S.C. § 1981 and also under many state laws such as Cal. Civil Code §§ 51, 51.8, and is further informed by the definitions of 42 U.S.C. § 2000e. <em>See also</em>, <a href="https://us.eversheds-sutherland.com/mobile/portalresource/lookup/poid/Z1tOl9NPluKPtDNIqLMRV56Pab6TfzcRXncKbDtRr9tObDdEuWJCt0!/fileUpload.name=/FLJFall2008McMillianBaker.pdf" rel="noreferrer">this commentary</a>. 42 U.S.C. § 1981 provides in the pertinent part:</p>
<blockquote>
<p>All persons within the jurisdiction of the United States shall have
the same right in every State and Territory to make and enforce
contracts . . . as is enjoyed by white citizens. . . . [T]he term
‘make and enforce contracts’ includes the making, performance,
modification, and termination of contracts, and the enjoyment of all
benefits, privileges, terms, and conditions of the contractual
relationship.</p>
</blockquote>
<p>Many cases have enforced this protection from racial discrimination in the franchising context. <em>See, e.g., Int’l House of Pancakes, Inc. v. Albarghouthi</em>, No. 04-cv02264-MSK-MEH, 2007 WL 2669117 (D. Colo. Sept. 6, 2007); <em>Elkhatib v. Dunkin’ Donuts, Inc.</em>, 493 F.3d 827 (7th Cir. 2007); <em>Harper v. BP Exploration &amp; Oil, Inc.</em>, 134 F.3d 371 (6th Cir. 1998); <em>Pointer v. Bldg. Stars Advantage</em>, No. 4:03-cv-01237-HEA, Bus. Franchise Guide (CCH) ¶ 12, 960 (E.D. Mo. Apr. 26, 2004), aff’d, 115 F. App’x 321 (8th Cir. 2004); <em>Home Repair, Inc. v. Paul W. Davis Sys., Inc.</em>, No. 98 C 4074, 1998 WL 721099 (N.D. Ill. Oct. 9, 1998) (motion to dismiss); 2000 WL 126905 (N.D. Ill. Feb. 1, 2000) (motion for summary judgment); <em>Smith v. Molly Maid, Inc.</em>, 415 F. Supp. 2d 905 (N.D. Ill. 2006).</p>
<p>Employment law protections rarely apply to franchise relationships. <em>See Adcock v. Chrysler Corp.</em>, 166 F.3d 1290, 1294 (9th Cir. 1999) (holding that because Chrysler did not control day-to-day operations of dealership, dealer would not be considered employee for sex discrimination claim); <em>Mangram v. Gen. Motors Corp.</em>, 108 F.3d 61, 63 (4th Cir. 1997) (holding that General Motors dealers are not employees of General Motors and that plaintiff, at best, demonstrated that as a participant in General Motors’ Minority Dealership Development Program he was a trainee for a nonemployment relationship with General Motors for purposes of age discrimination claim).</p>
<blockquote>
<p>This question was a result of a recent conversation regarding Chick
Filet only selling their franchises to Christians. I thought that was
discriminatory, but was told a private company can do anything they
want because they are privately owned. I find this very hard to
believe is the case in 2021. Can anyone shed some light on this
subject?</p>
</blockquote>
<p>Not all kinds of discrimination are prohibited by Section 1981 (which was enacted shortly after the adoption of the 14th Amendment in the post-U.S. Civil War context and is the only or primary federal non-discrimination law applicable to franchise contracts), although state law protections are often broader. <em>See Saint Francis Coll. v. Al-Khazraji</em>, 481 U.S. 604, 613 (1987)(holding that § 1981 does not address discrimination claims based on national origin); <em>Runyon v. McCrary</em>, 427 U.S. 160, 167 (1976) (noting that § 1981 does not cover discrimination based on gender or religion); <em>Kodish v. United Air Lines, Inc.</em>, 628 F.2d 1301, 1303 (10th Cir. 1980) (finding age discrimination claim not addressed by § 1981).</p>
<p>In particular, discrimination on the basis of religion in franchising contracts is not prohibited by federal law, although it is prohibited by state law in some states.</p>
<p>But a franchisee in operating the franchise business must follow all state and federal non-discrimination laws that apply to public accommodations with respect to their customers, and must follow all state and federal non-discrimination laws that apply to employees with respect to their employees.</p>
