McDonald's Sued in Federal Court Over AI Tool Allegedly Influencing Franchise Pricing

McDonald's is facing a lawsuit in an Illinois federal court filed by a consumer who claims the fast-food giant uses an artificial intelligence platform to coordinate pricing among its franchisees. The lawsuit argues this practice is anti-competitive and has driven up menu prices for millions of Americans.

According to the Associated Press (AP), the lawsuit was filed last Friday in the U.S. District Court for the Northern District of Illinois. The plaintiff, Michael Thomas from DeKalb, Illinois, frequently visits the chain's restaurants and alleges he has noticed price discrepancies among locations near his home.

The complaint accuses McDonald's of violating Section 1 of the Sherman Antitrust Act, as well as Illinois state laws on competition and deceptive business practices.

Allegations of Price Coordination

At the heart of the accusation is a machine learning platform—developed with technology from Tiger Analytics—that the company has used since at least 2019. This system processes data from millions of daily transactions across approximately 14,000 U.S. restaurants to generate recommended prices per product and location.

The lawsuit claims the system shares confidential sales data between franchisees competing in the same markets, amounting to illegal price coordination. The complaint describes it as "an information-sharing platform that extracts data from millions of daily transactions," resulting in "algorithmic price setting targeting customers already financially strained."

Impact on Menu Pricing

Technical details include a so-called "30% rule": the algorithm would suggest raising the price of an item when at least that percentage of restaurants had recently increased prices on that product. The suit also alleges that average menu prices rose about 40% between 2019 and 2024, during a period when food inflation heavily affected U.S. consumers.

Franchisee Pressure

Pressure on franchisees is another central issue in the case. Five franchise owners told Reuters they felt compelled to follow the recommendations, and corporate documents recorded deviations from suggested prices. Since January of this year, McDonald's business standards require franchisees to engage "constructively" with company-approved pricing consultants and tools.

On Tuesday, McDonald's firmly denied the allegations. "Menu prices at McDonald's restaurants are set by franchisees, not AI," the company said in a statement, noting that the tools are optional and "do not automate, coordinate, or set prices in any way." A spokesperson added, "All we provide is context for what's happening. We have no way of affecting menu prices at a restaurant."

The chain acknowledged using the tool for over a decade, and long before its adoption, McDonald's had been collecting data and recommending prices to its franchisees, who own and operate 95% of U.S. locations.

Antitrust Implications

The case is part of a broader antitrust scrutiny over the use of pricing algorithms across various industries. A recent precedent is the RealPage case: in May 2026, a federal court prohibited the operational use of non-public competitor data in their rental management software, applying the same legal theory underpinning the lawsuit against McDonald's.

The lawsuit seeks class action certification, damages for the class, and a ban on agreements that restrict competition. The National Owners Association, representing the chain's franchisees, had not issued a public statement by the article's deadline.