WASHINGTON -- The owner of Denny's, under attack for allegedly discriminating against black customers, will sign an agreement today in Baltimore allowing the National Association for the Advancement of Colored People to conduct random tests of the company's four restaurant chains for racial bias.
Under the sweeping seven-year accord, Flagstar Corp., which owns 2,320 restaurants internationally -- including Denny's, Hardee's, Quincy's Steakhouse and El Pollo Loco -- will increase minority involvement in company management and in restaurant hiring and contracting.
The agreement will pump $1 billion into the black community in job opportunities and other economic benefits, according to an NAACP spokesman, Don Rojas.
Flagstar will set out a minimum number of minority-owned Denny's franchises and appoint a minority member to its board of directors under the deal, which the NAACP's executive director, Benjamin F. Chavis Jr., and Flagstar's chief executive, Jerome Richardson, are scheduled to sign today at the NAACP's Baltimore headquarters.
Flagstar also will hire more blacks for management and non-management jobs at the corporate level and in all its restaurant chains, said a company source knowledgeable about the agreement. And black-owned firms will have more opportunities to win contracts with Flagstar.
"This is going to be an historic agreement on a magnitude and scale that has not been developed hitherto by any civil rights organization," Mr. Rojas said. "We think this will create a new paradigm for relations between the civil rights and business communities."
The NAACP never has conducted random testing of restaurants before, he said, although it has tested housing projects for discriminatory treatment. The civil rights group will be looking for evidence of racial discrimination against black customers, but it will not receive compensation from Flagstar Corp. for investigating the restaurants, Mr. Rojas added.
"We're going to establish certain standards for the company and hold them to those standards," he said, adding that the agreement will "certainly expand minority involvement at the ranks of the decision-making management."
But the agreement "does not redress the injuries of the many people who have been discriminated against at Denny's," said John P. Relman, a lawyer representing six Secret Service officers who say they were discriminated against by an Annapolis Denny's.
"Adding a few more blacks to the management is not going to solve the company's problem," he said.
The company faces lawsuits from the six Secret Service officers, who say they were refused service while preparing for President Clinton's address at the U.S. Naval Academy in April, and from 32 Californians, who filed a class action lawsuit earlier this year alleging racial policies in several West Coast Denny's restaurants. The publicity from both cases has generated more accusations of bias at Denny's in Virginia, Florida and North Carolina.
While the agreement with the NAACP was being completed, officials in the company attempted to contain the damage to Denny's reputation, pledging earlier this month to hire a civil rights monitor. But it has yet to do so.
In addition, the company has begun airing a television commercial featuring Mr. Richardson, the CEO and a potential NFL expansion team owner, as well as black and white employees assuring customers of fair service.
Flagstar Corp., a Spartanburg, S.C.-based company, changed its name from TW Services, Inc., at its annual meeting last month. The firm employs more than 100,000 people.
Under pressure from the Justice Department, the company signed a consent decree to end discrimination in its California Denny's restaurants, but the NAACP accord would apply to all of Flagstar Corp.'s holdings. The California class action lawsuit, in which former Denny's employees filed statements admitting to policies of asking black customers to pay in advance for their meals, and the Annapolis lawsuit filed by the Secret Service officers are still pending. Both lawsuits seek punitive damages against the company.