McDonald's and one of its franchise owners agreed to pay $700,000 (£441,000) to members of the Muslim community to settle allegations a Detriot-area restaurant falsely advertised its food as being prepared according to Islamic dietary law.

McDonald's and Finley's Management agreed to the settlement, with that money to be shared by Dearborn Heights resident Ahmed Ahmed, a Detroit health clinic, the Arab American National Museum in Dearborn and lawyers.

Mr Ahmed's attorney, Kassem Dakhlallah, said he was thrilled with the preliminary deal, expected to be finalised on March 1.

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McDonald's and Finley's Management deny any liability but say settlement is in their best interests. The lawsuit alleged Mr Ahmed bought a chicken sandwich in September 2011 at a Dearborn McDonald's but found it was not halal – meaning it did not meet Islamic requirements for preparing food.

Mr Dakhlallah said there are only two McDonald's in the US that sell halal products and both are in Dearborn, which has one of the nation's largest Arab and Muslim communities.

The locations advertise they exclusively sell halal Chicken McNuggets and McChicken sandwiches.

However, a letter sent to McDonald's and Finley's Management by Mr Dakhlallah's firm said Mr Ahmed had "confirmed from a source familiar with the inventory" that one of the restaurant had sold non-halal food "on many occasions".