Category Archives: The Founder

These posts will be added to our Student Work menu item. This category should be used for submitting posts for our Week G Assignment.

The Founder

1. What makes Ray Kroc and the brothers different from each other?

Ray Kroc is the kind of business man whose focus is more honed in monetary gain, and while both Kroc and the brothers value efficiency in the workplace, the way they view efficiency is severely different. The brothers are more concerned with their product being as they originally intend it to be made even if it means their profit margins are not as large as it could be, whereas Kroc replaces their milkshakes with vanilla and chocolate powder packets to cut down on electricity costs. If the food is “good enough,” then it’s more than workable for Ray Kroc, whereas the brothers do not think that something being workable means it’s good enough to sell to customers.

They will not compromise the quality of their food or their integrity in order to cut costs and create more revenue for themselves. It’s not within their character to do so, and their good natured-ness aids in their downfall as Kroc is like a shark who smells the blood in the water, and the McDonald brothers are very much wounded. Within an exchange between Ray Kroc and Dick McDonald, their contrasting characters can be best shown; Ray Kroc says, “Business is war. It’s dog eat dog, rat eat rat. If my competitor were drowning, I’d walk over and I’d put a hose right in his mouth. Can you say the same?” Dick McDonald replies, “I can’t, nor would I want to.”

2. Do you think the McDonald’s brothers did the right thing by selling out to Ray Kroc? Did Ray Kroc give the brothers a good deal?

I don’t believe that the brothers did the right thing by selling out to Ray Kroc, but I also believe that they ended up feeling cornered because of the predatory nature of Ray Kroc and were left with little to no other options. Much of the deal made was not written down and was done on a “handshake basis,” which is what made most of the deal sour as Kroc did not honor the handshake or live up to his promise of giving the brothers 1% propriety, which would have given them the most financial gain of anything with the deal made in that handshake moment. They were able to keep their location in San Bernadino as a non-negotiable as a show of goodwill to their employees for their loyalty, however as a result of their good nature and naivety they did not benefit from the deal in the long run whereas Kroc did.

3. How did the local store franchisees make money?

After overhead costs (utilities, supplies, etc.) are subtracted from the actual services and sales, the franchisees are able to take home their total earnings/revenues. Franchisees being responsible for the overhead costs was a part of the reason why Rollie Smith shared his concerns with Ray Kroc since the cost of their electricity bill was much higher than they were anticipating. This also then led to the later issue of product integrity that Kroc and the brothers butted heads on, as Kroc changed the way the company approached the creation of milkshakes in order to cut back on those electricity costs.

4. How did Kroc make money? How was that different than the franchisees, running the local stores?

Kroc entered the real estate business with the assistance of Harry Sonneborn. He leased the land/building to the franchisee’s and would make money because of the monthly rental fee, and would earn 4% of the franchisee’s monthly sales. It created a hierarchy and gave franchisees an incentive for quality control, especially since their money is solely earned from sales of their food/product in customer-facing transactions, whereas Kroc does not have to deal with the day-to-day hassle and stresses of operating the restaurant.

5. Does this film change your view of McDonald’s?

In some ways it does, and in other ways it doesn’t. For larger companies to make such exorbitant amounts of revenue every year, somewhere down the chain of employment there has to be people who are not being compensated adequately for how much profit their work really produces. It’s unsurprising that a billion-dollar company has dodgy beginnings, but I did not anticipate that it would have begun from two good-natured brothers being scammed and conned. The brothers have still not been compensated for their contributions to this day, and I understand the legality would be difficult to prove, but it is morally repugnant that the companies will turn blind eyes to these kinds of issues unless someone legally rules that they have to address it and appropriately compensate whoever is ruled to be compensated. It is especially egregious since the company is named after the brother’s.

The Founder

  1. The difference between Ray Kroc and the McDonald brothers is their approach and visions for the business. Ray was more determined and eager focusing mainly on expansion and profit. He had a vision to turn McDonalds into a worldwide franchise. The McDonald brothers, Dick and Mac, focused on taking a much simpler approach and caring for good quality and efficient services. They wanted to maintain the principles of their original concept. Ray Kroc was definitely riskier in the way he approached the business.  
  2. I think the Mcdonald’s brothers did make the right choice by selling out to Ray Kroc. Their options were very limited and by selling their business, they would be provided with income. It is definitely a difficult decision to give up something you started, but they couldn’t afford to win against Ray. Although, I do think that they should’ve been given a better offer, but regardless McDonalds ended up being very successful and known globally.
  3. The local store franchisees made money by giving McDonalds a percentage of their sales. They were able to use the well known brand, as people were familiar with it.
  4. Ray Kroc made money off the land of the McDonalds locations. He would buy the space and then sell or rent it to franchisees. They would have to pay him a percentage of their earnings. 
  5. The film “The Founder”, didn’t change my view on McDonalds. It was interesting learning the specifics of how McDonalds came to be, but my views on McDonalds remain the same. I feel like most big companies start off small then slowly start to expand, whether its nationwide or global.  However, the film was informative and did a good job painting the picture of how this company grew to be so big from start to finish.

The Founder Assignment

  1. It seemed like Ray’s drive to succeed was based on failures and the financial predicament  that he was in. Ray was desperate, so I believe he would have took on any business that he could make a profit from. The Brothers were not in the same financial situation that Ray was in, they were content with the one store in San Bernardino after unsuccessfully trying to franchise the business. The Brothers saw the risk of trying to franchise company as being greater than the reward. Although Ray faced failure, adversity, and people telling him no daily, he was still motivated to succeed.
  2. I think the Brothers had no choice but to sell the company to Ray at the end. Ray was financially stable at this point due the revenue he was making from the real estate that he purchased and how that was tied in to the purchase of a new franchise. I believe the Brothers realized they could not afford to battle Ray in court, so they opted to sell. Ray gave them a blank check and they gave Ray a number that they felt was appropriate based on what they knew of the business, so yes it was a fair deal in that aspect. While the Brothers put emphasis on the contract throughout film, they did a deal at the end and the most important part of the deal for them was left out of the contract. It seemed like Ray was always a few steps ahead of the Brothers although they believed that they were smarter than him. Ray already displayed how he conducted business and what he was capable of, so I don’t know why they would think he would give them anything outside of the contract.
  3. The local stores franchisees made their money based on the overall sales minus the expenses and franchise fees. This was the reason why they were trying to change to a powdered milkshake, so they could cut the cost of the electricity bill. Their profit margins were razor thin.
  4. Ray at the end had multiple revenue streams which included the revenue generated by the Mc Donald’s that he owned, a percentage of the fees that the franchisees had to pay the corporation, and also from the rent that he received from leasing the land that he owned to the franchisees to build their new stores on.
  5. The Founder was a well put together film that I would certainly watch again, however the film did not change my view of Mc Donalds. Most of the successful companies that started out as a small business and eventually became a household name has a story similar to this one. I think Ray and the Brothers had a different vision on the direction of where they wanted to take the business from the onset of the deal. Ray was just focused on signing the contract I believe because his back was against the wall, the film did not show any attorney reviewing the contract for him. Ray realized that was a mistake when his new ideas kept getting shot down and his operating cost barely covered his expenses. I think the outcome may have been a little different had the Brothers renegotiated the contract earlier. Ray could have let them keep the name on their San Bernardino store though, but I guess that was the cost of doing business.

week G

 

  1. What makes Ray Kroc and the brothers different from each other?

The stark contrast between Ray Kroc and the McDonald brothers lies in their personalities. Ray, driven by a relentless pursuit of wealth, was devoid of the same core values and qualities that the brothers held dear. This moral disparity extended to their interactions with others and their approach toward the company.

  1. Do you think the McDonald’s brothers did the right thing by selling out to Ray Kroc? Did Ray Kroc give the brothers a good deal?

If we are talking in financial terms, yes, because the McDonald brothers didn’t have the money to keep up with Ray Kroc. He was expanding the business fast, and whatever money the McDonald brothers earned from their location wouldn’t be enough to cover lawyer fees. Still, overall, I think the McDonald brothers should have kept their company with Ray and renegotiated the contract with him again so they could have a better expansion since Ray never came up with any of the ideas, or they could have made him a co-owner.  Personally, Ray did give the McDonald brothers a good deal because of how big the company is today, and realistically, this is business sometimes. You may have to cut out the middle man to adapt to the changes and make more for your money. I’m not saying Ray’s deal was the most excellent thing to do, but it was harsh. He could at least have let the McDonald brothers keep the royalties and let the first store keep the name but change the logo because if it weren’t for McDonald’s, he wouldn’t be successful. 

  1. How did the local store franchisees make money?

They made money by buying a franchise of McDonald’s and they became owners of that particular store which caused each person to become the supervisor/manager in that location this means they were able to hire whoever they wanted but they would still have to follow the policies within the McDonald’s contract.

  1. How did Kroc make money? How was that different than the franchisees, running the local stores?

Ray Kroc made money in various ways while tending to the McDonald’s business, some of these ways are selling land to the people who wanted to buy a franchise of the store, running his location of Mc Donald’s for a profit, Selling contract version of Mc Donald’s to people that wanted to run their version. Ray’s way of making money was different from everyone else’s because he didn’t just run his version of the store he also connected with people to have the company have investors, He rented out space for people to have their part in the company.

  1. Does this film change your view of McDonald’s?

No, it doesn’t change my view of McDonald’s the food is convent and cheap. Everywhere you look there will be a McDonald’s somewhere plus McDonald’s is more than just a fast food company now they. It’s a mainstream corporation that partners with many organizations and they are charitable towards different companies that help people every day so all around it’s a family-valued corporation.

The Founder Assignment

1. Ray Kroc and the McDonald brothers had different methods when it came to managing their business, While Ray Kroc was a visionary entrepreneur who realized that he could franchise the McDonald’s idea nationwide, The McDonald brothers were happy with their original small scale operation in California.

2. The reason why the McDonald brothers decided to sell their business to Ray Kroc was because they believed that he would assist them in expanding their concept throughout the whole nation. It is true that though Ray Kroc offered them a deal for buying his business but later on went against what had been agreed upon initially by not involving them into future profits. Some people may think that kroc cheated these guys or failed to keep his word with them.

3. Local store franchisees made money through paying a percentage of sales as royalties to McDonald’s Corporation and also through buying supplies plus ingredients from authorized suppliers. They were required by corporation to operate under strict guidelines and standards while using the brand name of McDonald’s.

4. Ray Kroc earned his money basically by franchising. What he did was obtain profits from every McDonald’s restaurant which came in the form of franchise fees, royalties and real estate deals. The thing that brought him his revenue were not the day-to-day operations of individual local stores but rather growth and success within the whole system of McDonalds.

5. My opinion about McDonald’s changed after I watched a movie called “The Founder”. This film gave me a lot more knowledge about this fast food chain including some controversial figures like Ray Kroc who was one of its founders. It also showed how hard it can be for entrepreneurs to make it big in business while revealing just competitive such industry is too. In other words what I mean here is that now I understand where McDonalds came from better than before thanks to this movie so my opinion about them has been different.

The Founder Assignment Example

  1. Dick and Mac, who wanted to focus on quality and standards. Chose to play it safe, to not expand, to focus on their singular location in California. While Kroc, eager to expand and grow, though differently. He only saw progress, growth and the future. You could say the Brothers were stuck in the past, while Kroc focused on the future. What made the two forces fundamentally different is one force wanted to focus on steady performance, while the other wanted to progress at an immense pace. And that’s what cost the brothers everything in the end, they were too focused on morality and ethics, they missed how desperate and power hungry Kroc was. 
  2. At the point at which they were at, the brothers were left no other options. They neither had the power, nor resources or connections to fight against Kroc. And Kroc could have fully screwed over the brothers, but gave them the opportunity to name their price and cut a deal. It wasn’t a matter if it was the right thing to sell out to Kroc, it was really the only option the brothers were left with. And in the end, it was a pretty good deal at the time, sadly however. Since the brothers couldn’t prove the authenticity of their deal with Kroc after he died. They weren’t able to get everything out of the deal they made with Kroc. 
  3. Kroc, who was buying the land needed to build the franchisees, would lease that land to couples who he signed a contract with. The contract included being paid 4% of the monthly sales made by the franchisee, as well as the monthly rental fee for the leased land. 
  4. Like mentioned before, Kroc would own the land required to build a franchisee. By leasing said land to those who wish to open up a franchisee, Kroc was able to collect a portion of the sales, from the lease contract. 
  5. Not necessarily, I’m not saying I’m experienced in the world of business. However I would assume that integrity and morality would work against you. Especially when working with those like Kroc, power hungry and looking solely on the future. It’s clear the world of business is unforgiving to those who play it safe and focus on the smaller picture, like the brothers. At the end of the day big businesses like McDonald’s weren’t built by those who were filled with moral integrity. They were built by those who sought cold hard harsh progress. And sure you could say men like Kroc are evil for what they did, but he was able to win, because he understood what was needed to survive in the world of business. And what would that be? Self interest and selfishness. Overall my perspective on McDonald’s hasn’t really been altered by this film, I’d still happily enjoy my cheeseburger and fries and coke, any day of the week.