- What makes Ray Kroc and the brothers different from each other?
Ray was more concerned about making money by growing the business exponentially
- 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?
No , because Ray Kroc undermined their authority by implementing the powdered milkshakes which went against the standards in which McDonald’s had by delivering quality food. However, Kroc took it upon himself to sacrifice the quality of the food for the sake of saving money. What I just mentioned was not the only red flag. The second red flag is when Kroc gets advice from a financial advisor to provide real estate to the franchisees, which will not only provide a revenue stream, but give Kroc leverage over his franchisees and the brothers.
Having leverage over the brothers far supersedes being fair and doing right by the McDonald Brothers.
Kroc continues to pay his so- called respect to the brothers and incorporates a new company, Franchise Realty Corporation and attracts new investors, while opening new restaurants. With the expansion of more restaurants which disregards the brothers standard operation of procedures and overall vision the brothers had for their brand , the brothers increasingly become more and more upset with Kroc. In fact one of the brothers got so upset that he went into diabetic shock after it was revealed that Kroc renames the company the McDonald’s Corporation and demands to be released from his contract so that he can buy the McDonald brothers out. Kroc was disingenuous from the very beginning and used the schemes up his sleeve to undermine the brothers and carry out his own agenda. Selling out McDonald’s to Kroc was definitely the wrong decision.
The brothers agree to a $2.7 million lump sum payment , ownership of their original restaurant in San Bernardino and a 1% annual royalty but when the time comes to finalize the agreement, Kroc refuses to include the royalty in the settlement. This later results in the Brothers having to take their own name off the original restaurant and to add insult to injury Kroc opens the bought out franchise right across the street from the brother’s dwindling business. In the end the McDonald brothers were never paid their royalties, never getting the decency and respect to reap the benefits off the intellectual property they created themselves.
- How did the local store franchisees make money?
Following the normal standard operation of procedures with the exception of implementing the powdered milkshakes the local store franchisees only make money through the actual services and sales after the overhead costs were deducted from their total earnings/revenue.
- How did Kroc make money? How was that different than the franchisees, running the local stores?
By providing real estate to the franchises Kroc was able to leverage the real estate by leasing the land/building that the franchise would run its business on, and then being paid 4% of each franchisee’s monthly sales, and a monthly rental fee for the land, Kroc was able to see profits from the franchisees. Kroc used the franchising model to maximize profits and reduce costs, as well as to gain control of the company.
5. Does this film change your view of McDonald’s?
Even though there’s very little nutritional quality within a McDonalds meal, McDonalds was still a staple to mine and my generation’s childhood. From the smell of fries to the happy meal toy brings back fond memories from adolescents , however , my childhood memories are quickly forgotten now that I know the origin of how Mcdonald’s franchise expanded globally purely off of deceit and disingenuousness, The dog eat dog mentality embodied by Kroc is what led to the acquisition and expansion of the Mcdonald’s restaurant we know of today.