Being released in cinemas this week, The Founder is the
story of how Ray Kroc built the McDonald's empire.
Michael Keaton plays Kroc and portrays him as an unlikeable,
ruthless character who steals the ideas and even words of others
without shame. He takes the brand concept and systems originated by
Mac and Dick McDonald and passes them off as his own work. In doing
so he grows their small operation to one across the US and
On the facts as presented in the film, there are a number of
lessons familiar to experienced franchisors on the dangers to be
aware of and essentially, the mistakes to avoid.
Choosing the wrong franchisees at the
"And spend the next 10 years trying to get rid of
them!" say many franchisors. Ray Kroc is no exception, with
the first few McDonald's franchisees failing to follow the
system. We could also observe that the McDonald brothers may have
ultimately regretted their choice in Kroc as master franchisee.
Having too slim a royalty or revenue
As master franchisee under a fairly unfavourable contract, Kroc
has a very thin slice of the profit pie. This was not enough to
support his operations or to grow the business, a situation that
almost leads to its collapse. We all know that for franchising to
work everyone has to have enough of the revenue to be profitable,
and while we usually think of franchisees in this situation,
franchisors and their masters also need enough to fund their own
businesses, provide the support to franchisees, and to expand the
system and be successful.
Not taking control and command
In the film, the McDonald brothers are all about keeping control
of their automated system for making and selling burgers and their
menu. They emphasise the importance of maintaining control to Kroc,
who learns the lesson himself when faced with his early franchisees
refusing to follow the rules. He then alights on a solution to both
his problems – in becoming landlord to his franchisees, it
provides him both an additional revenue stream to the meagre
royalty and a way to control the sites and eliminate any
The flipside to exerting control and uniformity is that the
McDonald brothers were so rigid in their application of their
system that they refuse to accept any ideas for improvement –
a situation that ultimately forces Kroc to act and assert his
Selling the farm
Dick and Mac McDonald gave the master franchise rights to the
whole country to Ray (for nothing upfront apparently?) in return
for only a small royalty share. Once Kroc solves his own revenue
problem he grows his empire to a stage where he overtakes them in
wealth, which then puts him into the position of power and superior
The film shows Ray Kroc to be someone who is incapable of a
single original idea. This lack of imagination means he fails to
see that he could have just replicated the McDonald's system
under a different brand, rather than sign on with the unfavourable
deal with Mac and Dick McDonald.
When he is posed with the query as to why he didn't pursue
that path, he attributes the success of the chain to the very name
"McDonald" and believes it to have some kind of inherent
magical quality or appeal. He appears to fail to understand that he
has personally built the brand and the mythology surrounding it.
Whether Kroc really thought this or whether his original decision
was more likely a result of needing the experience and resources of
the brothers, he made up for this initial lack of creativity with
Kroc ultimately attributes his success to persistence, but he
also obviously had an innate ability to recognise a great idea and
put it into action.
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