Nephew of Ray Kroc Explains How McDonald's was NOT Stolen From the McDonald Brothers

Excerpt from Ed Potts: "From the Golden Arches to The Untold Story of Ray Kroc" | The I Know A Guy Podcast #001
#mcdonalds #raykroc #thefounder

[stevebiddle]

I got my start in McDonalds at Hank’s restaurant in West Lafayette in 65. Worked for them for 5 years and began my career with MCD Corp which led to me becoming a franchisee. Retired in 15 and sold my 5 restaurants. I am truly a blessed man.

[floridadad]

Ray Kroc paid the bothers the modern day equivalent of 10 million dollars AFTER taxes and they got to keep their original restaurant. They absolutely made out like bandits. One of them even turned around and reinvested a ton of it back into McDonalds corporation stock and made a fortune.

[randyrapidfire]

So the $2.7 million ($1.35 m each) was paid in 1961 which is over $25 million today. So the McDonald's brothers we not left broken on the side of a dusty dirt road, they were business men who made out pretty well.

[briansetter]

I worked at Mcdonalds from prolly 78-82 . i remember the ray kroc " award " on the wall . It was a good company back then . they took care of you .

[supervette]

I don't know a single person who has a nephew, who knows ANYTHING about their uncles life in detail....this is all in the movie lol

[uwillal]

in the movie about Ray Kroc starting McDonalds, "The Founder", one of the McDonalds brothers asked Kroc him why he bought it from them instead of just stealing it and he told them "I need the name McDonalds, No one eats at a restaurant called Kroc's"

[geoffreypereira]

The Founder didn't claim McDonald's was STOLEN from the brothers, just how that $1M per brother relative to the multi BILLION dollar valuation attached to the brand now meant they got less money than they deserved since they invented the original "fast food" concept.

If I was Kroc I would've let them keep their 0.5% for them and their descendants in perpetuity [in addition to the "buy out" money]. It's called "honor."

[duhduh]

The Founder was a great movie but it unfairly demonised Ray Kroc for narrative spice. Not the worst crime. Michael Keaton absolutely killed it as Ray.

[Bonzi_Buddy]

Ray forming the real estate and lease arrangement was not his idea but he enacted and acted upon that recommendation. McDonalds was a juggernaut because of him and his decisions but there were 2-3 other early players that were absolutely vital for the success of the company and none of their last names were McDonald.

[davidpalmer]

The McDonald brothers partnered with Kroc to grow the franchise... They fought him tooth and nail with any progress Kroc wanted to make. So... 'Tis Business!

[RudieObias]

If it wasn’t for Ray Kroc, no one would even know what McDonald’s is to begin with. 😅

[MisterMikeTexas]

Whatever you may think of Ray Kroc, he got it done. He made it happen.
I like this channel's name, "I Know A Guy". It reminds me of one of comic Vic Dibitetto's routines.

[seanritter]

What a great interview! Mr. Potts should have his own podcast.

[tiadaid]

Honestly The Founder did Ray Kroc dirty by portraying him as having stolen McDonald's from the McDonald brothers. In truth, the McDonalds never wanted to be filthy rich. They're perfectly content with what they have, which is why they're more than happy to sell out to Kroc for $2.7 million, which is the amount they had calculated that would give them $1 million each after taxes. They never asked for royalties in perpetuity, and Kroc had to use that money that would have gone to the McDonald brothers to pay for the loan he had to take to buy the out, which ended up costing him $14 million in 1960s money.

The only thing that left a sour taste was the fact that Kroc agreed to the amount in anticipation that the brothers would also hand over the OG store to him, because he required the cashflow from that store to fund the loan he took to buy out the McDonalds. The brothers however had promised the store to two employees, and wouldn't budge on that. Kroc finally relented, but got his revenge by building a McDonald's close to where the OG store was, which no longer had McDonald's branding. The two employees tried to keep it afloat, but subsequently failed to do so.

A Hollywood movie needed a protagonist & an antagonist, so they amended Kroc's story to make him the antagonist. But in reality it's nothing of the sort.

[azimuthbusinesscenter]

If the McDonald brothers didn't have sense enough to have an enforceable contract, Kroc did nothing wrong by having a vision of how to make everyone more profitable, he tried to bring them along. Never look back, never hold on to "the way we do things" while sacrificing progress

[joeblow]

Another poster is claiming that Kroc's real estate company was some violation of his contract with the saintly McDonald's brothers. That is another lie.
Nothing in the contract about the land the restaurants stood on. The brothers had nothing to do with the lots or any money made from them. Never occurred to them.

The franchisees were in charge of selecting the location and securing the property either by purchase or lease. Once Kroc realized from Harry Sonneborn that there was much money made from owning that property and much better control over the business he implemented it and hired Sonneborn.

Most reasonable people would call that good business but ignorant people would rather slander a man's memory and calling it theft. 🙄

Actually if you study it from a business perspective Kroc's real estate company helped the brothers. They selected better locations for the stores and had more control and higher profits.

[capt.obvious]

Without Ray Crock I bet we would never even know about McDonalds. So you think of him good or bad does not matter the man did what he thought was right did not commit a crime or scam anyone like all the false coins out there of this day.

[whereman]

At least in the movie, Ray's back was against the wall. He had his sweat, home, and personal weath on the line. Dick and Mac failed to want to compromise on profits like ads for Coca-Cola and electricity fir freezers. He had to make a takeover. They were paid like the story said. Never have to work ever again. Nobody suffered.

[selfdo]

I should point out that owning a structure and leasing the land it's on is a rather common practice in commercial/retail real estate. Has a lot to do with ability to claim depreciation and reduces capital costs for a particular location. Often, over time, the actual cost of the land-lease is quite modest; but the landowner (McDonald's Corporation in the case of most of its North American franchisees, IDK how the arrangement works outside NA as their tax laws vary, for most other outfits, some REIT, or Real Estate Investment Trust), as long as the "tenant" is reliably making the rent payments, has a steady rate of return on investment which can be monetized. Kroc not only used this strategy to provide an income stream separate from franchise earnings, it also gave him ability to rein in the franchisees and standardize the brand. For bad or good, there's one thing about McDonald's...you know what to expect, wherever you are.

Kroc's nephew points out that the McDonald's brothers simply exchanged their 0.5% stake in the "McDonald's" corporation that Ray Kroc founded (as opposed to their "McDonald's restaurant") for a lump-sum payment of $1.2M apiece, along with the restaurant NAME. While at the time it might have seemed like a good move (worth in excess of $15M apiece in today's dollars!), as the long-term success of Kroc's company was far from assured, being only six years since the first franchise he'd sold opened for business in 1955 in Des Plaines, IL, it ended up being quite short-sighted. Then again, in 1976, would you have put $5, 000 of your hard-earned savings in this startup in Los Altos, CA known as Apple Computer, with two college dropouts building their kit computer out of the GARAGE of the parents of one of them, or ATARI? Or, what if Jobs and "Woz" had sold their shares of Apple in 1981, for, say, $50M apiece, what would THEIR heirs be saying NOW? Also, if the description of the brothers is correct, they were getting older, and one of them wasn't in the best of health, so having ALREADY, thanks in no small part to Kroc, achieved their dreams of each becoming a millionaire (which at the time meant something), why shouldn't they have "punched out" and enjoyed life? As it was, one of them plowed a considerable amount of his payout right back into Kroc's company, so it seems there was also a fundamental split between the brothers by that time going, with one in effect "hitching his star" to Kroc. That man, AFAIK, did a lot better, and so did his heirs, than his brother, though even that man was very comfortable. It seems that much of this MYTH that Ray Kroc scammed and/or bullied the McDonalds brothers stems from their disgruntled heirs.

[JJohnstonLife]

Successful people always seem to have successful people in the family.