By GREG SARBER
Recent events have reminded me that there are two sides to every story and of an interesting historical parallel.
The McDonald’s fast food chain is one of the largest corporations in the United States, with over 40,000 franchise restaurants worldwide and a market capitalization of over $200 billion. However, it wasn’t always this way, and there was a great deal of controversy about how the restaurant chain got started.
The McDonald’s corporation began with a single restaurant founded by two brothers in California back in 1948. Maurice and Richard McDonald founded a restaurant in San Bernardino to sell hamburgers and milkshakes.
They produced food quicker than their competitors and prided themselves on being able to sell it for half the price and in half the time as other restaurants. They called this their Speedee Service System, and credited Henry Ford with the idea, saying they modeled their restaurant after the assembly line that he created for the automobile industry.
The restaurant was so successful that in 1954, the brothers hired an individual named Ray Kroc to help them franchise their business in other locations. Some franchise restaurants were opened over the next 6 years, but the expansion did not proceed as fast as expected since the brothers were more concerned about operating their existing restaurant than managing a corporation.
Kroc saw the potential, and he convinced the brothers to sell him the franchise rights to McDonald’s in 1961. He paid them $2.7 million, which is equivalent to $32.8 million in today’s dollars. The deal allowed them to keep the ownership and operate the original location independent of the new McDonald’s corporation.
The brothers agreed to the deal, which was very favorable for them at the time, given the lack of success of the initial franchise attempts. They were able to get a significant payoff for their efforts. Had Kroc failed, the brothers still retained their original restaurant and were not taking any financial risks in accepting the deal.
Ray Kroc was able to make a rapid expansion of McDonald’s, establishing franchises around the country. As the new corporation became very successful, the brothers began to complain about the terms of the original deal. They alleged that they had a handshake agreement with Kroc to share profits in the new enterprise with them, but he had failed to do so. Kroc’s position was that no such agreement was made, and that he had treated the brothers equitably, complying with the original contract they had agreed to.
It is impossible to say who was right in the matter, but afterwards, there were hard feelings between Kroc and the brothers.
Some people tell the story of the McDonald’s corporation, and portray Ray Kroc as the villain, but it is impossible to say if he did anything wrong. The brothers were well compensated for the deal they signed, and willingly agreed to it. It was only later did they have a case of seller’s remorse. The complaints the brothers made appeared to be a case of sour grapes.
What does this history lesson have to do with anything? Sorry to leave it there and be intentionally vague.
Greg Sarber is a lifelong Alaskan. He is a petroleum engineer who spent his career working on Alaska’s North Slope. Now retired, he lives with his family in Homer, Alaska. Greg serves as a board member of Alaska Gold Communications, Inc., the publisher of Must Read Alaska.
“……..What does this history lesson have to do with anything? Sorry to leave it there and be intentionally vague………”
“……..“The kingdom of heaven is like a landowner who went out at dawn to hire laborers for his vineyard. After agreeing with them for the usual daily wage, he sent them into his vineyard. Going out about nine o’clock, he saw others standing idle in the marketplace, and he said to them, ‘You too go into my vineyard, and I will give you what is just.’ So they went off. And he went out again around noon, and around three o’clock, and did likewise. Going out about five o’clock, he found others standing around, and said to them, ‘Why do you stand here idle all day?’ They answered, ‘Because no one has hired us.’ He said to them, ‘You too go into my vineyard.’ When it was evening the owner of the vineyard said to his foreman, ‘Summon the laborers and give them their pay, beginning with the last and ending with the first.’ When those who had started about five o’clock came, each received the usual daily wage. So when the first came, they thought that they would receive more, but each of them also got the usual wage. And on receiving it they grumbled against the landowner, saying, ‘These last ones worked only one hour, and you have made them equal to us, who bore the day’s burden and the heat.’ He said to one of them in reply, ‘My friend, I am not cheating you.* Did you not agree with me for the usual daily wage? Take what is yours and go. What if I wish to give this last one the same as you? Am I not free to do as I wish with my own money? Are you envious because I am generous?’ Thus, the last will be first, and the first will be last.”………”
That parable immediately came to my mind as well!
Watch as readership drops. You screwed up. The MRAK board is the McDonald brothers in this analogy.
Love the photograph accompanying this article. Thanks for a memory of a Gold Rush that I was never a part of.
Had Ray Kroc not hired Harry J. Sonnebornm, who convinced Kroc that he was running a real estate company, not a hamburger company, Kroc may have went broke. I am sure the McDonald brothers would run to his aid with their money, had he started going down the tubes.(sarc) Successful people in business are generally villainized because, in the free market there are always successes and failures. The McDonald brothers had neither the vision, nor the inclination, run a giant corporation.
Really! Another piece from
Faulkner’s Board of Director who is labeled as a “ Senior Contributor. About g McDonalds! Really? McDonald’s?
This not representative of why Suzanne had so many readers.
Come on Mr Faulkner. Get with the program. Readers want local news and local gossip. We want to debate it in the comment sections. Not to go to sleep from boredom.
If you want readers to make financial contribution you are going to have to publish articles that promote debate. Not put readers asleep.
Most readers of MRA desire confirmation of their views and a platform to spew. Debate, genuine, honest debate on MRA site is like Leap Year. It happens once every four years.
So Joe, please allow me to ask a question. I pose this with sincerity and honest curiosity in a effort to understand.
Why are you here?
Why spent time reading stories on MRAK and comment, if you deem both the authors and readers to be unsophisticated rubes?
We need dialogue not insults.
How clever of you, Greg.
Left “intentionally vague”, but nonetheless pretty transparent. The photo of Skagway is nice, but needed a more truthful (or at least evasive) caption.
This sort of “reporting” does not replace the actual news that Suzanne Downing wrote and provided on a timely basis nearly every day. I request that you bring her back now!
You should NEVER PUT AT RISK—–THAT WHICH YOU LOVE.
Interesting article, I wonder if there are any parallels in the news recently.
well, that read was a 2 min waste of my time
As I recollect, Suzanne was selling the site in order to car for an aging parent.
If you’re going to tell parables vaguely bagging on her, at least have the decency to remove the cartoon image of her from the site you imply she has no right to speak about. Eh?
Yeah, yeah yeah. We get it. There are always at least two sides to a story. I seriously doubt that Suzanne Downing is sour grapes. She never was selling burgers and shakes. She was selling the Truth, at a discount, because no journalist takes the facts and molds them into a great story quicker than Suzanne Downing. She IS Must Read Alaska, whatever the sales price happened to be. And there is no franchise on her product. Nevertheless, and regardless of the two different sets of facts, I will continue to read MRAK as well as follow Suzanne’s new path. It’s all good!
Great article! /sarc
My, my, my, it’s breathtaking how quickly the peasants turn on their masters
Whom here have a master?
Do you?
Its been said there are three sides to every story,the two sides telling it, and the truth