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The story follows Ray Kroc, who is an
unsuccessful salesman. On one of his many business endeavors, selling a
milkshake machine, he hears of a business that needs an abnormal amount of
milkshake machines. He drives down to this fast food restaurant in San
Bernardino. There he meets the McDonalds’ brothers, Mac and Dick, they take him
on a tour, and show him the layout of the restaurant, and how efficient their
system is. He invites them to dinner, where they proceed to tell him the
origins of the business. Ray eventually persuades them to franchise their
business. They sign a contract with him that requires him to have their written
permission before making any changes. Their franchises soon start becoming
successful, due to Ray’s middle-class investors. Ray takes particular interest
in one of his investor’s wife, Joan Smith. Financial struggles arise, and to
lower the cost Ray suggests they use a milkshake powder, which the brothers
disagree to, as they believed it was subpar quality. With the help of a
financial consultant, he establishes Franchise Realty Corporation later known
as The McDonald’s Corporation. Continuously breaking his contract multiple
times, he succeeds in buying the company and the rights to the name. The
brothers change the name of the original restaurant to The Big M, but Kroc put
a McDonald’s across the street that put them out of business in a few years.

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Entrepreneurial successes and


2.1  A) Ray Kroc was perseverant, he started as a salesman and no matter how many people
turned him down, which was shown in his experiences at the bank where he
couldn’t get a loan, and he still kept going. The McDonald’s brothers juxtapose
this as they tried to franchise once and after it failed due to people not
keeping up the quality of their restaurant they didn’t try again or continue to


B) Kroc thought big
and was a risk taker; he invested in
all the restaurants even though he was not making enough profit. He kept on
investing and while the McDonald’s brothers were locally focused. Starting
Franchise Realty Corporation was another risk, as it could have made the
brothers end their business contract.


C) Kroc succeeded as,
he went out of his way to target people he believed could help him, such as the
men at his country club, and develop his ideas, such as making the decision to
target middle-class couples instead of rich people, as they were more likely to
keep to the working formula. Him making this decision shows that he made the right connections, and uses them to his
advantage. Kroc constantly kept on searching for investors, and ways for his
ideas to become a reality. He did not become complacent with mediocre success;
this kept him looking for ways to improve. This made him a better entrepreneur
than the brothers as they only cared about small success, while Kroc wanted
large scale success, he saw the bigger picture.


D) Kroc was adaptable and flexible. He kept on being
innovative in how to franchise. Looking for the right locations to place each
restaurant. He was searching for more cost effective ways to boost McDonald’s
such as preferring to use milkshake powder over real dairy because it was
cheaper. Kroc also experienced what the brothers did, with the separate restaurants
having poorer quality, to solve this he changed the target group that would own
the McDonalds restaurants, unlike the brothers whenever he encountered a
problem he adapted to the situation, not give in.


E) Ray Kroc was
keeping track of what could make the business more cost-effective, while the
McDonald’s brothers were focused on maintaining their quality. Both were
unwilling to compromise and therefore this caused their partnership to fall
apart. Their shortfall was partnering with someone that didn’t share the same
views as they did, and giving him too much control, without monitoring more



            Debate professionalism, ethics,
and effective business practice


2.2  A) Professionalism:
The McDonald’s brothers used word of mouth excessively when dealing with contracts.

They gave him verbal warnings, but took no legal action till it was too late; they
didn’t specify their business culture up front. When discussing the 1%
royalties the brothers wanted, they didn’t write a contract, but shook hands.

This makes it hard to prove that there was a deal made, and therefore can’t
take any further steps against him.


B) Effective business practice: In their
partnership, they didn’t have good communication. There were no specific days
given for them to have meetings, allowing for a disconnection between them
grow, and when Kroc was drifting away from the businesses original views, they
couldn’t pick it up earlier. When he called them on the phone and told them he
was starting Franchise Realty Corporation, they had their suspicions yet didn’t
act on it, until he called them and said that “contracts were made to be broken”.

The McDonald’s brothers were too trusting; this shows, as they were not in
constant communication with their lawyers about their partners’ behavior, even
though it was their first official partnership. They were unprofessional and
unaware of what the business environment is really like, as they gave Ray Kroc,
and many others, tours of their system, knowing this was one of the main reasons
their business was successful, putting themselves in the position to be stolen
from, and exploited. As well as not copyrighting the term ‘Golden Arches’.


C) Ethics: Ray Kroc’s
actions become more unethical as the movie progresses. When he decides to make
the Franchise Realty Company with the intention of buying the land for
McDonald’s restaurants that would be giving him the upper hand over the
brothers could be considered unethical, however as it is a separate business,
it was completely legal.


Conflict management


2.3. A) When Ray brought up the idea of selling the powder
milkshakes. He didn’t account for their views on the quality they wanted their
brand to stand for, the brothers didn’t listen to him either, as with almost
every idea he brought up to them. They shut down too many ideas of his that
were with good intention, this led to Kroc feeling disrespected and becoming
more frustrated with the brothers, this opened the gateway for him to try an
steal their business instead of cooperating with them. To resolve this, they
should have had a written contract that they kept him accountable to, but more
importantly they should have listened, and improved their communication, a way
they could have done this is by not having so many over the phone
conversations, but set up meeting times, face to face.


B) When Kroc wanted a raise, the brothers were adamantly
against it, even though he had brought them a lot of success and in a normal
business this usually ensures a raise or bonus. The brothers not giving him a
well deserved raise, led to him reacting violently, yelling and a loss of
respect between them, and the eventual backstabbing that followed. To solve or
prevent this situation they should have been considerate and put themselves in
his shoes. They should have been more detailed in their contract and specified
how the payments were going to be dealt and the possibilities for raises.



C) Kroc started franchising without their consent and
claiming himself to be the founder of McDonald’s and the Golden Arches. The
McDonald’s brothers should have been more aware about how Kroc was franchising,
if they were aware of this they would have known to copyright, and avoided the
possibility of him legally stealing the credit that they deserved. Kroc’s
behavior was unethical and they should have brought it up to him in person and
brought up the possibility of taking legal action. They didn’t establish their
boundaries and therefore he felt he could treat them as equals even though they
were his superiors, this uncertainty of power led to a power struggle that
should have been avoided by setting down a precedent.


D) As mentioned earlier The McDonalds brothers always turned
down his ideas, this resulted in him no longer asking permission and deciding
he knew what was best for the restaurant. The McDonald’s brothers were scared
of the uncertainty that Ray brought with his new ideas and changes making them
lash out instead of embrace it. Their business relationship was going downhill,
lack of respect between them bred an unhealthy working environment. They kept
blaming one another, what they needed was a third party intercessor, that could
mediate and help them see eye to eye.