The story has become a founding myth of American capitalism, and the film The Founder (2016) fixed it in collective memory. It deserves to be untangled, because the verifiable part and the fictionalised part are not of the same nature.
What is established
The meeting. Ray Kroc had been the exclusive distributor of the Multimixer, a milkshake machine, since 1939. He visited the brothers Richard and Maurice McDonald in San Bernardino in 1954. The version published by McDonald's Corporation itself is sober: this visit “led him to become their franchising agent”. The New York Times obituary of Richard McDonald, in 1998, is even more direct: Kroc, who was not selling many machines except to the McDonalds, “went to San Bernardino to find out why, and was so impressed that he asked them for a job as franchising agent”.
Franchising predated Kroc. This is the point that the popular account erases. The brothers were already franchising. The New York Times writes that “by 1954, the McDonalds had sold 21 franchises and opened nine outlets”; McDonald's official website, for its part, speaks of 14 franchises sold, 10 of which had become operating restaurants. The two figures differ - we give them as they are.
Des Plaines, 1955. The restaurant opened by Kroc on 15 April 1955 in Illinois was the first of Kroc's. It was the ninth McDonald's restaurant.
The 0.5% royalty. It was contractual, and dates from the 1955 agreement: Kroc received 1.9% of the franchisees' gross turnover, of which 0.5% went to the brothers.
The 1961 buyout. McDonald's Corporation states it on its own website: “McDonald's acquired the rights to the brothers' company in 1961 for 2.7 million dollars.” The amount had been calculated so that each of the two brothers would receive one million after tax.
What is not established: the handshake
The film tells how the brothers allegedly obtained, on top of the 2.7 million, a verbal promise of 1% of future profits - a promise that Kroc supposedly never honoured, and whose epilogue puts the lost income at “more than 100 million dollars a year”.
No primary source documents this secret agreement. The claim rests on statements by a descendant of the McDonald brothers, relayed by the film. The figure of “100 million a year” is an estimate by the film, not a verified figure. The rate itself varies according to the accounts (0.5% or 1%).
A biographer of Kroc, Lisa Napoli, offers a different and more prosaic reading: as McDonald's was short of cash, Kroc asked to pay for the buyout in instalments; the brothers refused, preferring to continue receiving their 0.5% royalty if he could not raise the sum. In other words, the 0.5% royalty existed before the buyout and ended with it. A corroborating element: the 1998 New York Times obituary, which recounts the sale and the falling-out in detail, makes no mention of any unpaid royalty.
What the family actually disputed: authorship
The falling-out arose from Kroc's autobiography, Grinding It Out (1977), which has McDonald's being born in Des Plaines in 1955 - not in San Bernardino. Richard McDonald told the Wall Street Journal in 1991, as quoted by the New York Times:
“Up until the time we sold, there was never any talk of Kroc as founder. […] If we had heard about it, he would have gone back to selling milkshake machines.”Richard McDonald, quoted by the New York Times, 16 July 1998 - originally in English
The company eventually settled the matter, through a spokesman in 1998: “We have mutually agreed that Dick and Mac were the pioneers of McDonald's and helped found the fast-food industry. Mr Kroc was the entrepreneur who founded what is known today as McDonald's Corporation.”
On money, however, Richard McDonald showed no bitterness. Asked years later about his regrets, he replied that he had none: otherwise, he said, he would have ended up “in some high-rise office building with four ulcers and eight tax attorneys”. His descendant told CBS in 2017: “My grandfather was never bitter about it. Why should we be bitter about something he wasn't?”
The original restaurant
The brothers had kept their San Bernardino establishment, but not the right to use its name - it was renamed “The Big M”. Kroc, as he recounts in his autobiography, opened a McDonald's nearby, and the Big M closed. This is the protagonist's own account; we know of no other.
This story, whatever the share of legend in it, says something accurate about the model: what has value is not the restaurant, but the name and the system. The brothers kept the premises and lost the brand. This is also what happened, twenty years later, to the first French franchisee, Raymond Dayan, whose fourteen restaurants had to become O'Kitch outlets. And it is the lever that the company's annual report still openly claims today.
What Kroc actually built
If one sets aside the scenes from the film and the autobiography, three documented decisions remain, and they are enough to explain the rest.
Standardisation. The brothers had designed the kitchen; Kroc turned it into an enforceable standard. Procedures, cooking times and cleanliness became contractual obligations - what the network would later designate by the three letters QSC. An operating standard thus became a legal weapon: failure to comply grounds termination. It was on this basis that McDonald's obtained in 1982, before an Illinois court, the end of the licence of Raymond Dayan, the first French operator.
Real estate. This was the contribution of Harry Sonneborn, not Kroc: the group takes the leases, then sublets them to the operators. It thereby collects rent in addition to the fee - and holds the asset that the franchisee will never own.
The contract. The franchise agreement organises the whole: a long term, standards prescribed by the network, two-tier remuneration. There is nothing secret about this structure: it is described every year, in black and white, in the 10-K annual report that the group files with the US stock market regulator.