When a film opens with an argument supported by Say’s Law (“supply creates its own demand”), you know it’s going to be something special. And The Founder, about Ray Kroc, the founder of the McDonald’s franchise empire, is indeed special. The film opens with a close-up of Kroc (Michael Keaton) in full-on selling mode, explaining to a potential client, “Sure, you don’t think you need the Prince Castle Multi-mixer milkshake maker right now because you don’t have one yet. You have to own a 6-station Multi-mixer before you will actually need a 6-station Multi-mixer.”
Director John Lee Hancock seems to be making fun of the traveling salesman’s spiel, which is reminiscent of Nancy Pelosi’s “We have to pass the bill so you can find out what’s in it.” Yet Kroc was right in theory. Look at how many things we consider necessities today that weren’t demanded before someone else created and supplied them. Did anyone demand a device 20 years ago that would contain 3,000 songs and fit in the palm of your hand? No, we just complained about our CD getting scratched when someone else removed it from the machine without putting it away in its jewel case. But once Steve Jobs conceived it and produced it, the iPod became a must-have device. Did anyone yearn for a double latte cappuccino with a sprinkle of cinnamon before Starbucks introduced variety to the coffee shop (at five bucks a pop instead of a dime)? No. Supply created its own demand.
Nevertheless, not every “supply” meets with sufficient demand to make a profit, and success is often preceded by multiple failures. The McDonald’s story is no exception. Ray Kroc was a mediocre, middle-aged traveling salesman before he met the McDonald brothers, Dick (Nick Offerman) and Mac (John Carroll Lynch). Even when he saw the potential gold mine, he nearly went bankrupt trying to get the franchise model right. The McDonald brothers also went through tremendous trial-and-error before perfecting their simple menu and the compact kitchen design for their SpeeDee assembly line. The scenes of their design process are some of the best in the film. Business success does not come easy. It requires time, capital, innovation, labor, persistence, and a spark of genius.
Kroc is portrayed as a Willy Loman-like salesman who listens to recordings of motivational speakers in his hotel rooms and belongs to the local country club primarily to socialize with potential clients and investors. He’s also portrayed as a heavy drinker, although he never seems to be drunk. His longsuffering wife Ethel (Laura Dern) supports his enthusiasm for each new product he invests in, but she is growing increasingly concerned about how their savings are dwindling instead of growing. Despite her worries, Ray’s optimism remains strong.
As Kroc drives away from his third rejection in the opening montage, he passes a billboard that says, “Time for a Change.” When his secretary tells him that a restaurant in San Bernardino has ordered six Multi-mixer machines, he hops on Route 66 and heads out to discover why they would need to make 36 milkshakes at a time. The rest, as they say, is history.
The story of how Dick and Mac developed their menu model, and how they tell the story to Ray, is another wonderful scene that I won’t spoil for you here. Eventually Ray sees the potential for expanding their model across the country and becomes the franchiser for the team. Here we see another great example of the effort, innovation, and risk a businessperson must expend before becoming an “overnight success.” Ray has to deal with building codes, health regulations, quality control, and maintaining uniformity. He discovers that country-club investors who just want a place to park their money will not become reliable franchisees, so he looks for husband and wife teams of owner-operators who will work at the restaurant from opening to closing and take care of every aspect. Ray also has to deal with rising overhead costs, waning profit margins, and stubborn partners (the McDonald brothers) who dig in their heels against making any changes, even though franchisees are struggling to stay afloat.
The first two-thirds of the film is a textbook story that should be shown in every business school. But the final third takes an abrupt turn against capitalism in general and against Ray Kroc in particular. He hits on the wife of a potential franchisee (Patrick Wilson) on the night he meets them, asks Ethel for a divorce over dinner, and tells his attorney to give Ethel their house, “but not a single share of McDonald’s stock.” All of this is factually true—Kroc did divorce Ethel and marry Joan (Linda Cardellini), and Ethel didn’t get any stock in the company. But we can’t know whether the settlement was made through greedy vindictiveness, as the film suggests, or whether Ethel herself preferred the house to stock in a company that was not yet profitable. The ruthlessness of Kroc in these scenes may or may not be real.
Similarly, Kroc appears to push the McDonald brothers out of the business against their will, and the $2.7 million they receive as compensation is presented as a pittance compared to the value of McDonald’s today. It also appears that Kroc reneged on a handshake deal to give them a percentage in perpetuity, but the brothers were never able to prove that handshake agreement. Again, we can’t know how the deal was reached. Perhaps the brothers preferred the lump-sum bird in the hand to the fragile, unhatched eggs in the nest. Perhaps it was only later that they realized those eggs would become McMuffins and they should have taken a percentage. We can’t know. But at this point in the film Kroc is presented as a greedy, evil capitalist who takes advantage of his franchisees, his ex-wife, and the “little guys” whose idea he seems to exploit.
Although it is noted in the credits that Joan Kroc donated a sizeable legacy to the Salvation Army and NPR, nothing is said about the many other good works of the McDonald’s corporation. For example, McDonalds has provided the first real job for three generations of American teens—myself included. I worked for McDonald’s during my first year of college, and I appreciated how accommodating they were to my schedule. I also noticed that they promoted from within the company and encouraged counter servers to apply to Hamburger U to become managers and even owners, a policy that began with Ray Kroc. In fact, a good friend of mine bought his first McDonald’s franchise right after college and soon expanded his holdings to three profitable stores. He and his wife were the middle-class owner-operators Kroc valued, and they became wealthy through their hard work in the business.
When my daughter was hospitalized for several days at the Cleveland Clinic, I stayed across the street at a Ronald McDonald House, which provided free housing, a communal kitchen, and even snacks and comfort food 24 hours a day. I remember baking a cake at midnight and sharing it with other moms who were just as worried about their children as I was about mine. I’ve always been impressed by the Kroc Center in San Diego (now run by the Salvation Army), where families could stay rent free for up to six months while looking for a job and another six months while saving enough money to rent an apartment on their own. (To read more about Kroc from his perspective, I recommend Grinding It Out: The Making of McDonald’s, by Ray Kroc with Robert Anderson, St. Martin’s Press, 1977– now back in print.)
Why does this film take such an unfavorable view of Kroc? It’s significant to note that the McDonald family is listed among the advisors to the film, and one of the producers of The Founder is SpeeDee Distribution—named for the McDonald brothers’ original hamburger mascot and kitchen design. In other words, this film is about Ray Kroc, but its perspective is from the McDonald family. The McDonalds’ heirs would naturally be resentful toward the man who bought their family name, attached it to the most successful restaurant franchise in history, and didn’t give them residual royalties.
Maybe they’re right—surely there was enough money to go around for everyone. Surely he could have given them a 2 % royalty. But in the food industry, where profit margins are notoriously slim, 2% could be a killer, especially in the early stages, when Kroc was struggling to make the franchises profitable. At the time, he was the one taking the risks, investing his own money, borrowing against his house, training the franchisees, touring the stores, and maintaining quality control. He was the one dealing with local building codes and suppliers, and trying to eke out a profit margin. The McDonald brothers had contributed the original concept, but they were on the sidelines with the franchise business. They were managing one store (the original location) and receiving a percentage off the top, whether the franchisees were profiting or losing. They weren’t involved in the day-to-day struggles of the franchisees, and they were adamantly unmovable whenever Kroc tried to make any cost-cutting changes. Kroc foresaw that the company would go bankrupt if he couldn’t adjust, so he bought them out. And at the time –when a hamburger, fries and a Coke could be purchased for 35 cents — $2.7 million was a heck of a lot of money.
Despite the downturn at the end of the film, The Founder is definitely worth seeing. The early scenes showing how much effort and innovation go into building a business are fascinating and are presented with a humorous flair, especially in the charming portrayal of Mac and Dick. Even the ending of the film is good in that it shows the difficulty that can develop between partners when they aren’t able to adjust to changing environments. The film’s period set dressing is remarkable, from the mid-century automobiles and sleepy stand-in for 1950s San Bernardino, to the vintage wallpaper, clothing, and bric-a-brac in the homes and offices, to the nostalgic Golden Arches. And the story is so American that you’ll feel as if you’re watching your own home movies. You might even want to go out for a Big Mac and fries after the movie.
The Founder, directed by John Lee Hancock. FilmNation Entertainment, Weinstein Company, and SpeeDee Distribution, 2016. 115 minutes.
Jo Ann Skousen is the founding director of the Anthem Libertarian Film Festival. For information about tickets and submissions, go to http://anthemfilmfestival.com/submissions-tickets/
Previously published at libertyunbound.com
