I recently got around to seeing The Founder, the movie dramatizing the early years of McDonald’s, as Ray Kroc transformed the McDonald brothers’ local fast-food restaurant into an eventual global juggernaut. Given the business I’m in, films about entrepreneurial activities are inherently interesting to me, so scenes in The Founder involving people reviewing and signing contracts are perhaps more attention-grabbing to me than they are for the general public.
As recounted by the film (spoiler alert), Kroc grows tired of the brothers’ stubborn refusal to approve his proposed changes in business practices to facilitate fast growth, and he finds the deal he struck with them unprofitable. The brothers ultimately agree to unwind the deal, proposing a buyout by Kroc of them for $2.7 million plus a 1% royalty in perpetuity. Kroc agrees, but says his lawyers need the 1% piece to be a handshake deal, not in the contract, so as not to hinder Kroc’s future financing plans. At the end of the movie, we find out that Kroc reneged on this and never paid them any further.