The Ethical Economics
Study Center

The Founder (2016)

This movie tells the story of the founding of the McDonald's hamburger chain in the United States in the 1950s.  Ray Kroc, played by Michael Keaton, was a milkshake-machine salesman who stumbles upon an innovative fast-food hamburger restaurant created by Mac and Dick McDonalds in San Bernadino California.  Kroc convinces the brothers to accept his efforts to expand the restaurant to a chain of franchises. This ultimately leads to a struggle for the control of the company as fast food hamburgers and fries quickly become a national sensation.  

The Founder offers many positive lessons about running a successful business, including the development of efficient production techniques, the importance and difficulty of maintaining product standardization and effective methods to control franchise profits and leverage these for greater expansion.  The success of McDonalds is easily quantified in the number of hamburgers sold to consumers, each of whom willingly purchased a consistently reliable and affordable product and thereby made themselves a little bit happier. This is the right way to become a billionaire because wealth is earned by making others happier.  By 1963 McDonalds was able to post on their signs, "over 1 billion hamburgers sold." Today, it is estimated McDonalds has sold over 100 billion hamburgers.  

The movie highlights several ethical issues as well.  Viewers are likely to come out on different sides of the issue whether Ray Kroc unfairly took control of the company or if he was simply a smart and persistent businesman who knew better how to turn a small burger shop into an international megacorporation. One might claim that the genius of McDonalds was the simple menu, the consistent and fast production methods and the product's affordability and that this was mostly due to the original innovations of the Mcdonalds brothers who never received a fair share of the company's ultimate profits. On the other hand, one could side with Ray Kroc because he eventually pays the McDonald brothers to sign away their rights in the company for a hefty sum of money that made the McDonalds instant millionaires.

A second ethical issue arises in the handshake promise that Ray Kroc makes upon closing the buyout deal to give 1/2 percent of future profits to the McDonalds brothers. (today that would amount to as much as $100 million dollars per year) He claims his lawyers would not allow him to put that clause into the buyout contract but he promises to make the payment nevertheless. The brothers sign the deal, but never receive a penny of future profits. Were the brothers at fault for signing the contract with only a handshake promise, or, was Ray Kroc at fault because he failed to fulfill his promise?

Finally, there is an issue of attribution. The movie's title, The Founder, points to the controversy of who was the original founder of McDonalds, as it exists today.  Was it the original innovators of fast food and the namesake of the company, the McDonalds brothers?  Or, was it Ray Kroc, who eventually claimed the title as the McDonalds' Corporation Founder to the dismay of the McDonalds brothers?  In Kroc's defense, one could point to his franchise innovations as a key reason behind the Corporation's success.  

In any case, the movie offers an accurate historical account of the rise of the most successful fast food restaurant in history. It offers good lessons about how to become rich, appropriately, by providing a reliable and affordable product to billions of consumers around the world. Although there are potential ethical lapses in procedures and attributions, Ray Kroc's wealth was not made via monopoly exploitation since the fast food industry remains highly competitive. 

 The movie highlights one other key to success, in both business and in life. Ray Kroc stumbles into his fortune after spending decades as a traveling salesman. Eventually he discovers that one key to great economic success is persistence.

More Info




The Founder - Trailer


The McDonalds Story - CBS Sunday Morning


Reflection Questions

  1. Why does Ray Kroc say that the most important element of success is persistence?
  2. Why is consistency in the product so important? What difficulties arise in getting franchises to maintain consistency in production?
  3. How can one be sure that the sale of McDonalds hamburgers results in so much happiness worldwide?
  4. Why is attribution as Founder important? Although Ray Kroc became weathier than the McDonalds, the McDonalds remain the ones' whose names are known by everyone worldwide. Is that enduring name recognition worth the cost of lost wealth when alive?
  5. In the movie Ray Kroc says "You know what - contracts are like hearts, they are made to be broken."  Discuss how contracts might both impede business success and motivate business success.