0:00 In 1961, a handshake deal was made for one percent of all future McDonald's profits—a deal worth billions today.0:08 That handshake was never honored.0:11 Last week on Unlaced Truths, we looked at the real stories behind iconic brands, and honestly, this one about McDonald's might be the most ruthless of them all.0:24 Whoa.0:24 Okay, so the official story, the one everyone knows, is Ray Kroc, right?0:30 The visionary founder.0:32 That's the story Ray Kroc wanted everyone to hear.0:36 He even titled his autobiography "Grinding It Out: The Making of McDonald's." But he didn't make it.0:44 He, uh, he found it.0:45 The real founders were two brothers, Richard and Maurice McDonald.0:51 Dick and Mac.0:52 Exactly.0:52 In 1948, in San Bernardino, California, they created something revolutionary.0:59 They called it the "Speedee Service System." They threw out the huge carhop menu and focused on just a few items—burgers, fries, shakes.1:09 Everything was standardized, like an assembly line for food.1:14 So they invented fast food.1:16 I mean, the actual system.1:19 They perfected it.1:20 It was so efficient that people were coming from all over to see it.1:25 And one of those people was a fifty-two-year-old milkshake machine salesman named Ray Kroc.1:33 He couldn't understand why this one little restaurant needed eight of his machines.1:39 So he went to see for himself.1:42 And his mind was blown, I'm guessing.1:45 Completely.1:46 But here's the turn.1:47 The brothers saw a successful restaurant.1:50 Kroc saw a global empire.1:52 He convinces them to let him franchise the system.1:56 The brothers, you know, they were hesitant.2:00 They'd tried expanding before and it was a disaster for their quality control.2:06 Mm-hm.2:07 They cared about the product, he cared about the model.2:11 Precisely.2:12 And for years, there was this constant tension.2:16 Kroc wanted to cut corners on ingredients, change recipes to save money.2:21 The brothers kept saying no.2:24 Their contract gave them final say.2:26 So Kroc realized he didn't just want to be their partner.2:31 He wanted to BE them.2:33 So what did he do?2:34 Just...2:35 take it?2:35 He bought them out.2:37 In 1961, he secured the financing to buy the company and the name for two-point-seven million dollars.2:45 The brothers thought they were set for life.2:49 A million dollars each, after taxes.2:51 That sounds like a lot for 1961.2:54 But not for...2:55 you know...2:56 McDonald's.2:57 Not even close.2:58 But here is the ugliest part.3:00 The deal specifically excluded their original restaurant in San Bernardino.3:06 They were forced to rename it.3:09 And the one percent royalty deal?3:11 Kroc said the financiers wouldn't allow it in the written contract, but he gave them his word.3:19 A handshake.3:20 Wait—the handshake you mentioned at the start.3:24 That was the royalty deal?3:26 That was the deal.3:27 They got NOTHING.3:28 And to finish the job, Kroc opened a brand new McDonald's a block away from their original, now-renamed restaurant, and drove them out of business within a few years.3:42 That is just...3:43 brutal.3:44 He erased them.3:45 He erased them and then wrote himself into the story as the founder.3:50 The official company history, for decades, listed 1955—the year Kroc opened HIS first franchise—as the founding date.4:00 Not 1948, when the brothers actually built the system.4:04 So it raises this huge question, right?4:07 Who is a founder?4:08 Is it the person with the original, brilliant idea?4:12 Or is it the person with the ambition and, uh, the ruthlessness to scale it to every corner of the globe?4:21 That's the whole ethical mess.4:23 Kroc built the empire, no question.4:26 But he built it on a foundation someone else laid, and then made sure nobody remembered the architects' names.4:35 The brothers never spoke about it publicly.4:38 They just...4:39 faded away.4:40 Richard McDonald died in 1998, and only then did the full story really start to get traction.4:48 So for almost forty years, the official story just held.4:52 Because they were too gentlemanly, or maybe too beaten down, to fight it.4:58 I think so.4:59 It makes you wonder, doesn't it?5:01 How many of the "great man" stories we celebrate in business are built on a handshake deal that was never honored?
