Ray Kroc: The Entrepreneur Who Built The McDonald’s Franchise

“The two most important requirements for major success are: first, being in the right place at the right time, and second, doing something about it.”

– Ray Kroc

I’m going to begin with this: Ray Kroc was the entrepreneur who built the McDonald’s franchise.

This is the guy who knew he was on to something after seeing the McDonald brothers’ hamburger restaurant in action. I Ray’s case, he was definitely at the right place at the right time.

Allow me to introduce you to Ray.

 

 

Ray Kroc

Ray (Raymond Albert Kroc) is my personal franchise business hero. He’s someone who should be a hero to everyone who is part of the franchise industry. Franchise owners everywhere owe Ray a debt of gratitude. Because without Ray Kroc, the franchise industry probably wouldn’t exist. Or, if it did, it wouldn’t be as good as it is today. Or as powerful. Or, as important to the U.S. economy.

The McDonald’s franchise empire wouldn’t be the dominant force it is today, either.

Ray was the man. In so many ways.

His vision for franchising has impacted so many people and so many franchise concepts over the years.

And, still does.
 

A Ray Kroc Short Biography

 

I wrote about Ray Kroc in my book, Become A Franchise Owner! The following is an excerpt from Chapter 2.

Born in 1902, Ray Kroc was a sales guy with incredible vision. He started out selling milkshake mixing equipment, and even mortgaged his home to become a distributor of the ‘Multi-Mixer’ – a hot product during that time that could make five milk shakes at the same time. Ray traveled all over the country, meeting entrepreneurs in the food industry and selling them his products.

During his travels, he had heard about two brothers from California named Dick and Mac McDonald. The McDonalds owned a very busy hamburger stand at which they were using eight of Roy’ milkshake mixing machines — simultaneously. Ray drove to California, since he had to see this for himself. What he observed there was an assembly line-like system being used in – of all places -a restaurant! The McDonald brothers appeared to have this procedure of theirs down to a science.

Ray had an epiphany after seeing this amazing restaurant operation first hand: he envisioned these restaurants being built all over the country. As it happened, the McDonald brothers happened to be looking for a ‘franchising agent,’ to sell franchises across the country — and as someone who’d been a salesman for the past 30 years, Ray Kroc was just the guy for the job.

Ray cemented a deal to be the McDonald brothers’ exclusive agent, and started selling franchises. At the same time, he also opened the first duplicate of the McDonald brothers’ California restaurant in Des Plains, Illinois. Ray saw something big in the making, and tried to convince the brothers that they should start thinking bigger also. A few years later, the three owned multiple restaurants. However, Ray was the one that wanted to build the eateries into a true ’empire.’ He recognized that it was the perfect time to introduce a chain like this, as automobile travel was becoming increasingly popular the 1950s, and freeways were beginning to build up in a big way.

There’s a lot to absorb there.

Let’s start with one of the most important trends Ray capitalized on.

 

 

Freeways

Travel used to be quite difficult. Until it wasn’t.

More from Chapter 2 of my franchise book…

Increased automobile use increased the need for paved roads, which ‘paved the way’ for businesses to open up along these new roads – business that could support these drivers’ (and automobiles’) needs. In other words, now that automobiles were common all over America, businesses were sprouting up everywhere that people traveled.

Ray Kroc knew what he wanted. He pictured the McDonald brother’s hamburger restaurants dotting the landscape, and knew that the people traveling all over the country by automobile needed places to stop and eat. Kroc ended buying out the McDonald brothers for a paltry $2.7 million. With the less than motivated McDonald brothers out of Ray’s hair, he was free to bring this idea of his to the next level. And so he did.

By 1963, McDonald’s had grown so much, that its signs boasted information about ‘One Billion Hamburgers Sold’! By this time, McDonald’s just had just hit its 500th restaurant mark, and it was uphill from there – to say the least.

Today, lots of franchise businesses (including thousands of McDonald’s franchises) are located at just about every freeway exit across America.

Only true entrepreneurs have the vision…clairvoyance really, to “see” what’s coming.

Can you think of any other entrepreneurs with that kind of vision? I can.

How about:

• Steve Jobs
• Howard Schultz
• Elon Musk
• Sergey Brin
• Larry Page
• The dude who founded Microsoft?

So ahead of their time.

So smart.



 

Ray Kroc: The Entrepreneur Who Built The McDonald’s Franchise

Ray Kroc went from from selling Multimixer milkshake machines to creating and selling franchises. That’s one heck of a jump. And, he sold a lot of franchises over the years.

(The Multimixer)

Think about what this milkshake machine salesperson-with an obvious entrepreneurial urge, was able to do with a simple hamburger stand.

 

Ray Kroc Debt

It’s the struggles we go through-work through, really, that make us stronger.

In any event, Ray Kroc was a wealthy man. But, he didn’t start out that way. He certainly wasn’t born with one of these…

As a matter of fact, as you’ll see in this video, Ray started his franchise empire in a lot of debt-thanks to the McDonald brothers, who omitted one very important thing when they sold their hamburger stand and their name to Ray.
 

 

 McDonalds: Super-Sized Hamburger Empire

After working through his debt, Ray’s hamburger restaurants started becoming profitable. Ray Kroc ended up building a franchise empire of epic proportions. Super-sized, actually. Maybe it would help if I visualized the size of the business Ray created. The infographic below is a snapshot of McDonald’s revenue from 2005-2013.

You will find more statistics at Statista
 

Ray Kroc Quotes

for the purpose of this article, I spent a half hour or so searching around for the best Ray Kroc quotes. Below, you’ll see which ones I chose. Read each one twice to get the full effect…to experience the power of Ray’s words.

“The McDonald brothers were simply not on my wavelength at all. I was obsessed with the idea of making McDonald’s the biggest and the best. They were content with what they had; they didn’t want to be bothered with more risks and more demands.”

“None of us is as good as all of us.”

“We take the hamburger business more seriously than anyone else.”

“When times are bad is when you want to build! Why wait for things to pick up so everything will cost more?”

“If you’re not a risk taker, you should get the hell out of business.”

Great stuff. Thanks, Ray.

Here’s one more. It’s so true.

“Its easy to have principles when you’re rich. The important thing is to have principles when you’re poor.”

 

McDonald’s Today

If you’ve read my hardcover book, or have been a subscriber to my blog and/or my VIP Franchise Newsletter, you know that I’m not one to sugar-coat things.

McDonald’s is in trouble. There’s no other way to say it.

I’ve been writing about the struggles McDonald’s has been going through for the past couple years. I’ve been a very harsh critic. I’ve offered suggestions, freely. I care a lot about the company. I care because it was Ray Kroc’s baby.

The entire franchise industry needs to pay attention to what’s happening at headquarters. It’s that important.

In a nutshell, if McDonald’s doesn’t transform their business into what it once was, the entire franchise industry will take a massive hit. Our credibility as an industry will be lost.

Check out these recent headlines:

Pretty ugly stuff.

As far as I’m concerned, McDonald’s is really screwing things up.

They’ve been in a serious slump for a while now.

Their franchisees are really mad.

What used to be the best franchise to own-isn’t now.

I really hope the executives at McDonald’s don’t ignore this.

 

Update!

There is now a movie about Ray Kroc. Here’s a clip.
 

 
 

Ray Kroc Dreams And More

Fact: I got to interview Ray Kroc. Read the interview.

I was also able to physically go back in time to eavesdrop on the conversations Ray had with the McDonald brothers.

I have a feeling that Ray is rolling in his grave-and is pretty angry about what’s been taking place at headquarters-and how franchisees are faring.

Did you hear that a movie about Ray Kroc-and his possible dark side, is coming out soon?

Ray Kroc was the entrepreneur who built the McDonald’s franchise. He did an amazing job.

Ray Kroc’s dreams came true. He sold thousands of franchises. He enabled a lot of his franchisees to become millionaires. He created amazing business systems.

Will his dreams live on?

 

Ray Kroc image courtesy wikispaces- http://f08-mana156.wikispaces.com/Ray+Kroc 

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