Movie Review: ‘The Founder’

September 4, 2017

by Eric Schansberg, Ph.D.

Most people think that “The Founder” is a good movie — well-acted and well-produced, a compelling story on a topic of cultural interest. But it’s a terrific movie if you’re into business, economics, ethics and entrepreneurship.

When I’ve asked people about it, they say it was good, but it left them feeling ill. They didn’t like Ray Kroc and they felt sorry for the McDonald brothers. But it wasn’t nearly as bad as I anticipated. It seems like another example of how easy it is to see sins of commission (by profligates like Kroc) while we overlook sins of omission (by conservatives like the McDonalds).

For one thing, I had the impression that the brothers were rubes. Instead, they were experienced, shrewd, and even brilliant. As the brothers put it, we were “an overnight sensation 30 years in the making.”

The brothers also had the upper hand in their first contract with Kroc — and greatly benefited from it. They negotiated a really low margin for Kroc. How do we know it was low? Kroc was doing everything right and “succeeding,” but he was still going under, despite mortgaging his house. As one character notes later: If Kroc wasn’t making a ton of money, something was terribly wrong. From a Christian worldview, the McDonalds should have renegotiated and increased Kroc’s margin. They were making plenty of money — in their own endeavors and from Kroc’s work. The brothers also broke at least the spirit of the law in being so inflexible. They were taking advantage of him, whether knowingly or not.

For the second contract (dissolving the first) Kroc was in a more powerful position and seemed to take advantage of it. His handshake lie was unethical. But when the brothers sign, they know that they’re only going to get the $2.7 million. So, you can view it as part of the negotiation — and they still could have walked away. (Imagine the difference if Kroc had been completely honest and cooperative previously — and then broke the handshake deal.) They were even willing to sell the right to name their own restaurant.

The brothers were paid  well to break the contract. Today, $2 million post-tax would be tens of millions of dollars. This begs the question of what the McDonalds should have received. What credit and how much money did they “deserve”?

Kroc reveres the power of the McDonalds’ name. In the movie, he notes that people wouldn’t buy burgers from a restaurant called Kroc’s. The name McDonalds sounded . . . well, American. To what extent do the McDonalds deserve financial rewards, merely for being born into a good name?

Their efforts certainly set the table for Kroc, but their work was not a sufficient condition for his success. They had an amazing restaurant and they had figured out a way to do mass production in developing a new “fast food” industry. But they couldn’t franchise it, so we know that Kroc brought a ton to the table.

Interestingly, we tend to overlook the fourth entrepreneur who, behind the scenes, was ultimately responsible for the success: the legal/finance wizard, Harry Sonneborn. Without him, none of this happens.

What motivated the entrepreneurs in the movie? All of them were driven by money to some extent. But there’s far more to it for Kroc and the McDonalds. Both saw value in doing things the right way. Both saw their efforts fitting into a certain vision of America. Both enjoyed entrepreneurship and the act of creation — as is emphasized in another excellent movie, “The Call of the Entrepreneur.”

I didn’t feel sorry for the McDonalds, but I felt sorry for Kroc’s first wife, Ethel (whom he divorces). And I pitied Kroc at the end of the movie. Year later, he’s preparing to give a speech, practicing in front of a mirror and describing “how it all began.” When he says his version of the beginning (completely ignoring the McDonalds’ role), he gets a funny look on his face, showing us that he knows it’s a lie and an empty claim.

Maybe that’s the punchline of the movie: When you live from a materialistic worldview with worldly pursuits, hearts and contracts will get broken, lies will be told and lived. As Solomon tells us in Ecclesiastes, this way of life is ultimately a matter of vanity.

Eric Schansberg, Ph.D., an adjunct scholar of the Indiana Policy Review Foundation, is professor of economics at Indiana University Southeast.


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