Curious about how much the McDonald brothers made from their fast food empire? Prepare to be shocked by the tale of entrepreneurship, betrayal, and lost fortunes that unfolds in this captivating blog post. From a simple handshake deal that cost them their fortune to the lasting legacy they left behind, there are valuable lessons to be learned from their story. So sit back, grab a snack, and let’s dive into the fascinating world of the McDonald brothers.
Key Takeaways
- The McDonald brothers sold their company to Ray Kroc in 1961 for $2.7 million, ensuring each brother received $1 million after taxes.
- They agreed to a “handshake” deal for 1% royalties of the revenues Kroc would make, but this deal was never honored, and they did not receive any royalties.
- Ray Kroc’s personal net worth at the time of his death in 1984 was estimated to be around $500 million.
- When Richard McDonald died in 1998, he left a will of just $1.8 million, having outlived his brother, and spent his final days in a humble three-bedroom suburban home.
- The brothers made $350,000 a year and split profits of $100,000, or about $1 million in today’s money, before selling their shares in McDonald’s.
- A 2012 Museum of American Finance publication reported that the McDonald brothers would have eventually earned $305 million a year if they had received their 1% royalties.
The McDonald Brothers: A Tale of Entrepreneurship, Betrayal, and Lost Fortunes
The story of the McDonald brothers, Richard and Maurice, is a classic tale of American entrepreneurship and the perils of trusting the wrong people. The brothers’ journey began in 1940 when they opened a small hamburger stand in San Bernardino, California. Their innovative approach to fast food, with its emphasis on speed and efficiency, quickly caught on, and within a few years, they had opened several more locations.
In 1954, the brothers met Ray Kroc, a milkshake machine salesman who was impressed by their operation. Kroc convinced the brothers to let him franchise their concept, and he soon began opening McDonald’s restaurants across the country. As the chain grew, so did Kroc’s power and influence.
In 1961, Kroc offered to buy out the brothers for $2.7 million. The brothers, who were tired of the day-to-day grind of running the business, agreed to the deal. However, they made a crucial mistake: they failed to get Kroc to sign a contract guaranteeing them a percentage of the profits from the future growth of the company.
As McDonald’s continued to expand, Kroc became increasingly wealthy. By the time of his death in 1984, he was worth an estimated $500 million. The McDonald brothers, on the other hand, never saw a dime of the profits from the company they had founded. They lived out their lives in relative obscurity, with Richard dying in 1998 with a net worth of just $1.8 million.
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The Handshake Deal that Cost the McDonald Brothers Their Fortune
One of the most intriguing aspects of the McDonald brothers’ story is the so-called “handshake deal” they made with Ray Kroc. According to the brothers, Kroc promised them a 1% royalty on all future sales of McDonald’s products. However, Kroc never put this agreement in writing, and after he bought out the brothers, he refused to honor it.
The McDonald brothers tried to sue Kroc for breach of contract, but they were unsuccessful. The courts ruled that there was no enforceable contract between the parties, since the agreement was never put in writing.
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The handshake deal has been the subject of much debate over the years. Some people believe that Kroc was a ruthless businessman who cheated the McDonald brothers out of their rightful share of the profits. Others believe that the brothers were naive and made a mistake by not getting the agreement in writing.
Whatever the truth may be, the handshake deal is a reminder of the importance of getting everything in writing when you are entering into a business deal.
The McDonald Brothers’ Legacy
Despite the fact that they lost control of the company they founded, the McDonald brothers made a significant contribution to the American fast food industry. Their innovative approach to fast food helped to revolutionize the way Americans eat, and their restaurants have become a staple of American culture.
The McDonald brothers’ story is a cautionary tale about the importance of protecting your interests when you are dealing with powerful people. It is also a reminder that even the most successful entrepreneurs can make mistakes that can cost them dearly.
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Lessons Learned from the McDonald Brothers’ Story
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The McDonald brothers’ story is a valuable lesson for anyone who is thinking about starting their own business. Here are a few key lessons to keep in mind:
- Get everything in writing. When you are entering into a business deal, it is essential to get everything in writing. This will help to protect you if there is a dispute later on.
- Don’t trust people blindly. Even if you know someone well, it is important to be careful when you are dealing with them in a business context. Get everything in writing and make sure you understand the terms of the deal before you sign anything.
- Don’t be afraid to walk away. If you are not comfortable with the terms of a deal, don’t be afraid to walk away. There are plenty of other opportunities out there.
The McDonald brothers’ story is a reminder that even the most successful entrepreneurs can make mistakes. By learning from their mistakes, you can avoid making the same ones yourself.
How much did the McDonald brothers make when they sold their company to Ray Kroc?
The McDonald brothers made $2.7 million when they sold their company to Ray Kroc in 1961, ensuring each brother received $1 million after taxes.
Did the McDonald brothers receive any royalties from the revenues Kroc made?
No, the McDonald brothers agreed to a “handshake” deal for 1% royalties of the revenues Kroc would make, but this deal was never honored, and they did not receive any royalties.
How much would the McDonald brothers’ royalties be worth today?
The McDonald brothers’ royalties would be worth approximately $100 million a year today, as per a family member’s estimation.
How rich was Ray Kroc when he died?
Ray Kroc’s personal net worth at the time of his death in 1984 was estimated to be around $500 million, as reported by Forbes.
What was the net worth of the McDonald brothers when Richard McDonald died?
When Richard McDonald died in 1998, he left a will of just $1.8 million, having outlived his brother, and spent his final days in a humble three-bedroom suburban home.
