The Founder - Summarizing a Challenging Business Situation
Harry J. Sonneborn:
So to summarize, you have a minuscule revenue stream. No cash reserves. And an albatross of a contract that requires you to go through a slow approval process to enact changes if they're approved at all.
Ray Kroc:
Which they never are.
Harry J. Sonneborn:
Am I missing anything?
Ray Kroc:
That about sums it up.
Harry J. Sonneborn:
Tell me about the land.
Ray Kroc:
The... land?
Harry J. Sonneborn:
The land, the buildings, how that whole aspect of it works.
Ray Kroc:
Oh, pretty simple really. Franchisee finds a piece of land he likes. Gets a lease, usually 20 years. Takes out a construction loan, throws up a building and off he goes.
Harry J. Sonneborn:
So the operator selects the site.
Ray Kroc:
Yeah.
Harry J. Sonneborn:
He picks the property?
Ray Kroc:
Right.
Harry J. Sonneborn:
You provide the training, the system, the operational know-how, and he's responsible for the rest?
Ray Kroc:
Is there a problem?
Harry J. Sonneborn:
A big one. You don't seem to realize what business you're in. You're not in the burger business. You're in the real estate business. You don't build an empire off a 1.4 percent cut of a 15-cent hamburger. You build it by owning the land upon which that burger is cooked. What you ought to be doing is buying up plots of land then turning around and leasing said plots to franchisees who as a condition of their deal, should be permitted to lease from you and you alone. This will provide you with two things. One, a steady, up-front revenue stream. Money flows in before the first stake is in the ground. Two, greater capital for expansion. Which in turn fuels further land acquisition, which in turn fuels further expansion and so on and so on. Land. That's where the money is.
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The Founder - Struggles Over Control and Profit in Business
Mac McDonald:
Dick. We will never beat him. We will never be rid of him.
Mac McDonald:
This is not your company, Ray!
Dick McDonald:
Ray, we have no interest in a milkshake that contains NO MILK.
Harry J. Sonneborn:
Mr. Kroc, if you're not making money hand over fist, something's terribly wrong.
Quotes sourced from Wikiquote (© Wikiquote contributors), licensed under CC BY-SA 4.0. Modified for formatting/length.