You've got to admit -- a lot of people think those fries are darn good.

But to u
nderstand what made McDonald's Corp. so successful, you have to look at more tha
n the food or Dick and Mac's Speedee System or even to Ray Kroc's dedication and
savvy. Kroc himself attributed much of the company's success to a man named Har
ry Sonneborn [source: Love]. Sonneborn worked for McDonald's for a mere 10 years
, but his real estate policies sealed the fate for the immensely successful comp
any.
Let's back up a few years to when Kroc and the McDonald brothers were still work
ing together. For some time after his hire, Kroc was struggling to make the busi
ness profitable. He wasn't bringing in enough revenue from his franchised restau
rants. Part of his trouble was in getting the funds to pay for the land and the
building for the restaurant. In order to maintain control over operations, Kroc
needed to franchise one store at a time, rather than a whole slew of stores over
a particular geographic zone, which is what other food chains did [source: Love
]. Although other chains could attract big investors, the franchisees Kroc attra
cted didn't have the funds to pay for the land and the building.
That all changed in 1956 when he hired Sonneborn, who convinced him that the rea
l money was in real estate. Sonneborn's idea was to have the McDonald's company
lease a plot of land and the building for each restaurant. The company would the
n sublease to the franchisee who would run the restaurant. Sonneborn further dev
eloped the plan to eventually take out mortgages to own both the building and th
e land. [source: Love]. Kroc soon established the Franchise Realty Corp. to find
willing landowners.
Making (Up) History
In his autobiography, Kroc fostered bitterness between himself and Dick, the sur
viving McDonald brother. Not only did Kroc consider the Des Plaines location --
rather than the San Bernardino location -- the first McDonald's, but he also con
sidered himself, not Dick and Mac, the founder. While the company acknowledges
that Dick and Mac were pioneers of the fast food industry, they point out that K
roc in fact founded McDonald's Corp. [source: Gilpin].
At first, McDonald's charged franchisees markups of 20 percent of lease costs, but
it eventually increased this to 40 percent. Franchisees were responsible for in
surance and taxes, ensuring a steady profit for the company as long as the resta
urant stayed in business.
But that's not all: The rent due to McDonald's could be even more if the restaura
nt was doing well. The franchisee had to pay either the stipulated lease markup
or 5 percent of the sales -- whichever was higher. Kroc and Sonneborn also reque
sted up-front security deposits from the franchisees. Unbeknownst to the franchi
see, this capital would fund the opening of more restaurants. Overall, this crea
ted a symbiotic relationship between the franchisee and the company -- McDonald'
s Corp. had a vested interest in the ongoing success of its individual restauran
ts