Ronald McDonald, the nephew of McDonald's founders Richard and Maurice McDonald, says his uncles were cheated by Ray Kroc. Photo / Getty
Ronald McDonald, the nephew of McDonald's founders Richard and Maurice McDonald, says his uncles were cheated by Ray Kroc. Photo / Getty
They have just overhauled the company to try to save its future, but McDonald's has a past that is far from savoury either.
Daily Mail Online can reveal that the restaurant chain was forged on a poisonous row between the two founders and an entrepreneur who was so angry he called them "every kind of son of a b**** I could think of".
Ray Kroc tore into Richard and Maurice McDonald when they demanded $2.7 million for their company in 1961.
He said that he "hated their guts" and was "so mad I wanted to throw a vase through a window" because he felt they had tried to make him fail - and were now ripping him off.
Kroc paid the money and enacted revenge by building a McDonald's right next to their last remaining restaurant and driving them out of business.
Relatives told Daily Mail Online that Kroc also cheated Richard and Maurice McDonald - who was so torn up he later died of heart failure - out of their 0.5 per cent royalty which would have been worth $15 million a year by 1977.
By 2012, according to one estimate, that stake would have made them a staggering $305 million a year.
When Kroc died in 1984 at the age of 82 his personal fortune was estimated at $500 million.
When Richard McDonald died in 1998 having outlived his brother he left a will of just $1.8 million - and spent his final days in a humble three-bedroom suburban home.
It was all ego. Why else would you put a bust of yourself in every store? Why would you put your name on the placemats?
The McDonald brothers were effectively the fast food equivalent of the Winklevoss twins, who claim that Facebook founder Mark Zuckerberg stole their idea for the social network.
The details emerged in the week that McDonald's unveiled its new plan to turn around falling sales by cutting $300 million of costs and increasing franchising.
In an interview with Daily Mail Online, the brothers' nephew Ronald McDonald said that Kroc took over the business because he was all about "ego, ego, ego".
He then set about rewriting history to ensure that he was described as the founder - and not the McDonalds.
Ronald said: "It was all ego. Why else would you put a bust of yourself in every store? Why would you put your name on the placemats?
"We weren't as rapacious or as greedy. Ray Kroc just wanted more and more.
"Name me one other American corporation where an employee became the founder."
Michael Keaton will star as Ray Kroc in an upcoming biopic. Photo / Getty
The story of how the deal was made is set to play a key part in a biopic of Kroc starring Michael Keaton in the lead role.
The film has already been tipped for an Oscar even though it has not begun filming yet.
Surprisingly, McDonald's has said it will not move to stop what is expected to be a warts-and-all depiction of Kroc, a high school dropout from Chicago who became a brash and utterly ruthless milkshake salesman.
If any of my competitors were drowning, I'd stick a hose in their mouth and turn on the water.
He once said of his business rivals: "If any of my competitors were drowning, I'd stick a hose in their mouth and turn on the water."
Another of his sayings was: "The definition of salesmanship is the gentle art of letting the customer have it your way."
But it is his relationship with the McDonald brothers that is arguably the most interesting part of the whole McDonald's story.
It begins in New Hampshire where Richard and Maurice were born to Scottish immigrants and realised they wanted more for their lives when they saw their father working in a shoe factory.
They moved to California in the 1930 and had jobs in film-set stands before opening their first McDonalds restaurant in San Bernardino in 1940.
Their eureka moment came when they got rid of the car hops who brought the food to waiting customers and made people drive up to two service windows.
They also modelled the kitchen like a factory, reduced the size of the menu and brought in paper plates and cutlery so they could get rid of the dishwasher.
Labour costs plummeted, sales soared and customers could not get enough of their 15c burgers and delicious 10c fries. Soon the brothers made $350,000 a year and split profits of $100,000, or about $1 million in today's money.
Kroc went to meet the McDonalds when he heard word of their operation and he liked what he saw so offered to be their franchise manager.
Their original deal was that Kroc got 1.9 per cent of gross sales from franchises and of that the McDonalds would get 0.5 per cent.
Kroc writes that he developed "bristling suspicion" of the brothers that turned into outright contempt when he negotiated the deal to buy the company from them in 1961.
What happened next depends on who you ask.
In his book McDonald's: Behind the Arches business author John F Love says that Richard and Maurice were paranoid about paying taxes, so sold up.
He says that they chose to do a deal with Kroc because they did were tired of paying a 50 per cent income tax rate on their earnings - Kroc's money would be taxed as capital gains at 25 per cent.
The brothers also worried that if they died it would leave their families with a huge tax bill, so decided to take the deal and live a comfortable life, even if it meant forgoing great riches.
In his account Kroc wrote that Richard McDonald justified the high price by saying he and his brother had worked seven days a week for thirty years.
Kroc wrote: "Very touching. But somehow I just couldn't seem to work up any tears of pity."
They went back on a promise, made on a handshake, and forced me into grinding it out, grunting and sweating like a galley slave for every inch of progress in California.
In Behind the Arches, Love writes: "Kroc had a sincere admiration of their entrepreneurship and in the early years the relationship was close....but the renegotiation of the contract had finally turned the Kroc-McDonald relationship icy cold."
Kroc considered the deal "grossly unreasonable" and was "really upset" that the brothers made him pay cash.
But he wanted readers to believe that it was a "extremely successful deal" and that "all concerned were happy".
That is, until the brothers insisted on retaining their original restaurant in San Bernadino, which was making about $100,000 a year at the time.
Kroc said that their demand 'stuck in my throat like a fishbone'.
He wrote: "What a goddamn rotten trick! I needed the income from that store...eventually I opened a McDonald's across the street from them, which they had renamed the Big M, and it ran them out of business."
In fact it was just a block away, and it took him six years to drive it out of business.
"But that episode is why I can't feel charitable or forgiving toward the McDonald brothers," he wrote.
"They went back on a promise, made on a handshake, and forced me into grinding it out, grunting and sweating like a galley slave for every inch of progress in California."
Love says that Kroc said at the time: "Hell, I guess the deal is off."
Kroc later told the author: "I closed the door to my office and paced up and down the floor calling them every kind of son of a bitch there was. I was so mad I wanted to throw a vase through the window. I hated their guts."
After all that turmoil there was one final sting in the tail - the 0.5 per cent of gross sales the brothers had been getting as a royalty payment.
Kroc makes no mention of this in his book at all.
Late McDonald's owner Ray Kroc. Photo / Getty
According to Ronald McDonald, however, Kroc had promised them that they would keep it but said that he had to keep it out of the contract because it would mess up his accounts.
They all shook on it, but once the paperwork was signed he changed his mind. Ronald claims that Kroc used the brothers' claim on their original restaurant as a way to justify his actions.
Ronald said: "It was just Ray's way of getting out of his agreement. He had to find a way out.
"Mac ended up taking it really hard. He died of heart failure. Richard just didn't want any problems for his family.
"He knew there would be problems. He told me: 'I think I have enough money, it's not worth dying over. I watched Mac being torn up until the point the point that he died and I don't want that for myself.'"
After taking over McDonald's, Kroc oversaw a period of staggering expansion.
It has become the stuff of legend in the fast food industry, and could hardly have been fun for the McDonald brothers to watch.
After 22 years in business the new company made its first billion dollars, a feat that IBM took 46 years to achieve.
By 1983 sales were $9 billion a year and by 2012 they had reached more than $61 billion.
In a revealing admission in the book, Kroc says: "If they [the brothers] had played their cards right, that 0.5 per cent would have made them unbelievably wealthy."
Ronald said that in public Richard never criticised Kroc because he wanted to keep the peace and protect his family.
That mean that, in an interview with the Wall St Journal in 1991, Richard said he sold because "taxes were killing us. We weren't kids anymore. We had three homes and a garage full of Cadillacs, and we didn't owe a dime to anyone.
"I have no regrets. Yachts on the Riviera were not my style at all."
Richard however also described how every year he was sent a copy of the McDonald's house newspaper talking about 'Founder's Day'.
It included a tribute to "founder Ray Kroc" with no mention of the McDonald brothers.
Richard told the Wall St Journal: "It really burns the hell out of me."
When Richard McDonald died his total estate was just $1.8million, not exactly poverty, but nothing like what Kroc would go on to earn.
The will shows that the bulk of Richard's money was in investments, including $20,000 worth of McDonald's shares.
The home he was living in was humble, a three-bedroom split level property in Bedford, New Hampshire, on a quiet suburban street worth $284,000 in today's money.
He collected coins and amassed a $2,100 collection including some Franklin Mint silver bars and a money clip with a $10 gold piece from 1881.
A McDonald's spokesman says that Ray Kroc was the founder of McDonald's Corporation. Photo / AP
Yet it is his McDonald's memorabilia that is the most poignant of all and his in his will describes it as an "extensive collection" which includes several albums of photos.
Inside his office there was a framed copy of a 1973 Time magazine cover called The Hamburger Empire, a large McDonald's black cup and saucer and a McKids McDonald's doll.
Richard kept a commemorative pin set called McDonald's celebrates its first 100 countries and items on the stand in the office included several McDonald's ashtrays and a small yellow toy plane with the company's logo on it.
Also listed was an engraved gold-plated spatula used to cook McDonald's 50 billionth burger, which the will says is worth $100.
Kroc meanwhile went on to live a very comfortable life and moved to a huge house in Beverly Hills, followed by an even bigger one in San Diego where he bought the San Diego Padres baseball team.
After his death his wife Joan inherited his fortune and became a philanthropist, giving $1.6 billion to the Salvation Army and $225 million to National Public Radio.
By that point the McDonald's version of how the company was founded involved just one man: Ray Kroc. If you believe the official version on the McDonald's website, the business was founded in 1955, the year that Kroc opened his first restaurant in Des Plaines, Illinois.
But by that stage the McDonald brothers had been serving happy customers from their first outlet 15 years. On the McDonald's website there is also a piece about the "Ray Kroc story" - and the only mention of the McDonald brothers is buried in the interactive timeline.
The 'Our Story' homepage says: "Can you imagine a world without the Big Mac? Or Chicken McNuggets? Or Happy Meals? Luckily, back in 1954, a man named Ray Kroc discovered a small burger restaurant in California, and wrote the first page of our history."
The multinational sticks to that position robustly.
A spokesman for McDonald's told Daily Mail Online: "Ray Kroc's story is compelling, so we're not surprised Hollywood wants to dramatise it for the big screen.
"The historical facts of his journey to success are in his autobiography and other non-fictional accounts of McDonald's."
The spokesman added: "Ray Kroc was the founder of McDonald's Corporation."
But asked if the makers of the film had been in touch to get his side, Ronald McDonald laughed.
He said: "That would be like Jay Leno calling David Letterman and asking for advice. McDonald's hates me."
The lesson from the history of McDonald's seems to be one that could have come straight from Ray Kroc's mouth: "History is always written by the victors."
