The Founder's Negotiation Lessons

May 31, 2017The movie started with a 52-year-old not very successful salesman peddling a multi-mixer milkshake machine to small drive-ins. He wasn’t having much luck.

Then he heard he had just sold six to one buyer in San Bernardino, California. Thinking it must be a mistake, he called them and they bought two more. So he drove cross-country to find out who bought them.

There he met the McDonald brothers, saw their restaurant, and heard their story. He subsequently partnered with them and later bought the rights to their concept and “founded” perhaps the most successful restaurant franchise company in the world.

I recently watched The Founder, the movie of Ray Kroc’s life. We can learn some important negotiation lessons from his life, as depicted in the movie.

1. Persistence Pays Off

Ray Kroc didn’t achieve business success until his mid to late 50s. Colonel Sanders of Kentucky Fried Chicken fame achieved his great success in his late 60s. Both had tried a variety of jobs that didn’t work out as planned. Some just flat out failed.

Yet they never gave up. Some of their common traits? Confidence, hard work and persistence.

Of course, you need more to succeed in both business and negotiations. But they’re necessary ingredients in almost every deal. Every successful negotiator can share the multiple times they felt a big deal was going down the drain – and yet they stuck with it and turned it around.

2. Mutual Interests Drive Effective Partnerships

Ray Kroc initially sold some McDonald's franchises to his wealthy buddies at the country club. Each failed miserably. Why? Because his friends were simply looking to park their money on a good idea and hang out at the golf course.

Kroc needed their money. But more than that, he needed hungry franchise owners with a mutual interest in rolling up their sleeves, working hard, risking a lot on a new concept with a big upside, and sharing his entrepreneurial spirit.

He finally found franchise owners with shared and mutual interests – and McDonald's then really took off.

Truly successful partnership negotiations depend on the parties sharing genuine mutual interests. Without these, they are almost certainly doomed to fail.

3. Ethics and Honor Impact All Negotiations

According to the movie, Kroc screwed the McDonald brothers – the geniuses who came up with the fast food concept and other innovative elements that underlie much of its ultimate success – out of a profit share worth about $100 million a year today.

How? Kroc agreed to buy them out for $3.5 million cash plus a 1% profit share in McDonald's in perpetuity. But then, last minute, he said he couldn’t include the 1% in their written agreement. But he orally promised it in a handshake deal at the closing.

The brothers agreed – yet Kroc never fulfilled his promise.

Some would say Kroc was just being a hardnosed businessman. And that the McDonald brothers were naïve and should have known of his untrustworthiness based on his previous actions.

Yes, they should have known. And yes, Ray Kroc died a very wealthy businessman who many consider the ultimate American success story.

But after this movie – and before it, for all those who knew this story – his name will always have an ethical footnote.

Kroc would have died a very wealthy and successful businessman regardless of whether he kept his deal with the McDonald brothers. Don’t risk your reputation and honor in any negotiation.

4. Aggressive Goals and Risk-Taking Can Lead to Great Success

Kroc had a very aggressive vision of what McDonald's could become. And he ultimately realized it. Yet early on he had to mortgage his home to finance his dream.

Think big. Don’t be afraid to fail. Take calculated risks when warranted. This applies to negotiations – and to life.

Of course, it’s not right for everyone. And it may not work for you. It certainly didn’t for Kroc or Sanders, initially. But life’s too short to go through it wondering “what if I had…”

Latz’s Lesson: Super successful negotiators work hard, find partners satisfying mutual interests, behave ethically, and dream big. Ray Kroc in The Founder exhibited 3 of these 4 traits.