Chapter 7, Making Money Summary and Analysis

McDonald's has trouble making a profit, despite its operating system. Kroc has never attended much to profit and loss statements and fails to make McDonald's profitable in the process. McDonald's finds out how to make money with real estate and a strategy developed by Harry Sonneborn, who creates their real estate investment strategy.

The strategy involves McDonald's creating a separate real estate agency to buy the land for franchisees to build their McDonald's on; they often cannot afford to do this on their own. They then charge mark-ups on the land. McDonald's leases from the land owner and subleases to the franchisees, creating a "sandwich" strategy. It produces immediate cash flow and gives McDonald's new control over the franchisee. There are some legal difficulties, but it ultimately harmonizes interests between McDonald's and franchisees. Today McDonald's is one...