The first transnational corporations take off in the 17th Century, financed by share sales: Hudson's Bay Company (once the largest land owner in the world) and the Dutch and British East India Companies...
Charles "Lucky" Luciano, ably assisted by Meyer Lansky, organizes crime as a business with a board of directors and semi-autonomous branches in the United States and Cuba...
Harry Sonneborn brings the struggling Ray Kroc a brilliant idea...
"We are not basically in the food business; we are in the real estate business. The only reason we sell hamburgers is because they are the greatest producers of revenue from which our tenants can pay us rent."
Mr. Sonneborn was exactly right and was rewarded with the presidency of the corporation (he stayed for ten years until Kroc irritated him too much). Today, McDonald's real estate assets are pegged at $37.7 billion. Originally, the plan was to buy and own cheap land freed up for development potential by the newly built Interstates (at exits), but a lack of the large amount of capital required shifted the grand strategy to leasing land, then subletting it to franchisees. Initially they charged the franchise holders 20% over their own lease cost, raising that to 40% later. And the locations had to pay all the insurance and taxes, as well as a $45,000 up front fee and 4% of gross sales.
Costs for construction and equipment for a new McDonald's range from $1 million to $2.2 million, depending on location and size. Half of that amount, up to $750,000, must be cash, that is, non-borrowed funds. The bait for all this is an average annual net profit for the operator of $150,000. That amounts to working for free for five years, but actually longer given the corporations' fees listed above. A McDonald's general manager would make $315,000 gross, on average, during a similar seven year period Now, that job would probably send you to an early grave, but you would do better than the owner by far.
Today, McDonald's stock was at $199.36 a share.
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