In: Finance
Elaborate the Agency Theory on the movie "the founder" identify and elaborate on the issues in the movie
Summary of the movie: The movie starts back in 1954, Ray Kroc is a travelling salesman who is trying to sell 5 milkshakes makers to restaurant in America. While doing so, he is introduced to Mac McDonald who are owners at a revolutionary restaurant trying to sell Burger, fries and a coke in 30 seconds. Impressed by Mac's work, Kroc offer his help to franchise their business and maintain the quality of the food there. But it was not easy as Ray thought. He tried hard to convince his rich friends to invest in McDonalds business, but in vain. He then employs a husband and wife which will show that McDonalds is a family diner which maintains quality and cleanliness. During the time, the thoughts of the owners and Ray clashed as the owners wanted limited number of quality restaurant but Ray wanted to franchise and expand as much as possible. He ended up using shortcuts and buying land and other means to expand. The movie revolves around Ray Kroc trying to franchise McDonalds and finding ways to gain Financial Success.
Agency Theory: Agency theory is the theory which is used to solve disputed between principal and agent. In the movie The Founder, the principal were the owners of McDonald Mac McDonald and the agent was Ray Kroc. Ray was salesman selling milkshakes to the restaurants when he saw the thriving sales in family based diner McDonald which sells Berger, Fries and Coke within 30 seconds. The restaurant have quality standards and cleanliness which makes it the family restaurant. Ray offered his help to franchise the business, so, he was appointed for maintaining finances of the business and franchises.
Issues in the movie: There were problem regarding searching for the franchise. Ray asked his rich friends to invest but they failed to maintain standard and quality. He then appointed a husband and wife for the same. After some time, Ray wanted to expand and franchise more, but the owners wanted limited standardized stores. This is where the problem started and the principal and agent started facing conflicts. Ray started to search for shortcuts to grow rich and then the owners decided to move out of the business and hand over the charge to Ray for $ 2 million.