In 1961, Ray Kroc (the man who scaled McDonald's) decided to buy out the business entirely from the founding brothers Dick and Mac McDonald.
💵 The brothers named a price of $2.7 million in cash. There was one more condition. The brothers wanted to receive 0.5% royalties from all future restaurants of the chain forever.
Ray Kroc agreed, but afterwards his financiers (a group of investors) refused to include the percentage in the official written contract, as it would spoil the financial statements for the banks.
His proposal: "Let's shake on it. I promise you 0.5% as a gentleman. This will be our handshake."
The brothers believed him and signed the purchase agreement, which did not mention the share at all.
As a result, the ink dried, and the legal force of the handshake became zero 😢
The brothers never received a cent of royalties. Moreover, Kroc opened his own McDonald's right across from their old restaurant (which they kept, renaming it The Big M) and drove them out of business.
If the clause had been in the contract, by today the brothers' heirs would be receiving about $100 million a year.
Because of one missing paragraph, they lost billions.
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