I used to play this all the time when I was in Elementary. Anyway, here's how it goes-

I start by saying once upon a time [Insert what I want to say here]

Then another person replies by saying something related to the thing before.

For example-

George: Once upon a time there was a cow named Moo.

Marge: Moo was adopted by her parents.

Edward: Her parents were actually aliens from another planet.

And so on.

Each person can only say something once but can say something else again after two people have taken their turn.

I'll start.

Once upon a time there was a milkshake.