Krispy Kreme Corporation has four principal sources of receipts. prime(prenominal) is their on-premise gross sales in their doughnuts shops, which are unique in the expressive style that they allow customers to view the factory process of doughnut making from start to finish as well as beingness able to purchase donuts and coffee. Secondly are the off-premise sales where they spread products to a variety of convenient and grocery stores. Thirdly, there is the manufacturing and scattering division that provides doughnut ingredients and equipment to franchisee owned stores. This model of vertical integration encourages Krispy Kreme to control quality of product at all franchises. Lastly, Krispy Kreme receives revenue in the form of startup fees and dues from franchise branches. These dues provide the branches with help for their advertising, marketing operation and accounting. Krispy Kremes plan was to open many stores quickly to collect franchisee start-up, equipment, and product mix fees.
Key Issues
Utilizing the income statements and relief sheets provided, we were able to find issues that adversely affect the health of the bloodline. These fiscal statements were used to locate problem areas regarding margins, increasing expenses, and decreasing sales in 2004.
There are two main issues with Krispy Kremes business model as discovered from analyzing their financial statements and cuticle data. The first issue is the unsustainable issue coupled with the relationship betwixt the franchisees and the corporation. The second issue was the accounting practices of Krispy Kreme that caused an informal investigation by the SEC.
Unsustainable Growth
Growth is the focus of most companies and can be deliberate and defined differently by each. For many, growth is measured though profit and revenue while others may measure growth by market capitalization or market share. establish on this, each company creates its own strategy and business model to support and sustain...If you want to get a ripe essay, order it on our website: Orderessay
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