Krispy Kreme

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CASE 8: KRISPY KREME DOUGHNUTS Krispy Kreme is a doughnut manufacturer and retailer that were founded in July of 1937. Within its seventy year life time KK went from a small rented out building in Winston-Salem, North Carolina to a global recognizable firm. Through that time KK has become a franchising company that has made changes within its life time. Most of the changes came in the late 1990s and early 2000s. A few years after those changes were made KK management realized that they had made a series of mistakes that gravely hurt the company. This paper will explain what caused the down fall of KK and how they should go about restoring their company. General Information After the company’s IPO KK announced to aggressively expand…show more content…
For KK franchisees they find the required KK product mix and machinery as a burden for they do not have the opportunity to try and find the items for cheaper from other vendor which would lower their fixed costs and help reduce the struggle to stay afloat from 2000 to 2004. The combination of these two goal conflicts caused many of KK franchisees to become unsuccessful and thus be closed down by KK parent company. When the closing of franchisees started KK parent company has to start reacquiring all the franchise rights, goodwill and other intangibles of the failed franchisee. Doing this it increased those (LIABILITIES) significantly (FIGURE 4). KK was inefficient on how it used its money on its expansion. This is seen by how the KK’s return on asset of the company went from its peak 10.33 % in 2002 to 8.16% in 2003. These issues from above can be seen when KK parent company overstimulates the market by having local media run a story about upcoming store openings and offering free samples before the stores were officially open. In addition to the seven unsuccessful franchises in Michigan that were forced to closed down within a few months of each other. Why Change in Preference is a Problem Along with KK management packing Franchisees

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