Case Detail

Case Summary

Krispy Kreme: The Franchisor That Went Stale

Case Number: 5-109-007, Year Published: 2009

HBS Number: KEL454

Request PreviewBuy

Authors: Burton Cohen; Julie Bennett; Johnny Bubb

Key Concepts

Franchisor, Franchise System Growth, Franchisee, Hot Original Glazed Doughnut, Scott Livengood, Growth, Restating Financial Statements

Abstract

The case depicts Krispy Kreme’s franchise system growth and decline as a lesson to entrepreneurs running a company as a franchisor. Burton D. Cohen, retired senior vice president and chief franchise officer for McDonald’s Corporation from 1980 to 1999, explains the strengths and weaknesses in Krispy Kreme’s franchising strategy during the period from 1997 to 2006. Areas examined in the case include: franchisee agreements, accounting practices, volatility in stock valuation, franchise system growth, franchise ownership structure, product distribution strategy, and commissary growth. The case depicts how Krispy Kreme started and how it ended up in a low point.

Learning Objectives

Students learn:

  • Financial and strategic responsibilities of franchisors
  • Effective and ineffective franchise system growth strategies
  • Franchisor accounting methods
  • Relationship ups and downs between the CEO and Wall Street financial analysts
  • Number of Pages: 15

    Extended Case Information

    Teaching Areas: Accounting, Entrepreneurship, Management, Operations, Strategy

    Teaching Note Available: Yes

    Geographic: United States

    Industry: Baked Goods, Food

    Organization Name: Krispy Kreme

    Organization Size: Medium

    Decision Maker Position: CEO

    Decision Maker Gender: Male

    Year of Case: 1997-2006