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This memo will focus on the underlying cause of Krispy Kreme's troubles and provide some recommendations on a possible turnaround.
TROUBLES
Once Krispy Kreme went public there was enormous pressure to grow very quickly and sustain growth quarter after quarter. Krispy Kreme concentrated on growing revenues and profits at the parent-company level, while its outlets struggled. While the franchisor aims to maximize sales, and thus boost royalty payments, the franchisee needs to maximize profits. If a franchisor packs a market with outlets to boost its own growth, it hurts the system in the long run by forcing units to compete with one another...
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