Krispy Kreme Doughnuts Inc. reported an increase of 3.8 percent in store sales on Sept. 11
The company recently bought off a franchised branch in Birmingham, Alabama costing them $7.5 million.
The branch includes four Krispy Kreme shops in the county, and includes the seller's franchise rights for 13 other counties in Alabama.
The Krispy Kreme Alabama branches were reported to produce sales of $9 million, according to its 2014 financial report.
Douglas Muir, Krispy Kreme Doughnuts Inc. Chief financial officer stated that the company would buy current franchises and convert them to company-owned outlets if the stores are performing well and will continue to perform well.
The company is also adding new company stores around its franchises to support the development of current franchisee stores.
Aside from that, CEO Anthony Thompson was anticipating the opening of a second franchisee-owned small factory in the second quarter this year. In relation to that, the company added one franchise shop in the last six months.
The reason that Krispy Kreme has been a solid brand is the confidence buyers put into it. "The sure test of confidence in the model is new franchisees signing up plus existing franchisees opening more shops," according to the CEO.
Despite the boom in sales, Krispy Kreme lacks a definite support system for their franchisees. The franchisees are not given the opportunity to create their own independent association to look after their own welfare. Aside from that, the franchise owners are not given the chance to put up a national-supply chain management cooperative, which would help them keep the food costs down.
However, the company has a traditional franchisee advisory council, where the franchise owners can relay their suggestions on how the company can be operated and improved.
Almost 40 percent of the Krispy Kreme branches are company-owned, with only 16 domestic franchises.
The company is acquiring steady flow of royalties from franchisees this year. Thompson admitted that the increase in franchisees boosted the company's second quarter sales by 18 percent to $3.3 million.
