Case Study Two
1
Case Study: Comparing Groups Assignment
Evan Marsh
School of Business, Liberty University
BUSI 820: Quantitative Research Methods
Dr. Touhey
July 3, 2022
Author Note
I have no known conflict to disclose.
Correspondence concerning this article should be address to Evan Marsh
Email: emarsh10@liberty.edu
Case Study Two
2
Question 1: Determine the amounts of sales revenue per company-owned store and
franchise fees per franchised store for each year and each company. In these computations,
use the average number of stores open during the year.
In order to calculate the revenue sales from fees for company owned and franchise stores
per location each year, the revenue will need to be averaged from the number of company stores.
Meaning divide the amount of revenue by the number of stores. To find the number of stores,
compute the mean for company owned store for the prior year and the current year. In 2007 the
number of stores at year end was 161 and for 2008 was 197. Combining the two-years equal to
358 then divide by two for a mean of 179 for the two years. As seen in figure 1, the sales revenue
per store is calculated by the revenues of company owed stores divided the mean of the stores.
The same is done for franchisee stores for the fees.
Question 2: Assume that for both companies sales at company-owned stores are the same
(on a per store basis) as sales for the same company’s franchised stores. Estimate each
company’s franchise fee rate, which is stated as a percentage of each franchisee’s sales
revenue.
According to Revsine et al. (2021), the purpose of the franchise fees is to pay for permits
that come from the franchisors permits, these permits allow the owner of the franchise to run and
operate at the specified location. Additionally, the fees help pay for administration costs for the
franchises as well as in order to help create new locations. As seen in figure 2, the rate for
franchises is calculated by dividing the number of locations at year end by the amount that is
generated by the franchise fees.
Question 3 and 4: Perform a cause-of-change analysis from 2008 to 2012 for each company
to disaggregate the increase in revenues from company-owned stores between growth in the
Case Study Two
3
average number of average stores open and growth in revenues per store. Also perform a
cause-of-change analysis from 2012 to 2016. Perform similar analyses for franchise fee
revenues.
Figure 3 has the calculations for question three and four. According to Revsine et al.
(2021), the reason in performing a cause of change analysis is to help figure out why there would
be any figures that were not lining up correctly that may have been cause human error or not
following proper GAAP procedures. In order for the organization to find any changes in revenue,
they will need to compile current sales minus previous year sales. To find this per store, you will
need to look at the stores current years sells and subtract the previous years sales for that store.
The change can be found by finding the average revue per company owned store, multiplying it
by changes in sales revenue divided by the previous year. After that, do this for the change in
numbers of store. For franchise locations, perform the same process but with franchise fee
revenues.
Question 5: What do your analyses from requirements 3 and 4 tell you about the
companies’ growth strategies and how they differ from each other and over time?
According to Revsine et al. (2021), the information that is gained from accounting is
pectinate for business as well as for expanding it. in order to put together the proper pricing
strategy, the organization will need to compute the revenues that are needed for expansion and
configuration to do so. In the case for McDonald’s, they are focusing on the franchise rate
because of the amount of revenues they generate through this is greater than the sales. As for
Buffalo Wild Wings, they are focused on company owned stores and sales through this since the
revenue generated this way is greater for them. According to Bretas and Alon (2021), the
franchise fees are used to reimburse the franchisor for its marketing cost, cost of goods, admin,
Case Study Two
4
etc. The method of franchising is the future for the market though because of the independence it
provides store owners while being part of an organization that can still support the owners goals
in growing markets.
Case Study Two
5
References
Bretas, V. P., & Alon, I. (2021). Franchising research on emerging markets: Bibliometric and
content analyses. Journal of Business Research, 133, 51-65.
Revsine, L., Collins, D. W., Johnson, W. B., Mittelstaedt, F., & Soffer, L. C. (2021). Financial
reporting and analysis (8th, Ed.). McGraw Hill Education.
Case Study Two
6
Figures
Figure 1
Figure 2
Figure 3
Cause-of-Change
Analysis
2008
to
2012—
Franchise
Fee
Revenue
and
New
Franchise
‘Stores
(§
in
millions)
Fiscal
008
franchise
fee
revenue
Ss
4270
Growth
in
franchise
store
in
2012
compared
to
2008
156.5
Revenue
growth
due
to
franchise
store
opening
19.23
Revenue
assuming
2008
franchise
fee
revenve
per
store
and
2012
mumber
of
franchise
stores
S
6193
Revenue
growth
due
to increase in
franchise
fee
revenue
growth per
store
$1467
2012
total
franchise
fee
revenue
316.60
‘Cause-of-Change
Analysis
2012
to
2016—
Franchise
Fee
Revenue
and
New
Franchise
‘Stores
($
in
millions)
Fiscal
2012
franchise
fee
revenue
3
76.60
Growth
in
franchise
store
in
2016
compared
to
2012 90
Revenue
prowth
due
to
franchise
store
opening
13.68
Revenue
assuming
2012
franchise
fee
revenve
per
store
and
2016
mumber
of
franchise
stores
S
90.28
Revenue
growth
due
to increase in
franchise
fee
revenue
growth per
store
S492
2016
total
franchise
fee
revenue
395.20
McDonald's
2007
2008|
-2009[
2010,
2011
2012
2013
2014
2015
2016
‘Number
of
stores
operating
at
vear
end
Company
owned
6906
650226263906
6598 6738
ond asd
5669
Franchised
2aa7
25465-26216
——«26338-=«27075,=S788D_—=««286DL_—=«—«208K4
300811230
Average
numberof
stores
open
during
vear
Company
owned
6704638263305,
SHIT,
65165
6668 6726
6579,
60565
Franchised
7
ages”
2584057
262777
2670657 2747857 2828657 2011757 2981257
306555
Revenue
(S
in
nlions):
‘Company-owned
stores
sales
$
16,560.90
$15,458.50
$1623330
$18,292.80
$18,602.50 $18,874.20 $18,169.30 $16,488.00
$15,295.00
Franchise
fees
$_6961.50_$
728620_$
7.84130
$
§71320_$
8961.50_$
9.25150
$ 9272.00 $
8925.00_$
9327.00
Total
‘$23,522.40
$22,744.70
$34,074.60
$27,006.00
$27,567.00
$28,105.70
$2441.30
$25,413.00
$24,622.00
Sales
reverve
per
company
store
$
"2470
$2422
$2564
$2851
$
"2855
$
2831
$
"2701
$
2506
$2525
Franchise
fee
revenue
per
franchised
store
S
0279
$
0282
$
0298
$
0326
$
0326
$
0326
$
0318
$
0299
$
0304
‘Cause-of-Change
Analysis
2008
to
2012—
Sales
Revenue
and
New
Company-owned
‘Stores
($
in
millions)
Fiscal
2008
sales
revenue
3.
16,5600
Growth
in
company-owned
store
in
2012
compared
to
2008
188
Revenue
growth
dus
to
less
company-owned
store
opening
483.18),
Revenue
assuming
2008
sales
revenue
per
store
and
2012 nomber
of
company-owned
stores
$16,097.72
Revenue
growth
due
to
increase
in
revenue
growth
per
store
$2,504.78
2012
total
sales
revenue
‘318,602.50
‘Cause-of-Change
Analysis
2012
to
2016—
‘Sales
Revenue
and
New
Company-owned
‘Stores
(S
in
millions)
Fiscal
2012
sales
revenue
3
18,602.50
Growth
in
company-owned
store
in
2016
compared
to
2012
460
Revenue
growth
due
to
less
company-owned
store
opening
S$
(313.15)
Revenue
assuming
2012
sales
revenue
per
store
and
2016 nomber
of
company-owned
stores
$17,289.35
Revenue
growth
due
to
increase
in
revenue
growth
per
store
2016
total
sales
revenue
s
‘315,295.00
Case Study Two
7
(Cause-of-Change
Analysis
2008
to
2012
Franchise
Fee
Revenue
and
New
Franchise
‘Stores
($
in
millions)
Fiscal
2008
franchise
fee
revenue
Growth
in
franchise
store
in
2012
compared
to
2008
Revenue
growth due
to
franchise
store
opening
Revenue
assuming
2008
franchise
fee
revenue
‘per
store
and
2012
number
of
franchise
stores
Revenue
growth due
to
increase
in
franchise
fee
revenue
growth per
store
2012
total
franchise
fee
revenue
(Cause-of-Change
Analysis
2012
to
2016~
Franchise
Fee
Revenue
and
New
Franchise
‘Stores
($
in
millions)
Fiscal
2012
franchise
fee
revenue
Growth
in
franchise
store
in
2016
compared
to
2012
Revenue
growth due
to
franchise
store
opening
Revenue
assuming
2012
franchise
fee
revenue
‘per
store
and
2016
number
of
franchise
stores
Revenue
growth due
to
increase
in
franchise
fee
revenue
growth per
store
2016
total
franchise
fee
revenue
$6961.50
$8,964.50
3177
S$
1036.45
$10,000.95
s
‘S_
9,327.00
Case Study Two
8
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