Boston Chicken, Inc. Essay
1. Assess Boston Chicken’s business strategy. What are its critical success factors and risks?
Boston Chicken is a company to operate and franchise food service stores that sold meals featuring rotisserie-cooked chicken, fresh vegetables, salads, and other side dishes. Its concept is to combine fresh, flavorful, and appealing meals associated with traditional home cooking with a high level of convenience and value. Boston Chicken focused its expansion through franchising the company through large regional developers rather than selling store franchises to a large number of small franchisees. In that, an established network of 22 regional franchises that targeted their operations in the 60 largest …show more content…
Boston Chicken shares both the upside and downside risk for financed franchise restaurants according to agreement of franchise.
3. What adjustments, if any, would you make firm’s accounting policies?
Boston Chicken avoids consolidating the financed developer operations in its financial statements. It effectively has control over the financed area developers through its option to purchase.
The royalty, franchise fee and interest income would be eliminated; the company would show its share of the sales revenue and cost from stores; the notes receivable would be eliminated and the firm would report its share of the assets and liabilities of the franchisees.
4. What questions would you ask management about the company’s performance?
The information needed to estimate the profitability of store for franchisees can