Plan A- increase franchise Information department The Chief Information Officer is to makes sure all the data, all

the applications and all the networks are always available. It also protects company integrity against any losses or theft. In this team, chief often has dedicated people on project management, application development, production, network, telecommunication and security. Addition, often hires external subcontractors for application

development, system maintenance, or the complete outsourcing of the information system. This department takes the right technology and applies it to the organization and strategy of the company. This role has become key for the success of the company given the increasing complexity of applications and the sometimes total dependence of a company on its information system. Information department are responsible to find application in each district to facilitate the registration of franchise management and it operations such as what document to prepared and needed, requirement for a franchise to operate legally etc. Not least, the information of company in each area to be RMCF networking. In other hand, this department will secure the operation by linking a network. For every the franchisee operating they should have a direct link to refer. For example, insurance company, a bank, government institution, technical service company etc. They have to choose insurance company to manage RMCF insurance in each of area e.g. Allstate, choose a quality company that costs less in advertising - e.g. Optomedia, and choose technical service company e.g. All-Tech Service Company Inc. Franchisee will deal with Bank of Maumee for any financial purpose and matter. Financial department Financial department is to provide the company with the right financial resources for its development. This department often includes dedicated teams for accounting, control, treasury, tax, investor relations and financial planning. It controls and records all the commitments by the managers of the companies and makes sure the accounts and the financial reports fully disclose the genuine situation of the company. In other hand this department will makes sure that the company has a realistic plan and the right financial resources to deliver the expected financial results. They develop trustful relationships with the financial investors including its shareholders, the financial markets and the banks. He

optimizes the financial resources and the tax and legal options to improve and secure the financial performance of the company. Chief Financial department have to do budgeting on expanding business, increasing production, administration, operating, manufacturing and many more. Setup an expected income for 5 years operating while reaching goal at least 3 franchise growth at a region. As to increase the number of franchise in US, the production should increase in large number in each of their product line. Expecting every year sale increase which is RMCF strength so, it is possible to expect the sales may increase 40% every year from previous sale together with RMCF business growing. This possibility support by a study which is RMCF was rated as an outstanding franchise opportunity in the candy category by entrepreneur magazine in 2008. Franchise and royalty fee expected to increase by 20% from previous year. Rocky Mountain Chocolate Factory Inc. Income Statement For year Ended 2008

Income
Sales Franchise & royalty fees Less: Cost of Revenue Revenue Gross Profit Research & Development Expense Selling, General, & Admin. Expense Depreciation & Amortization Operating Interest Expense Other Operating Income (Expense) Total Operating Expenses Operating Income Non-Operating Income Pretax Income Provision for Income Taxes Net Income

2008 (000,000) 25.55M 6.32M 18.17M 31.87M 13.70M 0.00 5.00M 0.78M

23.95M 7.92M 0.198M 8.11M 3.05M 5.06M

Based on RMCF income statement for year ended 2008, budgeted income statement where prepared as below: Rocky Mountain Chocolate Factory Inc. Budgeted Income Statement For Next Five-Years Performance (000,000) Year
Sales Franchise & royalty fees Revenue Less: Cost of Revenue Gross Profit Research & Development Expense Selling, General, & Admin. Expense Depreciation & Amortization Total Operating Expenses Operating Income Non-Operating Income Pre-tax Income Provision for Income Taxes Net Income

1 35.77 7.58 43.35 17.89 25.46 5.0 0.78 5.78 19.68 0.19 19.87 7.94 11.93

2 50.07 9.09 59.16 25.04 34.12 5.0 0.8 5.8 28.32 0.19 28.51 11.4 17.11

3 70.1 10.9 81 35.05 45.95 6.0 0.82 6.82 39.13 0.19 39.32 15.73 23.59

4 98.14 13.08 111.22 49.2 62.02 6.0 0.84 6.84 55.18 0.19 55.37 22.15 33.22

5 137.39 15.69 153.08 68.7 84.38 7.0 0.86 7.86 76.52 0.19 76.71 30.68 46.02

Based on budgeting above, the sales are expected to increase 40% every year. Franchise and royalty increase 20% every year. Cost revenue is 50% from sales expected to reduce as much as possible on production operating cost. The production cost on raw material, new supplier with cheaper quote will be selected so the price of RMCF product will remain stable and unchanged. It also helps preparing for any probability. Selling, general, and administration expense expected to increase $ 1million for every 2 year because of the business growth. Depreciation and amortization budget to increase $ 0.2million in every year to settle down unsettled business especially on accrued salaries and wages, also on any liability. This budget is relevance because the expectation on sale will continuously improve every year. Non-operating income maintains $0.19million and not expected to increase as to not over anticipate on income and prepared for worst-outcome. Provision income taxes are 40% from pre-tax income.

Operating department The Chief Operating Officer has to makes sure that the company runs seamlessly on a daily basis. He is helped with a team of seasoned managers, supervising the main processes. The staffs personally meet with the key customers and key suppliers. The department strategic role is to assists his President or CEO to make the right strategic choices. He makes sure the company can execute the strategy. Identifies new opportunities and participates in key acquisitions is on their duty. In this department, the chief operating needs to deal with World Cocoa Foundation to get the cheapest cocoa and support cocoa communitys economy. This also helps to endure 15,000 children from being slaves by working on cacao farms in West Africa as consumers are aware about this matter. In other hand, the expanding business needs to increase the production. Thus, new technology needs to add up into the factory to fulfil the demand also extending production capacity. This department has to minimize cost as much as possible especially on operating expenses whether in factory or in administration. Plan B- create new healthier product Information department This department will secure the operation by linking a network. The chief have to find information about person that has expertise to conduct the research that development department need. The linkage will to give them to connect. Such as seek a professor for conducting chemical examination and create a formula for a product (e.g drink, beverage, sundry, toiletries, cosmetic), successor that has expertise in such industry (e.g drink, beverage, sundry, toiletries, cosmetic) to guide how get into the market. To seek professional for laboratory purpose, they can link within Universities, hospital, or any agencies. To seek successor they can link with any companies that recently the person work on. Financial and operating department Chief Financial department have to do budgeting or expected income when new product want to release such as cost for extending product line, new production cost, research & development expenses and many more. Setup an expected income for 5 years operating while reaching goal at least 3 new product (organic product- snack, cookies and beverage) will created and distributed. Expected R&D on beverage was taken 1 year to produce a product and next year it will be

distributed. On year 2 to 4 expected establish R&D on snack and cookies and will distributed on year 5. However, R&D on beverage will continue even after it released. This is for product improvement. Expecting every year sale increase which is RMCF strength so, it is possible to expect the sales may increase 20% every year from previous sale (on 2008). 30% sale will increase on next year because of new product released (organic chocolate drink) and continuously until year 4. On year 5, expected sales to rise until 40% because two new product (organic snack and cookies) release. This possibility support by a study which is customers is willing to pay more for healthier product since nowadays people are very concern about their health. Rocky Mountain Chocolate Factory Inc. Income Statement For year Ended 2008

Income
Sales Franchise & royalty fees Less: Cost of Revenue Revenue Gross Profit Research & Development Expense Selling, General, & Admin. Expense Depreciation & Amortization Operating Interest Expense Other Operating Income (Expense) Total Operating Expenses Operating Income Non-Operating Income Pretax Income Provision for Income Taxes Net Income

2008 (000,000) 25.55M 6.32M 18.17M 31.87M 13.70M 0.00 5.00M 0.78M

23.95M 7.92M 0.198M 8.11M 3.05M 5.06M

Expecting every year sale increase which is RMCF strength so, it is possible to expect the sales may increase 20% every year from previous sale. 30% sale will increase on next year because of new product released (organic chocolate drink) and continuously until year 4. On year 5, expected

sales to rise until 40% because two new product (organic snack and cookies) release. This possibility support by a study which is customers is willing to pay more for healthier product since nowadays people are very concern about their health. Based on RMCF income statement for year ended 2008, budgeted income statement where prepared as below: Rocky Mountain Chocolate Factory Inc. Budgeted Income Statement For Next Five-Years Performance (000,000) Year
Sales Franchise & royalty fees Revenue Less: Cost of Revenue Gross Profit Research & Development Expense Selling, General, & Admin. Expense Depreciation & Amortization Total Operating Expenses Operating Income Non-Operating Income Pre-tax Income Provision for Income Taxes Net Income

1 30.66 6.32 36.98 15.33 21.65 5.0 5.0 0.78 10.78 10.87 0.198 11.06 4.424 6.636

2 39.86 6.32 46.18 19.93 26.25 5.0 6.0 0.81 11.81 14.44 0.198 14.63 5.852 8.778

3 51.81 6.32 58.13 25.0 33.13 5.0 6.0 0.81 11.81 21.32 0.198 21.51 8.604 12.906

4 67.34 6.32 73.66 33.67 39.99 5.0 6.0 0.81 11.81 28.18 0.198 28.37 11.348 17.022

5 94.28 6.32 100.6 47.14 53.46 5.0 7.0 0.84 12.84 40.62 0.198 40.81 16.324 24.486

Based on budgeted income statement above, Franchise and royalty fees expected to remain $6.32million every year RMCF not anticipate on expanding franchise on that time and focus more on development. Cost of revenue is 50% from sale. This is because consumers are willing to pay higher price on healthy product. Other than that, in year 1, product remain the same and it cost 50% from the price is because expected to reduce as much as possible on production operating cost. The production cost on raw material, new supplier with cheaper quote will be selected so the price of RMCF product will remain stable and unchanged. It also helps preparing for any probability. Budget for research and development is constantly $5million for every year. This budget is covered laboratory research expenses, laboratory tool, technology, chemical etc. Selling,

general, & administration expense budgeted to increase $1million per year for every new product created on a year covered all matter that related selling, general, & administration activities. Depreciation & amortization expenses budgeted to increase $3million per year for every new product created on a year. Reason for this is to settle down unsettled business especially on accrued salaries and wages, also on any liability. Non-operating income maintains $0.19million and not expected to increase as to not over anticipate on income and prepared for worst-outcome. Provision income taxes are 40% from pre-tax income.

Rocky Mountain Chocolate Factory, Franchise Guideline , retrieved

on 3 May 2012,

http://sweetfranchise.com/information/docs/11577-FranchiseInfo0709.pdf Facts About Chocolate, (2012), Where does your chocolate come from? Encouraging Fair Trade, retrieved on 3 May 2012, http://www.facts-about-chocolate.com/fair-trade-chocolate/