The Hair Emporium Research Paper Example | Topics and Well Written Essays - 1000 words

The Hair Emporium - Research Paper Example While a franchisor should ideally provide assistance and financial advice to their franchisees as discussed previously, it is important to understand that it is highly unfavorable for Rolando and Rosa to disclose certain types of accounting records and financial records to their franchisees. Most importantly, the financial information that should not be supplied to the franchisees includes computations of costs per unit and other unit-based data which has the potential to outline the inputs of the Hair Emporium in a comprehensive manner. The reasons why Rolando and Rosa are discouraged from providing this information can be represented in terms of the inadequacy and misleading nature of these figures and the competitive threats that are posed by the public disclosure of this data. For example, if provided with unit performance including variable costs that are incurred on material, labor and supplies the franchisee maybe misguided by the financial records as they cannot be applied to the franchised outlet of Hair Emporium. Moreover, the availability of this information to the businesses’ U.S-based competitors would threaten the success of the hair salon in the new country. The completion of balance sheets and operating statements on a monthly and yearly basis is critical to the analysis of the company’s financial position. An accurate examination of a firm’s financial position not only facilitates decision-making but also equips managers and business executives with the tools that are required to evaluate the present scenario and future possibilities for the business. By assessing the financial statements, senior management can discern whether the company has been able to achieve the designated corporate objects such as profit-maximization, survival or increase in market share. Through the completion of the balance sheet and operating statements in a timely manner the financial position of the firm and the result of business operations can be examined (Solomon et al. 1990) to detect any impending risks that may adversely impact the organization and develop a contingency plan to cope with these risks. As owners of the franchised business, Rolando and Rosa can opt to complete their balance sheet and operating statements on a quarterly basis rather than creating these financial statements for every month. This decision would allow them to keep track of the business’ financial position as it appears every three months in the financial calendar. However, a consequence of this selection would be that Rolando and Rosa would not be able to continually assess the development of their business in the United States during the first crucial year of the commencement of operations. At this point, it is imperative for Rolando and Rosa to closely monitor the progress of Hair Emporium in order to identify any potential problems and issues that may hamper the growth of the business. Thus, adopting a quarterly system for the comp letion of financial statements would not be suitable in this scenario. Under the provisions of the franchise agreement, Rolando and Rosa would be entitled to provide the franchisee with initial services that also involve the formulation of financial records and advice related to bookkeeping (Epstein, Nach and Bragg 2009). Local conditions, regulations and