Franchise segment return on investment REAL WORLD GNC Holdings Inc. is a leading retailer of health and nutrition products, which are sold through both company-operated (3,500 outlets) and franchised retail (3,200 outlets) stores. In addition, GNC manufactures many of the products that it sells through its company-operated and franchised channels. As such, GNC's operating segments are Retail, Franchise and Manufacturing. The Retail segment is made up of company-operated stores, and the Franchise segment is made up of franchised stores. Recent financial information from these segments is as follows (in millions): Ma Retail $1,939 Franchise $433 Sales Income from operations 349 157 Invested assets 1,573 512 Analyze the profit margin for each segment Profit Margin = Income from Operations/Sales Retail: $349/$1,939 = 18.0% Franchise: $157/$433 = 36.3% Manufacturing: $90/$486 = 18.5% Analyze the investment turnover Analyze the investment turnover for each segment Investment Turnover = Sales/Invested Assets Retail: $1,939/$1,573 = 1.2 Franchise: $433/$512 = 0.8 Manufacturing: $486/$407 = 1.2 Analyze the Return on Investment Return on Investment (ROI) = Profit Margin * Investment Turnover Retail: 18.0% * 1.2 = 21.6% Franchise: 36.3% * 0.8 = 29.0% Manufacturing: 18.5% 1.2 = 22.2% Form your discussion by answering. the following: 1. Differentiate between a profit center and an investment center. 2. Why might the profit margin of the Franchise segment be larger than the other two segments? 3. What is the source of revenues for the Manufacturing segment? 4. With all of the above in mind, how would you enhance retail sales, which demonstrate the lowest profit margin and return on investment