Sean Wright founded Fit Food Inc FFI in 1972 . Sean Wright founded Fit Food, Inc. (FFI) in 1972. Sean had been working as the VP R&D in a large food company, but he had always wanted to start his own business. In his spare time, he developed a new line of cookies, called “Smart Cookies,” that he could advertise as being healthier because they were lower in fat and calories. After many struggles to get Smart Cookies placed in major supermarket chains, by 2000, Sean and his growing team were able to declare proudly that the Smart Cookie brand was being distributed nationally. With more products in development, and taking advantage of the good stock market environment in 2000, Sean launched an FFI IPO. The company’s stock was listed on NASDAQ.
By the year 2009, FFI was a medium-sized food company that targeted “tasty-but-healthier” market segments. In 2001, Sean introduced several new snack products and started a Savory Snacks Division. In 2003, he acquired an energy drink company, which became FFI’s Sport and Energy Drinks division. By 2009, FFI’s annual revenues were approaching $500 million. The company was consistently profitable but heavily leveraged, as Sean had funded the energy-drink acquisition by increasing the company’s debt load significantly.
FFI used a divisionalized organizational structure (see Exhibit 1). The general managers of the three relatively autonomous divisions – Cookies & Crackers, Savory Snacks, and Sports & Energy Drinks – reported directly to Sean, the CEO. Each division had its own sales and marketing, production, and R&D departments and a controller. The corporate staff included human resources, MIS, finance, R&D, and legal departments. FFI did not have an internal auditing function. It had outsourced the documentation and testing work needed to comply with the Section 404 requirements of the Sarbanes-Oxley Act. Recently, however, Joe Jellison, FFI’s CFO, had suggested that the company was becoming large enough that it should start bringing this work in house.