Zara Business Plan (Haley Burton, Neil Colombini and Brendan Morley)

Topics: Fashion, Customer, Customer service, Sales / Pages: 8 (1824 words) / Published: Feb 23rd, 2009
Zara Business Plan
Haley Burton
Neil Colombini
Brendan Morley

Franchise
A few broad questions related to the finance sector of the franchise are: Do you have the financial resources or means to get the resources required to buy a franchise?, will your capital provide you with a cushion for at least one year after you have paid for the franchise, allowing a one-year period of time to break even?, what is a high estimate of your fixed expenses such as rent and your variable and operating expenses such as wages and stock?. When buying the Zara franchise rights, the franchise fee typically varies between 5% and 10% of the franchise store’s sales. Included in that fee, Zara offers franchisees full access to corporate services, such as human resources, training, and logistics at no extra cost. They also allows them to return up to 10% of purchased merchandise, which is a higher level than many other franchisers permitted. This will cut down on the sunk cost that is purchased stock. Then, breaking down the previous questions further, we have to ask ourselves more specific financial questions before buying the franchise. How much initial investment will you need to buy the franchise? We figured that the startup costs would include the franchise fee, employee training, operating licenses, equipment, and the expenses involved in running a retail space, such as moving expenses, furnishings, equipment, décor, signs, and landscaping. The employee training, however, is included in the franchise fee and the landscaping expenses are covered by the rent expense by the University Village complex owner. The franchise fee was estimated to cost from $20,000 to $30,000. The licensing, furniture, and equipment costs were estimated at $50,000.

Franchise Fee Estimate $20,000-$30,000
Employee Training Included in franchise fee
Equipment & Furnishings Estimate $50,000
Total $70,000-$80,000

The next question we developed was, what are your ongoing expenses until the

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