Mercedes Benz (Franchise Evaluation Paper) - Essay Example

Mercedes Mercedes is a premium luxury car brand often associated with successful members of the society. A Mercedes franchise will offer the targeted market a chance to own any variant of this luxury car model. The franchise will stock some of the most popular Mercedes models to give the target customers a wide choice in their selections. Other services that the franchise can offer besides sales will include after sales services and maintenance, customization services, spare parts dealership and car hire services for those who would want to own a Mercedes Benz albeit for a short period of time.

The luxury car market is well segmented with only the members of the society who are deemed to be well off financially being the principal consumers of the products. The products and services will be delivered from a show room that is strategically located. The franchise fees for a Mercedes Benz leadership vary with a number of factors including the expected sales volumes. It normally ranges from $80,000 to $300,000. The inventory cost will also depend on the business model adapted.

High end Mercedes Benz models could cost as much a $100,000 in productions costs only before a profit margin is included. An estimate for the initial inventory cost would be $250,000. The Mercedes Benz franchise arrangement will allow me to get the brand placement and advantages that already accrue from association with the brand. The Mercedes star logo is well known. Advertising and marketing will be covered by the franchise and I will only be required to focus on the sales. The franchise fee will also allow me to benefit from technical expertise.

Car dealership is a technical field and a lot of technical expertise especially in servicing and repairs will be required. An inclusion in the Mercedes Benz international franchise network will also mean that I can easily source for international clients. Finances and capital to run the Mercedes franchise can be obtained through a number of means. The first source of capital and finances will obviously be my personal savings. I will speak to my bankers and my fund managers to see how much I can rise for the venture from my personal savings.

The second source of capital is a bank loan. Bank credit is the most popular source of business financing. Although banks are usually reluctant to fund start-ups, I am very confident that they will find a reason to finance this venture. This is because the fact that I have obtained a franchise by itself can act as a good collateral for the bank. Mercedes is a luxury brand, often associated with successful executives. The bank would obviously like to be associated with such a venture. The final source of capital for the venture could be fundraising from family and friends.

For this, I can consider to offer a non-controlling stake to the potential funders and financiers. The franchise will be located an urban area preferably on the ground floor of an office block. Main competitors in the luxury car models include the Audi, Lexus, Porsche and BMW. Work CitedBenzworld.com. n.d. Web. July 3,2014.