Mercedes Benz (Franchise Evaluation Paper) Essay

Mercedes Benz (Franchise Evaluation Paper) - Essay Example 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