Do you want to start a Zara business franchise and want to know the fees, agreement, details? If YES, here’s how much it cost to buy a Zara franchise for sale.
The clothing retail industry is growing at a very fast rate, especially in the United States, and it has proven to be an excellent business opportunity for entrepreneurs who are willing to start a clothing franchise business. Zara is one of the leading brands as far as retail clothing is concerned as its brand Inditex, now makes 840 million garments a year and has around 6,500 stores in 88 countries, though that number is always changing because Inditex has been known to open more than a store a day, or about 500 stores a year. Right now there are around 4,400 stores in Europe and almost 2,000 in Spain alone.
Right from inception till date, Zara has proven to be a very viable and profitable brand, and so if you are interested in owning a Zara franchise, here is all you need to know about the company and how its franchise works.
Buying a Zara Franchise for Sale and How Much It Cost
- Company Objective
Zara is one of the largest international fashion companies that belong to Inditex, one of the world’s largest distribution groups. One of their unique selling points is that they have their customers at the heart of their unique business model; which means that their customers interests are taken into account during the design, production, distribution and sale of their products through their extensive retail network.
- Zara Products
Zara offers men’s, women’s and kids’ clothing lines. They also have cosmetics and various beauty products, fashion accessories, bags and shoes on retail. The company prides itself in being in control of its business from the design aspect, manufacturing and distribution of the products right down to the supply chain.
Their men and women’s clothes are divided into Lower Garments, Upper Garments, Shoes, Cosmetics and Complements, as well as clothing for children known as Zara Kids. There are also Zara Home and Zara Home Kids stores that sell furniture and home textiles, which are also owned by Amancio Ortega and Inditex.
The current price range for their clothes varies depending on the garment, but simple t-shirts and tops can cost around $25 to $40 while jackets and dresses can be anywhere from $100 to $200.
- Zara Franchise Information
In order for you to become a franchisee of Zara, there are certain things you should know first such as the cost of actually opening a Zara store. Since Zara is present all over the world, their franchise fee varies but the average amount is around $30,000.
Other notable fees a potential Zara franchisee should take note of include;
- Equipment, furniture and fixtures – $50,000
- Royalty fee – 5 to 10%
- Advertising fee – 3% of the total revenue
- Total initial investment – $80,000
Other franchise offerings and benefits include full access to corporate services such as human resources, training and logistics, all at no extra cost.
- Company Competition
Since Zara is a clothing company, its competitors would typically be any major clothing company like American Apparel or Topshop. However the companies whom they compete with the most are Uniqlo, United Colors of Benetton, Mango, and H&M. But it should be remembered that Zara is a vertically integrated retailer, which makes the business more cost effective and efficient, and gives it an edge over its competition.
Length of Time for Zara Franchisees to Start Profiting
Depending on the location of the store, Zara franchises are famed to start profiting from the end of the first year of setting up shop. Since Zara stores are typically set up in highbrow locations, they can easily attract customers with the required purchasing capital, thus making it easier for the store to break even in record time.
Personal Traits Required from a Zara Franchisee
- Hardworking: anyone intending to join the franchise must be a hard worker. This fact is not negotiable for the company because it prides itself on providing excellent services at all times, and any franchisee that provides anything less risks tainting the image of the company, which would in turn affect other franchisees negatively.
- Be your own boss: an intending Zara franchisee must have a desire to work for him or herself. He must have the desire to run a business as well as the ability to take it to profitability.
- Good communication skills: an intending franchisee should be able to communicate efficiently with his or her customers.
- Be a team builder: the person must have the ability to work as a team, as well as be able to coordinate his or her workers.
A Brief Overview of Zara Franchise
- Founders – Amancio Ortega and Rosalía Mera
- Date of Incorporation – 1975
- Headquarters – Spain
Zara is a Spanish fast fashion (clothing and accessories) retailer that is based in Arteixo, Galicia (Spain). The company was founded in 1975 by Amancio Ortega and Rosalía Mera out of a small nondescript cloth making shop. It is the main brand of the Inditex group, the world’s largest apparel retailer. The fashion group Inditex also owns other brands like Massimo Dutti, Pull&Bear, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe.
Zara was officially launched in 1975 when Amancio Ortega opened the first Zara store in downtown A Coruña, Galicia, Spain after having turned his small coat making store into a proper business.
In 1989, the Zara brand entered the United States, and then France in 1990. Zara, utilizing uncommon astuteness in business expanded to Mexico in the same year while it set roots in Greece, Belgium and Sweden in 1993. In the early 2000s, Zara opened its first stores in Japan and Singapore, 2002 to be precise; and Russia and Malaysia in 2003, and between 2003 to 2010, the clothing store spread its franchise to China, Morocco, Estonia, Hungary, Romania, the Philippines, Costa Rica, and Indonesia, South Korea and India etc.
Zara stores stock men’s, women’s as well as children’s clothing (Zara Kids), and their products are supplied based on consumer trends. They pride themselves on having a highly responsive supply chain that ships new products to stores twice a week.
After products are designed and processed through their still retained distribution center in Spain, they take ten to fifteen days to reach the stores. There, new items are inspected, sorted, tagged, and loaded into trucks. In most stcases, the clothing is delivered within 48 hours to stores. Zara also stock cosmetics and various beauty products, fashion accessories and shoes on retail.
In 2003, while enjoying being the eye candy among their various fashion followers, Zara entered the home furnishing market by opening the first Zara home store.
As a result of increasing competitive pressures from the online shopping market, Zara started shifting its focus online as well, and on September 2010, Zara launched its first online boutique. The website began in Spain, the UK, Portugal, Italy, Germany and France but it extended its reach that same year to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. In 2011, the store made its debut in South Africa and Australia.
Zara introduced the use of RFID technology in its stores in 2014. This technology is basically tagging chips which are inserted in clothing in order to track them during shipment. The RFID chips are located in the security tags which are removed from clothing when it is purchased and can be reused. The chip allows the company to quickly take inventory by detecting radio signals from the RFID tags. When an item is sold, the stockroom is immediately notified so that the item can be replaced. An item that is not on the shelf can easily be found with the RFID tag.
Zara launches around 12,000 new designs each year and it needs just one week to develop a new product and get it to the stores, when compared to the six-month industry average. Despite having a presence in a lot of countries, Zara does not really conduct advertising.
This is because Inditex doesn’t advertise. It hardly even has a marketing department, and it doesn’t engage in flashy campaigns as its competitors do. Zara’s designers are completely anonymous, and this is how the company likes it.
Most of the products Zara sell are manufactured in nearby countries like Spain, Portugal, Turkey and Morocco, which is unlike their competitors who outsource all their production to Asia. Though Zara has exceptions as clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia.
The company can design a new product and have finished goods in its stores in four to five weeks and it can modify existing items on the shelf in as little as two weeks. They discovered that shortening the product life cycle means greater success in meeting consumer preferences, and they are quite committed to their consumers so much so that if a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued.
To further appeal to their customers, Zara monitors customers’ fashion changes so as bring out products that align with consumer habits. Zara has a range of basic designs that are carried over from year to year, but some fashion forward designs can stay on the shelves less than four weeks, which encourages Zara fans to make repeat visits.
An average high-street store in Spain expects customers to visit three times a year, but a Zara store expects customer visits 17 times more than that which goes to show how accepted their products are in the market. Zara produces over 450 million items per year.
Zara has also gone green after it banned harmful toxins from their clothing production, a movement which started in 2011. After Greenpeace published its “Toxic threads: the big fashion stitch-up” report in November 2012 as part of its Detox Campaign identifying companies that use harmful toxins in their manufacturing processes, Zara subsequently eradicated hazardous chemicals throughout its entire supply chain, making it the biggest retailer in the world to raise awareness for the Detox Campaign.
But despite these successes, Zara clothing has also encountered controversies just like a lot of other companies that have had a long history. In 2007, Zara had to withdraw a handbag from their shelves after a customer noticed a swastika on the bag’s design.
Further in reference to the swastika handbag fiasco, in 2009, there was an email rumor claiming that Zara “has been openly anti-Semitic for a long time” and the email contained a picture of the handbag that featured a swastika symbol in 2007. But the Anti-Defamation League addressed the email and put the issue to rest.
In August 2011, Zara waded through an accusation of slave labour where a Brazilian television show accused the company of using suppliers who were running sweatshops for their outsourced production. The Labour and Employment of São Paulo, Brazil, also closed a factory that produced Zara’s clothing for its poor labour conditions.
Again, in August 2014, Zara received criticisms for selling a toddler T-shirt that was said to closely resemble uniforms worn by Jewish concentration-camp inmates. The T-shirt was striped and featured a yellow star similar to the Star of David. Zara replied that the design of the shirt was inspired by the sheriff’s stars from the classic western films. But the clothing store immediately removed the shirt from their shelf after a few short hours and apologized.
As if all those were not enough, in July 2016, complaints were made against Zara that they had been stealing designs from multiple independent designers for their products, and in November 2017, customers shopping at Zara stores in Istanbul, Turkey, found handwritten notes purportedly from Turkish workers in the pockets of in-store garments asking shoppers to pressure Zara into paying them their wages, which they claim they are owed.
As of January 2018, Chinese authorities had to publicly scold Zara for listing Taiwan as a country on their website. But it has not been all woes for this clothing giant, because despite all this, Zara expanded to currently have over 6,500 Zara stores located across 88 countries, and their stores are usually located in the most expensive real estate locations in the world.
In 2015, Zara was ranked 30 on Interbrand’s list of best global brands, and by 2017, Zara was known to manage up to 20 clothing collections a year. Zara is currently valued at $11.3 billion and Amancio Ortega is one of the richest men in Europe and the wealthiest retailer in the world with a net worth of $69.8 billion, and he earns more than $400 million in dividends a year.