Zumba Fitness Case Analysis
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Zumba Fitness Case Analysis
Given the history of Zumba fitness business, I would recommend the implementation of a franchise business model. The business journey into expansion began with a unit sales model which was driven by the sale of exercise DVDs and videos (Zacharakis, & Bygrave, 2019). The business later transitioned to an instructor training model (informercial industry) which offered individuals certification programs to become trainers. The business needs to adopt a fully-fledged franchise model to allow them to build their brand, expand their reach and increase their business revenue through royalties and franchise fees. The benefits of a franchise business model compared to the other business models is that it allows for faster expansion, and permits the sharing of risk between the franchiser and franchisee. It also allows customers to benefit from consistency in the brand in different locations. Moreover, in efforts to make more revenue, the company is able to generate passive income. Furthermore, the business is able to get a deeper understanding of the local markets, which also makes it possible to develop customized services to meet specific customer needs.
The major revenue driver for a franchise business model is in the sale of products and services. For Zumba fitness, the key driver for revenue is sale of fitness classes. The second revenue driver is the sale of consulting services - specifically on matters nutrition and ways of staying healthy. Zumba fitness can also generate revenue through sale of branded merchandise such as sportswear including pants, vests, shoes, bras and caps. Royalty and franchise fees are the other revenue driver for a franchise business model. The cost drivers on the other hand include advertising and marketing costs related to promoting the franchise. Franchisees will have to pay royalties to the franchisor for use their brand and support services (Li, & Xia, 2019). Moreover, a franchise business model incurs technology and infrastructure costs used in supporting the entire franchise system.
The biggest risk Zumba fitness may encounter by implementing a franchise business model is loss of control and operation autonomy. The business may also lose its reputation when the franchisees deliver poor quality services to consumers.
References
Li, J., & Xia, H. (2019). Franchise: A Literature Review and Directions of Future Research.Open Journal of Business and Management,7(2), 817-827.
Zacharakis, A., & Bygrave, W. D. (2019).Entrepreneurship. John Wiley & Sons.
