Sanger Automotive Company wants to build an exclusive franchise agreement with Fisker Automotive inc. Fisker produces plug-in hybrid electric vehicles which are not well known in the market. The firm’s managers seek to collaborate with Sanger, a well known vehicle dealer operating in Florida and Georgia to sell their new Karma Sedan models in the area. Fisker manufactures Karma Sedan, a plug –in hybrid electric vehicle which targets consumers who are more sensitive about toxic emissions. However, Sanger executives need to look at the impact of establishing this franchise on their long term operations. The consumer demand for electric vehicles is still unpredictable and as such, the firm may incur huge losses if it agrees to have Fisker’s franchise (“Sanger Automotive” 196). The market for this type of car is still young because many consumers have little information regarding how electronic vehicles will suit their lifestyles. The vehicle industry is dominated by consumers who purchase electric vehicles based on what they know about specific brands. Most buyers of electric vehicles have high household incomes and as such, this model is not suitable for the mass market. This is likely to affect Sanger’s operations because the firm is likely to sell fewer Karma Sedans every month. An issue which needs to be looked at is the incremental operating costs which Sanger is likely to incur if the franchise agreement succeeds(“Sanger Automotive” 196). The firm needs to assess expenses it is going to incur in the franchise and how it will recoup them in its operations. This will enable the firm determine the viability of this franchise to its long term operations. Sanger has a reputation for selling high quality luxury brands in the market. It caters for clients who have good average incomes. The firm will incur significant costs if it decides to sign up for the franchise agreement with Fisker. However, a market analysis shows that only 5% of potential customers are willing to spend more than 55,000 dollars on electric car models. The tax credit of 7,500 dollars may fail to attract new buyers to the Karma Sedan because it has a market price of more than 96,000 dollars; a price which very few consumers can afford. The market is still indifferent to this model which may affect the uptake of these vehicles by consumers if the franchise agreement is successful. This is because the Karma Sedan is a luxury model and other luxury models have registered less impressive sales figures in the past few years. If the franchise deal is agreed upon, Sanger will incur additional costs which are needed to make the new dealership operational (“Sanger Automotive” 197). Sanger can pursue alternative courses of action to help it make its operations more competitive. The firm needs to conduct a market study in areas where its clients live to determine market perceptions regarding the Karma Sedan model. Information gathered will help the firm plan effective market strategies to help it serve the clients’ needs within these areas effectively. Therefore, the firm needs to conduct a thorough market analysis to determine how it will add value to its potential customers in the market. It needs to come up with a business model which suits its operations to enable it make a positive return on investment. Sanger needs to target specific markets which have customers that appreciate environment- friendly car models