Lolita S.A. Managing Company Growth

After turning to franchising as a way to stave off bankruptcy, should the CEO of an upscale Uruguayan clothing chain expand its franchise program or consider other options?
Nelson M. Fraiman, Medini Singh, Natalia Yankovic  | Spring 2008
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The Jerome Chazen Case Series

Lolita, founded in 1960 as an upscale Uruguayan woman's boutique, expanded across its home country and into Brazil under the direction of Michel Cohen, a son of one of the boutique's co-founders. But in 2002, the company hit a snag when the Uruguayan peso was allowed to float freely and quickly lost almost 50 of its value. For Lolita, which had dollar-denominated debt and needed to pay its Chinese suppliers in dollars, the crisis meant potential bankruptcy. Needing cash, Cohen turned to franchising. By the end of 2006, Lolita had 17 company-owned stores and 41 franchises. With a better financial outlook, Cohen pondered whether to continue franchising or to consider other options. In this case students examine Lolita's supply-chain management, its logistics strategy, and its financial decisions before making a recommendation for Lolita's future growth.

Case ID: 080202

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