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The Cost of Owning a Flip Flop Shops Franchise
Are you interested in owning a specialty retail store? If you’re interested in franchising flip flop brands, opening a Flip Flop Shops franchise is worth considering. According to Statista, the global flip flop market will rise to 23.8 billion by 2025. The flip flop market is growing strong as there’s an increase in demand for comfortable and fashionable brands. Here’s the overview of owning a Flip Flop Shops franchise.
Flip Flop Shops: Overview
Flip Flop Shops was founded in 2004. It’s known as the curator of all premiere flip flop brands. The retail store started franchising in 2007 and has successfully opened over 55 units. It carries famous flip flop brands such as:
- OluKai
- Reef
- Crocs
- Birkenstock
- Oofos
- Sanuk
- Flojos
- Bearpaw
Training Program
Before the store’s opening, the franchisee’s Operating Principal and Lead manager must finish the training as required by the franchisor. The initial training is conducted in the Flip Flop Shops’ headquarters located in Citrus Heights, California. Typically, the general training lasts up to five days. Also, the franchisor has the sole discretion to require additional seminars and training programs.
What You Need To Know As A Franchisee
As a potential Flip Flop Shops franchise owner, you need to know the following:
- The franchisees are not granted exclusive territory.
- According to the Franchise Agreement, franchisees can open a store at a site that the franchisor accepts.
- The Protected Area of the franchisee will be at least a one-mile radius around the store’s location.
- Franchisees must choose an Operating Principal. If the franchisee is not an individual, a designated person must be chosen.
- Unless a Lead Manager is appointed, the designated Operating Principal must supervise the retail store full-time.
- The initial franchise term length for Flip Flop Shops is ten years.
- If requirements are met, franchisees can renew the store for two consecutive five-year renewal periods.
- The franchisor does not offer any monetary support— direct or indirect.
Did You Know
Before diving into the total breakdown of franchising costs, here are some fun facts about Flip Flop Shop.
- Flip Flop Shops has generated at least 15 million visits per year from consumers.
- It is a family-owned business.
- The franchise is rapidly growing in North America.
- The specialty retail store curates various flip flops such as beach, surf, and relaxation footwears.
Your Investments
In this section, let’s go over the total cost of owning a Flip Flop Shops franchise. Take note that the details below are compiled from the 2020 FDD of the retail store.
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $35,000 | $35,000 |
| Rent for First 3 Months | $15,000 | $36,000 |
| Security Deposit | $2,200 | $12,000 |
| Leasehold Improvements | $15,000 | $40,000 |
| Signage | $5,000 | $10,000 |
| Furniture, Fixtures and Equipment | $15,000 | $25,000 |
| Initial Training Expenses (plus employee wages, if any) | $1,000 | $2,000 |
| Point of Sale and Computer Hardware and Software | $6,000 | $8,000 |
| Initial Inventory/Supplies | $45,000 | $75,000 |
| Professional Services | $2,500 | $5,000 |
| Promotional Expenses | $1,000 | $2,500 |
| Insurance | $800 | $1,500 |
| ESTIMATED TOTAL* | $143,500 | $252,000 |
Other Costs
Other than your investments, as a potential franchisee, you should be aware of the other costs you’ll encounter.
| Type of Fee | Amount |
|---|---|
| Royalty Fee | 5% of Gross Sales. |
| Brand Building Fund Contribution | Up to 1% of Gross Sales. |
| Software License Fee | Currently, $2,400 for the first year for the second year and beyond $900 per year – fees are subject to adjustment by supplier. |
| Software Support Fees | Currently, $2,515 the first year and $1,200 the second and beyond – fees are subject to adjustment by supplier. |
| Air Scenting System | Current price, subject to adjustment by supplier – approximately $69 per month. |
| Merchandise for Resale | Reasonable cost. |
| Interest | 18% per year or the maximum lawful rate. |
| Late Fee | $100 for each late payment. |
| Additional On-Site Evaluations | Reasonable fee, plus costs and expenses associated with the additional on-site evaluations. |
| Intranet | Reasonable fee. |
| Conferences | Reasonable fee (currently, $500), plus your costs and expenses to attend. |
| Additional Training | At the franchisor’s option, a per diem rate currently ranging from $250 to $500, based on its costs of providing the training. |
| On-Site Remedial Training | The then-current per diem fee for remedial training, plus costs. The current per diem rate is $250. |
| Transfer Fee | An amount equal to one-half of the then-current initial franchise fee that the franchisor generally charges to new Flip Flop Shops franchisees. |
| Renewal Fee | 50% of the then-current initial franchise fee. |
| Inspection and Testing | Cost of inspection, if applicable, and cost of test. |
| Indemnification | Varies according to loss. |
| Audit Fee | Cost of audit. |
| Insurance Fee | A reasonable amount based on the franchisor’s expenses. |
| Enforcement Costs | Will vary. |
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