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FDD Talk 2015: The ZIPS Dry Cleaners Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 17, 2015

in Dry Cleaning Franchise, FDD Talk 2017: Service Franchises, Franchise Earnings

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Zips Dry Cleaners Photo by Maryland Route 5

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the ZIPS Dry Cleaners franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a ZIPS Dry Cleaners franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of ZIPS Dry Cleaners’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average total revenue, average total cost of goods sold, average total gross margin, and average cost of labor, rent, repairs and maintenance, and utilities for the 35 ZIPS Dry Cleaners Businesses operated by franchisees during the period January 1, 2014 through December 31, 2014

Section I – Background Information

ZIPS Agreement to Give Substantial Boost to Dry-Cleaning Company

ZIPS Dry Cleaners took a big step forward in expanding both its reach and its volume in April 2015 when the Greenbelt, Maryland-based company signed a franchise development agreement that will bring 104 stores to the Mid-Atlantic and Midwest regions.

The agreement with ZDC Holdings, a Pennsylvania-based private equity firm, is the largest for the brand. At the time of the agreement, ZIPS had 39 stores, the majority in Maryland, in the Mid-Atlantic region. Expectations are that the chain will reach 50 locations by the end of 2015 and 80 by the end of 2017.

“The name of our game is go get more ZIPS up and be convenient to people,” ZIPS CEO Reid Bechtle told The Washington Post. “Our five-year plan is to get 350 stores across the country. There is room in this business for everybody. The basic business model is to be disruptive.”

Bechtle had previously announced goals of opening more stores in Virginia, moving further north into Pennsylvania, and moving into Ohio and New Jersey.

Originally Part of Dryclean Depot Chain

ZIPS Dry Cleaners began in 1996 with eight locations in the Baltimore-Washington, D.C., area as part of the Dryclean Depot chain. Those stores split from Dryclean Depot in 2002 to form ZIPS. Franchising began in 2006. Fourteen partners owned the company until 2013, when a large portion of the chain was purchased by JPB Capital, based in Columbia, Maryland, and Bechtle was brought in as CEO.

The chain’s “one price dry cleaners” is noted for its price of $2.29 for any garment. Its motto is “Professional Cleaning. Unbeatable Prices.”

Each ZIPS store employs 20 to 30 people and does all dry cleaning on location. A typical store will clean about half a million garments each year.

ZIPS locations are deeply involved in their local communities, including donating thousands of unclaimed pieces of clothing each year and collecting and cleaning donated coats for needy people each winter.

Company Seeks Environmental Responsibility

The company also works to be environmentally responsible, using advanced technologies to avoid certain harmful chemicals and using a filter system to avoid having to cook solvents. The chain says it uses approximately 75 percent less solvent than other dry-cleaning companies, thus creating 90 percent less waste.

Additionally, ZIPS uses biodegradable bags that use less plastic and thus deteriorate faster; offers hanger and bag recycling; uses less cleaning solution and avoids chlorine bleach; uses less energy because of its natural-gas-fired boilers; and cuts down on dry-cleaning cycle times by avoiding stills. The company requires its owners to dispose of their clay filtration systems through a third-party specialist that adheres to all government practices.

Company Cracks Next 300 List

With over $35 million in worldwide sales, ZIPS Dry Cleaners was No. 394 on the Franchise Times’ Next 300 list in October 2014. The list is a companion list to the Franchise Times Top 200 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of ZIPS Dry Cleaners franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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