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FDD Talk 2016: The Flip Flop Shops Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on June 2, 2016

in FDD Talk 2017: Retail Franchises, Franchise Earnings, Retail Franchise

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Flip Flop Shops Photo

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Flip Flop Shops franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Flip Flop Shops franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Flip Flop Shops’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average annual and weekly gross sales for the 69 franchised Flip Flop Shops stores in the United States (including stores in U.S. territories) and Canada that operated during the entire reporting period and were open and operating as of December 31, 2015

Section I – Background Information

Flip Flop Shops Seeking Growth, International Expansion

After being acquired by Cherokee Global Brands, the focus for Flip Flop Shops is on growth, especially in markets outside the U.S. Flip Flop Shops President Brian Curin has said 2016 will be an “epic year” for the company as it explores growth initiatives following the acquisition.

Curin said the chain intends to enter India with a key partner in 2016 and is looking at expansion in Latin America as well as the Asian countries of China, the Philippines, Vietnam, South Korea and Japan.

Acquisition Has Global Implications

The acquisition by Cherokee Global Brands in October 2015 adds more shoe brands to Flip Flop Shops, including Cherokee, Tony Hawk and Everyday California, to go along with the chain’s core brands — Sanuk, Quiksilver, Olukai, Roxy, Reef, Cobian and Havaianas — and many other brands of footwear.

The parent company is focusing on exploring partnership opportunities in Europe, Asia and Latin America and plans expansion of Flip Flop Shops through retail stores, shop-in-shops and mobile commerce, both in new and existing markets.

Sore Feet Inspired Flip Flop Shops

Flip Flop Shops was founded in 2004 by colleagues Sarah Towne and Todd Giatrelis, inspired by Towne’s difficulty in finding a pair of comfortable shoes while attending a Las Vegas convention and her realization that no store sold only flip flops.

The two opened a number of corporate stores, later teaming up with franchise veterans Curin, Darin Kraetsch and Alan Woods. The company began franchising in 2007.

The stores sell flip flops, sandals and accessories. Flip Flop Shops’ tagline is “Free Your Toes!”

Chain Drops in Franchise 500

Flip Flop Shops was ranked No. 285 in Entrepreneur’s 2016 Franchise 500 list, a drop from the chain’s high ranking of 227 in 2015 and the only year it has fallen in the rankings. After finishing 2014 four units shy of 100 locations, Flip Flop Shops was down to 87 at the end of 2015: 70 in the U.S. and 17 in other countries.

But aggressive expansion plans could make those numbers turn around in 2016 and get past that 100-store mark, especially around the world. Even as U.S. numbers dropped in 2015, locations in other countries rose from 13 to 17.

The brand currently has numerous market opportunities, but has listed on its website a number of immediate, time-sensitive opportunities in strong retail locations.

Flip Flop Shops, Cobian Partner for Contest

Flip Flop Shops partnered with Cobian Footwear in April 2016 to sponsor a social media sweepstakes with a prize of a five-day action adventure in Cabo San Lucas, Mexico, including snorkeling with whale sharks, deep-sea fishing, stand-up paddleboating, and surfing.

The winner in the sweepstakes, dubbed “The Great Escape,” will meet surfer and Cobian brand ambassador Bethany Hamilton, who survived an attack by a shark in 2003 that caused the loss of her arm; her story was told in the movie “Soul Surfer.” Also meeting the top prize winner will be Bill Boyce, marine biologist and host of “Destination: Baka Sur,” an NBC television show.

The contest is part of Flip Flop Shops’ efforts to reach more consumers.

Section II – Estimated Costs

  • Please click here for detailed estimates of Flip Flop Shops franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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