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FDD Talk 2016: The ZIPS Dry Cleaners Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 3, 2016

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 2016 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 2016 FDD
  • Section III – Presentation and analysis of ZIPS Dry Cleaners’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average revenue, cost of production supplies, gross margin, labor, rent, repairs and maintenance, utilities, and income before general and administrative expenses for the 37 ZIPS Dry Cleaners Businesses operated by franchisees during the period January 1, 2015 through December 31, 2015

Section I – Background Information

Back in 1996, eight different dry cleaners in the Baltimore-Washington DC area got together and said enough was enough. Each facility had its own incredibly confusing array of prices for different kinds of garments, making everything so unnecessarily complicated. What if they could all agree to just stick to one simple low price per garment, whatever the piece might be. They decided to give it a try, charging just $1.99 per article of clothing. Needles to say, they loved it – and so did their customers.

Calling the new approach ZIPS, franchising of the concept began in 2006. Since then, the number of locations has grown slowly but steadily and currently stands at 45, one of which is company-owned.

Here’s how ZIPS keeps things zipping along in the dry cleaning industry:

Keeping It Simple

That $1.99 price couldn’t last forever, but guess what? Twenty years later it has only gone up by 30 cents to $2.29! This is the epitome of simplicity, and it makes sense. Go online and visit a few different dry cleaning sites and you’ll see why this is such a great idea. I saw sites with as many as 50 different prices for various items. Who needs that?

Oh, and that $2.29 price per garment? It ends up being less than half the industry average!

Same-Day Turnaround

As if the simple pricing plan wasn’t enough, ZIPS also offers same-day turnaround with its “In by 9, out by 5” promise, which is so much better than all those other places where you end up waiting for several days before your garment is ready for pick-up.

Giving Back

As you can imagine, lots of garments are dropped off at dry cleaners and then never claimed. What happens to all those clothes? ZIPS donates them to local charities to help the needy. ZIPS also collects and cleans winter coats that will be given to those who need them.

Clean and Green

From hanger recycling to 100% biodegradable plastic bags to organic dry cleaning solutions to cutting waste by 90%, ZIPS is always on the lookout for ways to make its cleaning operations less resource-intensive and greener than your average dry cleaning establishment.

Franchisee Advantages

The leadership team at ZIPS has combined dry cleaning experience in excess of 200 years.

The chain also sticks to a “no receivables” business model where all customers pay for each garment at the time of drop-off, not pick-up – so you never get stiffed.

And dry cleaning isn’t seasonal – clothes need to be cleaned all year long.

The simple approach to pricing allows for a much higher volume to be handled at each location. ZIPS handles in one day what other companies would take 10 days to complete. How does ZIPS accomplish this? It’s all about having the most efficient equipment and emphasizing high productivity while maintaining quality.

Upcoming Expansion Plans

ZIPS has inked deals to bring the chain to a number of new markets, including Los Angeles, San Antonio, San Diego, Austin, Richmond and Central Maryland.

Section II – Estimated Costs

  • Please click here for detailed estimates of ZIPS Dry Cleaners 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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