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Considering a Flip Flop Shops Franchise? Don’t Overlook These 24 Important Franchise Fees

by Franchise Chatter on September 13, 2017

in Franchise Fees, Retail Franchise



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Flip Flop Shops Photo

If you are considering a Flip Flop Shops franchise, don’t get blindsided by these 24 important franchise fees (from the initial franchise fee, to the royalty fee, to 22 other fees found in Items 5 and 6 of Flip Flop Shops’ 2017 FDD).

1.  Initial Franchise Fee:  $17,500 to $35,000

  • When you sign the Franchise Agreement, you must pay Flip Flop Shops an initial franchise fee of $35,000 ($17,500 if the Franchise Agreement is the second or subsequent Flip Flop Shops Franchise Agreement to be signed at the same time as at least 1 other Flip Flop Shops Franchise Agreement).
  • The initial franchise fee is not refundable and is imposed uniformly on all franchisees. Flip Flop Shops may reduce or waive the initial franchise fee under certain circumstances in its sole discretion.
  • During Flip Flop Shops’ fiscal year ending on January 28, 2017, the initial franchise fees paid by franchisees ranged from $0 to $35,000.

2.  On-Site Evaluations:  varies

  • If Flip Flop Shops provides more than 2 on-site evaluations for your first Store or any on-site evaluations for your second and subsequent Stores, Flip Flop Shops may require you to reimburse it for its costs and expenses and charge a reasonable fee for those on-site evaluations.

3.  Royalty Fee:  6% of Gross Sales



  • Due Date:  Wednesday of each week for the preceding week.
  • Flip Flop Shops may require you to pay the royalty fee by electronic funds transfer.
  • If you are in default of Flip Flop Shops’ operational standards, it may, as an alternative remedy to termination, increase the royalty fee to 10% of Gross Sales and charge you an additional $250 per week until you rectify the deficiencies.

4.  Brand Building Fund Contribution:  up to 2% of Gross Sales

  • Due Date:  Same as royalty fee.
  • Currently, 0.5% of your Gross Sales must be contributed to the Brand Building Fund.
  • Flip Flop Shops requires you to pay contributions to the Brand Building Fund by electronic funds transfer.
  • Flip Flop Shops recommends that you spend at least 2% of Gross Sales on local marketing, but it does not require you to do so.

5.  Software License Fee:  currently, $601 per year beginning in the 4th year; fees are subject to adjustment by supplier

  • Due Date:  As invoiced.
  • You are not required to pay any additional software license fee for the Retail Pro software during the first 3 years that you use the software. Beginning in the fourth year of your use of the Retail Pro software, you must begin paying this annual software license fee.

6.  Software Support Fees:  currently, $1,500 the first year and $1,000 the second and third years; fees are subject to adjustment by supplier

  • Due Date:  As invoiced.
  • You must pay the software support fee to Flip Flop Shops’ designated supplier.

7.  ShopperTrak:  current price, subject to adjustment by supplier; $70 per month

  • Due Date:  As arranged.
  • You must subscribe for a monthly fee to obtain program tracking results.

8.  Mood Media Music Service:  current price, subject to adjustment by supplier, is approximately $157 per month

  • Due Date:  As arranged.
  • You must subscribe to the Mood Media music service and play the music at your Store.
  • This monthly fee includes the equipment lease fee and the music programming fee. This subscription is not a requirement for Floating Retail Shops.

9.  Air Scenting System:  current price, subject to adjustment by supplier, is approximately $69 per month

  • Due Date:  As arranged.
  • You must subscribe to the “air aroma” air scenting system supplied by Scent Air, Inc.

10.  Merchandise for Resale:  reasonable cost

  • Due Date:  On demand.
  • Flip Flop Shops may provide to you, at a reasonable cost, certain collateral merchandise for resale that identifies the system (for example, caps and t-shirts). If Flip Flop Shops makes such merchandise available, it may require you to purchase quantities sufficient to meet customer demand.

11.  Interest:  18% per year or the maximum lawful rate

  • Due Date:  On demand.
  • Flip Flop Shops may charge interest on all overdue amounts.

12.  Late Fee:  $100 for each late payment

  • Due Date:  On demand.
  • Flip Flop Shops may charge you a late fee for each late payment in addition to any interest that accrues.

13.  Additional On-Site Evaluations:  reasonable fee, plus costs and expenses associated with the additional on-site evaluations



  • Due Date:  When billed.
  • If Flip Flop Shops (or its representative) provides more than 2 on-site evaluations of any Store site or this is not your first Store, it may require you to pay it a reasonable fee and reimburse it for its reasonable costs and expenses for conducting those on-site evaluations.

14.  Intranet:  reasonable fee

  • Due Date:  When billed.
  • If Flip Flop Shops develops an intranet network, it may charge you a reasonable fee for using the intranet network.

15.  Conferences:  reasonable fee (currently, $500), plus your costs and expenses to attend

  • Due Date:  When billed.
  • Flip Flop Shops may require you to attend its annual franchisee conference and pay a reasonable fee. You must also pay for the costs and expenses (including travel and lodging costs) for your representatives to attend Flip Flop Shops’ franchisee conferences.

16.  Additional Training:  at Flip Flop Shops’ option, a per diem rate currently ranging from $250 to $500 based on its costs of providing the training

  • Due Date:  Before additional training.
  • You must also pay the expenses of your personnel attending training.
  • Training will also be required for a replacement or successor Operating Principal or Lead Manager.

17.  On-site Remedial Training:  the then-current per diem fee for remedial training, plus costs. Flip Flop Shops’ current per diem rate is $250.

  • Due Date:  When billed.
  • If you ask or if Flip Flop Shops believes it is appropriate, it will (subject to availability) provide trained representatives to conduct on-site remedial training at your Store.

18.  Transfer Fee:  an amount equal to one-half of the then-current initial franchise fee that Flip Flop Shops generally charges to new franchisees

  • Due Date:  With transfer application.
  • There is no fee if an individual or partnership transfers rights to a corporation controlled by the same interest holders; however, you must reimburse Flip Flop Shops for all costs (including attorneys’ fees) associated with reviewing and processing the transfer documents.

19.  Renewal Fee:  50% of Flip Flop Shops’ then-current initial franchise fee

  • Due Date:  Signing of renewal Franchise Agreement.
  • You must give Flip Flop Shops at least 6 months’ and not more than 9 months’ notice to renew and meet other renewal conditions.

20.  Inspection and Testing:  cost of inspection, if applicable, and cost of test

  • Due Date:  When billed.
  • Before approving a supplier, Flip Flop Shops may require you to pay the cost of testing the supplier’s products and inspecting its facilities.

21.  Indemnification:  varies according to loss

  • Due Date:  On demand.
  • You must indemnify Flip Flop Shops when certain of your actions result in loss to it.

22.  Audit Fee:  cost of audit

  • Due Date:  When billed.
  • Payable if an audit shows you have understated any amount owed to Flip Flop Shops by 3% or more.

23.  Insurance Fee: reasonable amount based on Flip Flop Shops’ expenses

  • Due Date:  On demand.
  • If you fail to maintain the required insurance, Flip Flop Shops may (but need not) obtain it for you. If it does, it will charge you a fee, plus its expenses.

24.  Enforcement Costs:  will vary

  • Due Date:  As incurred.
  • You must pay Flip Flop Shops’ costs of enforcement (including attorney’s fees and costs) if you do not comply with the Franchise Agreement.


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