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FDD Talk 2017: What You Need to Know About the Flip Flop Shops Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on September 13, 2017

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



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Flip Flop Shops Franchise Photo by dustpuppy

In this FDD Talk 2017 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 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Flip Flop Shops franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Flip Flop Shops’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average annual and weekly gross sales for the 57 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 January 28, 2017

Section I – Background Information

12 Things You Need to Know About the Flip Flop Shops Franchise

Partnership with Rainbow Sandals



1.  On July 14th, Flip Flop Shops introduced its exclusive footwear collaboration with Rainbow Sandals — the limited edition “Founder’s Edition” sandals. The special sandals were co-designed by Rainbow Sandals’ founder Jay “Sparky” Longley and Brian Curin, one of the co-founders of Flip Flop Shops. The Founder’s Edition sandals feature an updated design on Rainbow’s iconic flip flops and will only be sold at Flip Flop Shops stores.

2.  Curin said that the collaboration “has been nine years in the making and marks Rainbow’s first exclusive style with a retailer.” While the limited-edition sandals retain the look of Rainbow’s signature silhouette, they feature navy blue and beige pinstripes on Rainbow’s popular Sierra Brown premium nubuck leather. The sandals are available in both men’s and women’s versions.

3.  Flip Flop Shops has been selling Rainbow footwear since 2008; in early 2017, Rainbow became a core brand for the retailer. A full assortment of Rainbow styles and colors are available year round at all Flip Flop Shops locations.

4.  To celebrate the collaboration, customers were invited to visit any Flip Flop Shops store from July 14 to August 14 to enter for a chance to win a free trip to the Rainbow factory in San Clemente, California to learn about the history of Rainbow Sandals and design a custom pair of their own.

Debuts New “Floating Retail Concept”

5.  Toward the end of March, Flip Flop Shops debuted its first “floating retail concept” store at the Stonebriar Centre in the Dallas suburb of Frisco, Texas. The standalone unit is shaped like a flip flop and features many elements of a standard Flip Flop Shops store, including the cork floor, the coconut lotion scent, and a selection of styles from brand partners Birkenstock, Rainbow, Cobian, and Havainas.



6.  Brian Curin, President of Flip Flop Shops, said that the company came up with the floating concept as a way to meet the current uncertainty in the retail marketplace. Curin cited the recent closings of large mall anchor stores, such as Macy’s, as being one of the company’s biggest concerns. “We have locations in those malls, where we get hit, so we have to figure out if we’re going to suffer through another year of redevelopment of a mall or relocate,” said Curin.

7.  Curin added that relocating an inline store is expensive. The new standalone retail space offers more flexibility and comes with a cheaper price tag. Curin said that Flip Flop Shops might open another five to eight floating shops before the end of 2017. He noted that these kiosks aren’t a replacement for brick and mortar stores, but balances out the brand’s portfolio.

Debuts Everyday California’s First Flip Flops

8.  In May, Everyday California, a surf lifestyle brand owned by Cherokee Global Brands (which is also Flip Flop Shops’ parent company), launched its first footwear collection. The brand launched a series of five flip flops for men and women, which are available at Everyday California stores as well as 60 Flip Flop Shops locations around the U.S.

9.  The collection was co-developed by Saliluz LLC, a division of Cobian Footwear, and Flip Flop Shops. Brian Curin, President of Flip Flop Shops, said that the company had been looking into doing a special flip flop project. Curin said that Flip Flop Shops did a lot of research with Cherokee and ultimately decided that Everyday California was the right brand to work with as “it’s no secret that California, as a brand, is hot. It resonates everywhere. You see a lot of California-branded products everywhere.”

Company History



10.  The first Flip Flop Shops store was opened in 2004 by Sarah Towne and Todd Giatrelis in Boston, Massachusetts. The two were inspired to open the first shop after Towne couldn’t find a pair of comfortable shoes while on vacation and realized that there wasn’t a store that only sold flip flops.

11.  Towne and Giatrelis opened a few more stores before teaming up with Brian Curin, Darin Kraetsch, and Alan Woods, who were all veterans of the franchise industry. The new team began franchising the Flip Flop Shops concept in 2008. Today, there are around 90 Flip Flop Shops stores in operation around the world.

Entrepreneur’s Franchise 500

12.  Flip Flop Shops has appeared on Entrepreneur’s annual Franchise 500 list two times since it began franchising in 2008. The company debuted on the list at No. 415 in 2011 and ranked again in 2014 at No. 229.

Section II – Estimated Costs

  • Please click here for detailed estimates of Flip Flop Shops franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Flip Flop Shops’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

  • Flip Flop Shops’ financial performance representation includes information relating to the Gross Sales and average weekly Gross Sales for the period from January 31, 2016 to January 28, 2017 (the “Reporting Period”) for the 57 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 January 28, 2017 (the “Sample Stores”).
  • The Sample Stores do not include 24 franchised Flip Flop Shops Stores that closed during the Reporting Period or Floating Retail Shops.
  • These 57 Sample Stores represent 89.1% of the 64 total Flip Flop Shops Stores in the United States (including Stores in U.S. territories) and Canada open as of the end of the Reporting Period. Information for Stores outside of the 50 United States and Canada is not included in this Item 19.
  • The Gross Sales realized will vary from Store to Store and will be directly affected by many factors, such as the Store’s size, geographic location, competition in the marketplace, the presence of other Flip Flop Shops Stores, and the quality of management and service at the Store.
  • This financial performance representation reflects only revenue of the Sample Stores and does not reflect any cost of sales, operating expenses, and other costs or expenses that you will incur in operating the Store, including the royalty fees and advertising contribution that you must pay under the terms of the Franchise Agreement.
  • This financial performance representation also does not include debt service or equipment lease costs that may be incurred in the operation of a Flip Flop Shops Store.
  • In addition, this financial performance representation does not include any information about the federal income taxes payable on any net income derived from the operation of the Store, or state or local net income or gross profits taxes that may be applicable in the jurisdiction in which your Store is located.
  • Flip Flop Shops compiled these figures from the individual Stores’ actual reported Gross Sales for the Reporting Period. This information has not been audited or otherwise verified by the company.
  • 7 of the Sample Stores are located in Canada, and the Gross Sales figures for those Stores were converted from Canadian Dollars to U.S. Dollars using the exchange rates in effect at the time of payment of royalties.

Average and Median Annual Gross Sales and Average and Median Weekly Gross Sales for the Sample Stores During the Reporting Period



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