In this FDD Talk 2017 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 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a ZIPS Dry Cleaners franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of ZIPS Dry Cleaners’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average revenue, cost of production supplies, gross margin, labor, rent, repairs and maintenance, utilities, and income before general and administrative expenses for the 41 ZIPS Dry Cleaners Businesses operated by franchisees during the period January 1, 2016 through December 31, 2016
Section I – Background Information
10 Things You Need to Know About the ZIPS Dry Cleaners Franchise
Plans to Open 115 Locations in Southern California Over the Next 15 Years
1. In 2016, ZIPS Dry Cleaners signed an agreement with Los Angeles-based ZDry, LLC to develop the brand throughout Southern California. In early May of this year, ZDry opened the first of 110 locations it plans to open in Southern California over the next 15 years. This first Southern California store was opened on May 5 in Costa Mesa and is the first of 30 ZIPS Dry Cleaners planned for the Orange County area.
2. Shawn Bishop, one of the managing partners for ZDry, said, “What attracted us most to ZIPS was the company’s successful business model that is based on a concept revolutionary to the industry and clearly in high demand to today’s dry cleaning customer – dry cleaning that is ready for pick-up the same day it’s dropped off and all for a flat-rate price.”
Launches New Brand Campaign
3. At the end of March, ZIPS Dry Cleaners launched a major television and digital advertising campaign with the tagline “The Real Deal.” The new campaign highlights both the brand’s low prices and high-quality service. ZIPS worked with Baltimore-based advertising agency TBC, Inc., which utilized a number of creative and promotional tactics to bring ZIPS’ vision to life.
4. The ads ran throughout Baltimore and the Washington D.C. metro area and also included billboards, Facebook and Pandora advertisements, Metrorail posters across the WMATA and VRE, as well as Google Sponsored Promotions through Gmail. After the initial advertisements were launched, additional campaign materials were rolled out including in-store collateral and a redesigned website.
5. ZIPS Dry Cleaners CEO Reid Bechtle said, “We’ve found that today’s consumers have a difficult time believing that a trusted dry cleaning service is available at such a low price point that we offer. Our objective with this campaign is to overcome these perceptions with clever, memorable ads that assure current and prospective clients that their items are in good hands.”
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Appoints New Plant Performance and Quality Specialist
6. At the beginning of March, ZIPS Dry Cleaners appointed Kathleen Razmus as its new Plant Performance and Quality Specialist. Razmus comes to the company with over 30 years of experience in the dry cleaning industry – she co-owned and operated Regency Drycleaning Services for 25 years before selling the business to Glyndon Lord Baltimore Cleaners (GLB) in 2011. After the sale of Regency, Razmus served as the Production Manager at GLB Cleaners.
7. While at Regency and GLB, Razmus developed and implemented systems for monitoring, tracking, and optimizing product quality, operator productivity, supply inventory, and equipment maintenance. In her new role at ZIPS, Razmus will help train new franchisees as well as their managers to ensure that ZIPS’ commitment to quality is maintained throughout the entire franchise system. She will also offer operational support to existing franchisees.
8. ZIPS Dry Cleaners was started in 1996 when a group of eight independent dry cleaners in the Baltimore-Washington, D.C. metro area joined together as a buying collective to help cut down the costs of supplies. Each dry cleaner changed its name to ZIPS and agreed to offer same-day dry cleaning for $1.99 (currently $2.29) per garment. The group of dry cleaners made their arrangement official in 2002 and began franchising ZIPS in 2006.
9. ZIPS was owned by 14 partners until 2013 when a large portion of the chain was sold to JPB Capital of Columbia, Maryland. JPB Capital brought on a full-time CEO to help ZIPS continue to grow. Today, there are more than 50 ZIPS Dry Cleaners stores located in the District of Columbia, Maryland, Pennsylvania, Virginia, and California.
Entrepreneur’s Franchise 500
10. Since it began franchising in 2006, ZIPS Dry Cleaners has ranked three times on Entrepreneur’s annual Franchise 500 list. The company’s highest rank was No. 161 in 2017, while its lowest rank was No. 455 in 2011, its first year on the 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 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on ZIPS Dry Cleaners’ 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
- Presented below are the average total revenue, average total cost of goods, average total gross margin, and average cost of labor, rent, repairs and maintenance, and utilities data for 41 ZIPS Dry Cleaners Businesses operated by franchisees during the period January 1, 2016 through December 31, 2016.
- All 41 Franchised Businesses were open and operating during the 12-month period January 1, 2016 to December 31, 2016. These Franchised Businesses are located in the District of Columbia, Maryland, Pennsylvania, and Virginia.
- Four Franchised Businesses are not included because they were not in operation for the entire year.
- This data was compiled from unaudited financial statements submitted to the franchisor by the Franchised Businesses. The franchisor believes the information is accurate, but it has not audited or verified the information and cannot verify that the information was compiled using consistently applied accounting principles.
- Revenue – This figure is an average of all income and revenue from the sale of all services and products to customers less refunds to customers, discounts, and store value gift cards and gift certificates.
- Production Supplies – The average Production Supplies includes the total costs of all services and products sold at ZIPS Dry Cleaners Businesses (such as alterations, supplies, leather costs, dry cleaning and laundry supplies, and waste disposal). These costs may vary from year to year, or within a year, due to fluctuations in the prices of supplies and/or materials, transportation costs, and/or shipping costs.
- Gross Margin – This figure represents the Revenue minus the Production Supplies.
- Labor – Labor includes salary, payroll taxes, wages, or benefits (including vacation pay) for management personnel and employees. Each ZIPS Dry Cleaners Business compensates its managers differently and may use varied formulas. Franchisees may compensate managers differently or may compensate one or more individual owners in lieu of one or more managers.
- Rent – This includes rent, property taxes, and miscellaneous items. Rent consists of minimum rents, percentage rents, common area maintenance charges, and any sales or other taxes. Property taxes are real estate taxes and assessments levied against the property upon which the business is located.
- Repairs and Maintenance – This includes equipment and facility repair and maintenance.
- Utilities – This includes alarm system monitoring, satellite, telephone, internet and cable costs, and charges for water, gas, and electric. The charges for water are included in either the Utilities category or the Rent category, depending upon whether such charges are payable under the terms of the lease for the particular ZIPS Dry Cleaners Business.
- Income Before General and Administrative Expenses – This figure represents the Gross Margin minus Labor, Rent, Repairs and Maintenance, and Utilities, as defined above.