In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Tide Dry Cleaners franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Tide Dry Cleaners franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Tide Dry Cleaners franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Tide Dry Cleaners outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Tide Dry Cleaners’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- fiscal year 2017/2018 average gross sales, discounts, net sales, cost of sales, labor cost and taxes, marketing, utilities, repair and maintenance, credit card fees, miscellaneous expenses, total controllable expense, net controllable income, royalty, and net controllable income less royalty for the 15 Tide Dry Cleaners Outlets that were open and operating for over 1 year as of June 30, 2018, and operated as Plant Stores that did not support 1 or more Drop Stores or Non-Traditional Stores (the “Plant Store Covered Outlets”); and the 10 Tide Dry Cleaners Outlets that were open and operating for over 1 year as of June 30, 2018, and operated as Drop Stores (the “Drop Store Covered Outlets”) (separately stated)
- fiscal year 2017/2018 average gross sales, discounts, and net sales for the 18 Tide Dry Cleaners Outlets that were open and operating for over 1 year as of June 30, 2018, and operated as Servicing Plant Outlets (the “Servicing Plant Outlets”)
- fiscal year 2017/2018 average, median, high, and low monthly net sales, net sales per customer visit, price per garment, garments per trip, monthly customer visits, and monthly discount rate for the 15 Tide Dry Cleaners Plant Store Covered Outlets, the 18 Tide Dry Cleaners Servicing Plant Outlets, and the 10 Tide Dry Cleaners Drop Store Covered Outlets (separately stated)
Section I – Background Information
15 Things You Need to Know About the Tide Dry Cleaners Franchise
Acquires MW Cleaners
1. In mid-May 2018, MW Cleaners – a Houston and Austin, Texas-based dry cleaning franchise – announced that it had been acquired by Tide Dry Cleaners. Under the acquisition, all MW Cleaners locations will be converted into Tide Dry Cleaners stores.
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2. MW Cleaners said that Tide Dry Cleaners shares its core belief that customer service is the cornerstone of its business. The brand also reassured its customers that the entire MW Cleaners staff would continue to work under the new Tide Dry Cleaners brand.
3. MW Cleaners also guaranteed that customers would not notice any disruptions but would get new benefits offered by Tide Dry Cleaners, such as: 24-hour drop-off and pickup; open 7 days a week with extended hours; a 7-Point Inspection that includes tightening loose threads and replacing cracked buttons for free; brighter whites and darker blacks with Tide Restore™ and Back-to-Black™ services; and rewards and more with Tide Inner Circle Rewards Program.
4. Tide Dry Cleaners continues to grow across the United States. Two of its newest locations opened in Valrico, Florida and Rocky River, Ohio. The Valrico Tide Dry Cleaners franchise opened in early May 2018 and is owned and operated by husband and wife team Berry and Sharon Wright. Earlier in the year, the Rocky River store became the first Tide Dry Cleaners location in Northeast Ohio. It is owned and operated by James Sherman and his father Michael Sherman, who is a well-known businessman in the Rocky River area.
5. In addition to their Valrico location, the Wrights have committed to opening nine Tide Dry Cleaners locations in the Tampa Bay area. Their second location is slated to open by the end of 2018 on South Dale Marby Highway.
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6. The Wrights said that their customers have been enjoying the 24-hour pickup kiosk, which looks like a drive-thru ATM. Berry Wright added, “We got a lot of customers that are already doing it. It really is a new way to look at dry cleaning and we want it to be nice and bright in a nice environment.”
7. To celebrate the grand opening, new customers received welcome bags with samples, coupons, and a list of services including “Back-to-Black” where $2 more promises color restoration of items such as a black cotton polo or a faded white dress shirt.
8. Like the Wrights, the Shermans also have plans to open additional Tide Dry Cleaners locations. They plan to open at least three more stores by 2020 with their franchises servicing an area from Avon to Mentor, Ohio. Although the Sherman family owns several other businesses, this is their first venture into dry cleaning.
9. Chip Sherman said, “We wanted to get into a business that would not be disrupted by an app. We’re located in an area people come to every day for shopping, and we have an app of our own.”
Development Incentive Program
10. Until the end of June 2018, Tide Dry Cleaners was offering a development incentive program. According to the brand’s website, existing or new franchisees who signed a new Development Rights Agreement prior to June 30, 2018 paid a reduced franchise fee of only $20,000 per unit. This fee is paid at signing and no additional franchise fee will be due for each unit.
11. Tide Dry Cleaners also had a store opening incentive program where new units opened by a Tide Dry Cleaners franchisee by June 30, 2018 were eligible to receive a royalty reduction. Tide Dry Cleaners also said that it may match the amount franchisees will pay towards marketing their new unit.
12. There is no current information on the Tide Dry Cleaners franchise website regarding whether or not the brand is still offering these incentive programs.
13. Tide Dry Cleaners was started in 2008 by Agile Pursuits Franchising, Inc., a wholly-owned subsidiary of the Procter & Gamble Company (P&G). Before starting Tide Dry Cleaners, P&G had tried for over a decade to launch its own dry cleaning company. After spending millions of dollars in investments, P&G gave up on the idea for a while until the company decided to brand its latest dry cleaning attempt after its top-selling laundry detergent, Tide.
14. P&G knew that the Tide brand would draw in customers and the gamble paid off. After franchising started in 2009, Tide Dry Cleaners has grown into one of the largest dry cleaning franchises in the U.S.
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15. Tide Dry Cleaners ranked No. 251 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Tide Dry Cleaners franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Tide Dry Cleaners’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 20
- Outlets at the End of the Year: 28
- Net Change: +8
- Outlets at the Start of the Year: 28
- Outlets at the End of the Year: 35
- Net Change: +7
- Outlets at the Start of the Year: 35
- Outlets at the End of the Year: 56
- Net Change: +21
- Outlets at the Start of the Year: 8
- Outlets at the End of the Year: 8
- Net Change: +0
- Outlets at the Start of the Year: 8
- Outlets at the End of the Year: 11
- Net Change: +3
- Outlets at the Start of the Year: 11
- Outlets at the End of the Year: 10
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – Financial Performance Representation for All Plant Store Covered Outlets Open At Least 1 Year
- As of June 30, 2018, there were 77 Tide Dry Cleaners (TDC) Outlets operating in the United States.
- The franchisor excluded from this first financial performance representation the: (i) 17 TDC Outlets that had not operated for a full year as of June 30, 2018; (ii) 20 TDC Outlets that operated as Drop Stores or Non-Traditional Stores; (iii) 5 TDC Outlets that converted to TDC; (iv) 2 TDC Outlets that changed ownership and operational format during the year; and (v) 18 TDC Outlets that operated as Plant Stores, which serviced 1 or more other Drop Stores or Non-Traditional Stores (the “Servicing Plant Stores”).
- The franchisor excluded the Servicing Plant Stores because they incur additional costs of sales, labor, and utility expenses in servicing their associated Drop Stores and Non-Traditional Stores, and these additional expenses (and the difficulty in allocating the expenses between the Servicing Plant Stores and the Drop Stores and/or Non-Traditional Stores) alter the Servicing Plant Stores’ stand-alone results.
- The first financial performance representation reflects the average sales, certain expenses, and net controllable income for the period from July 1, 2017 through June 30, 2018 (the “Covered Period”) for the 15 TDC Outlets that were open and operating for over 1 year as of June 30, 2018, and operated as Plant Stores that did not support 1 or more Drop Stores or Non-Traditional Stores (collectively, the “Plant Store Covered Outlets”).
- Agile (the franchisor’s affiliate) owns and operates zero of the Plant Store Covered Outlets and franchisees own and operate the other 15.
- The Plant Store Covered Outlets use the prototypical business format, facilities, and operating procedures for a Plant Store that form the basis of the Tide Dry Cleaners franchise opportunity that the franchisor offers in the company’s 2018 FDD.
- All Plant Store Covered Outlets operate in suburban locations within greater metropolitan areas of U.S. cities, and most from free-standing premises.
- The Plant Store Covered Outlets operated for an average of 4 years, 7 months.
Fiscal Year 2017/2018