In this FDD Talk 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 2020 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 2020 FDD

• Section IV – Number of franchised and company-owned ZIPS Dry Cleaners outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of ZIPS Dry Cleaners’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average revenue, cost of production supplies, gross margin, labor, rent, repairs and maintenance, utilities, and income before general and administrative expenses for the 49 ZIPS Dry Cleaners Businesses operated by franchisees during the 24-month period January 1, 2018 to December 31, 2019

Section I – Background Information

14 Things You Need to Know About the ZIPS Dry Cleaners Franchise

Appoints New Vice President of Marketing

1.  In mid-November 2019, ZIPS Dry Cleaners announced the appointment of Tina Bagapor-O’Harrow as its new vice president of marketing. A versatile and talented marketing executive, Bagapor-O’Harrow brings more than 25 years of traditional and digital marketing experience to ZIPS, the majority of which was spent as the executive director of The Ad Store’s Washington, D.C. office.

2.  Leading the Washington office, she oversaw the creation of integrated campaigns for a long list of clients, including Disney and JetBlue, as well as such franchise organizations as Firehouse Subs, Choice Hotels, Barilla, and InfoUSA.

3.  In her new role with ZIPS, Bagapor-O’Harrow will lead the various marketing activities that support the company’s strategic and creative direction as it continues to bring its same-day, one-price dry cleaning model to new regions of the United States.

4.  Bagapor-O’Harrow said, “I look forward to bringing my experience in driving foot traffic to ZIPS. As the branding and marketing leader for a client roster that spanned more than two decades, I understand expiring capacity and how to get people through the door. During this time of exceptional growth, the opportunity to impact the future of the ZIPS brand is exciting.”

5.  Bagapor-O’Harrow’s appointment comes at a time when ZIPS Dry Cleaners continues to rapidly expand its national footprint. At the time of the announcement, ZIPS had more than 60 locations open and operating throughout eight states and Washington, D.C. The company also has a total active franchise pipeline that stands at more than 250 stores, all of which are slated to open over the next several years.

6.  According to ZIPS CEO Drew Ritger, “We are excited to bring someone with so much experience in turnstile marketing to the team. As we continue to grow, we are laser focused on providing strategic marketing support to our franchisees. We look forward to Tina helping our franchisees achieve superior value through their ZIPS investment. It is a great time to be part of ZIPS.”

Opens First Store in Portland

7.  In mid-October 2019, ZIPS Dry Cleaners announced the opening of the first of 12 stores signed in a development deal that spans the Portland metro area. All 12 stores will be owned by OKTA Dry Cleaning, LLC. The first store was slated to open on November 8. Various parts of town are being targeted for the remaining stores, including the immediate downtown area, Oakley, Hyde Park, Blue Ash, and Florence, among others.

8.  Affiliates of OKTA Dry Cleaning are experienced in owning and operating nine fitness clubs and gyms in the Portland metro area, and plan on using their management experience to make ZIPS a success.

9.  Justin Andrews, vice president of OKTA Dry Cleaning, said, “We are very excited to bring ZIPS to the Portland area. We saw that Portland was in need of a same-day, high-quality, low cost dry cleaner that provided outstanding service. ZIPS is able to provide customers with huge cost savings because of our flat rate cleaning fee for all clothes. Instead of spending that money on clothes, they can now spend it on other experiences that may be more enjoyable for them.”

10.  At ZIPS, a customer can have any item of clothing dry cleaned for $2.49. It doesn’t matter if the item is a necktie, a coat, or a pair of pants, the price is $2.49, 60 percent less than the national average. Garments are also cleaned on-site, allowing for same-day service. Laundry items such as shirts cost $1.89, while household items such as comforters are cleaned for just $19.99 per item.

11.  “Customers are shocked and relieved when I explain our value proposition: same-price dry cleaning/laundered shirts for $2.49 and $1.89, respectively, same-day service every day,” Andrews said.” We’re on average 60 percent less expensive, yet we provide the same clean and quality that expensive cleaners offer.”

Company History

12.  ZIPS Dry Cleaners was founded in 2002 when eight independent dry cleaners in the Baltimore, Maryland – Washington, D.C. area decided to combine their businesses into one unified brand. The founders wanted ZIPS to offer high-quality dry cleaning services at an affordable price. The ZIPS founders used their knowledge to streamline ZIPS’ business model and they started opening additional stores in the D.C. metro area right away.

13.  After a few years, ZIPS franchising was launched in 2006. Over the next few years, ZIPS Dry Cleaners expanded beyond Washington, D.C. and in 2013, the founders of ZIPS Dry Cleaners sold a majority share of the company to JPB Capital Partners of Columbia, Maryland.

Entrepreneur’s Franchise 500

14.  ZIPS Dry Cleaners ranked No. 317 on Entrepreneur’s 2020 Franchise 500 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  45
• Outlets at the End of the Year:  51
• Net Change:  +6

2018

• Outlets at the Start of the Year:  51
• Outlets at the End of the Year:  55
• Net Change:  +4

2019

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  63
• Net Change:  +8

Company-Owned

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  2
• Net Change:  +1

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2019

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 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 49 ZIPS Dry Cleaners Businesses operated by franchisees during the period January 1, 2018 through December 31, 2019.

• All 49 Franchised Businesses were open and operating during the 24-month period January 1, 2018 to December 31, 2019. These Franchised Businesses are located in the District of Columbia, Maryland, Pennsylvania, Virginia, Texas, and California.

• Twelve Franchised Businesses are not included because they were not in operation for the entire period and two Franchised Businesses are not included because they did not provide financial detail 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 trash/dumpster and charges for water, gas, and electric. The charges for water and trash/dumpster 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.

System-wide ZIPS Dry Cleaners Businesses – Statement of Average Total Revenue, Total Cost of Goods, Total Gross Profit, and Total Certain Costs (During Period January 1, 2019 to December 31, 2019)