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Flip Flop Shops Franchise Costs & Fees

Date of Incorporation: 2004
Franchising Since: 2007
Headquarters: Sherman Oaks, California

Business Description: The franchisor is Flip Flop Shops Franchise Company, LLC. The franchise is for the establishment and operation of retail stores that specialize in the sale of flip flops and sandals and related footwear and accessories.

Franchise Offer: The franchisor offers qualified applicants franchises for Flip Flop Shops Stores that operate under the Flip Flop Shops System.

Financial Assistance: Neither the franchisor nor any agent or affiliate of its offers direct or indirect financing to franchisees, guarantees any note, lease or obligation of theirs.

Training and Assistance: Before the opening date of the Store, the Operating Principal and Lead Manager (if applicable) must have attended and completed to the franchisor’s satisfaction the initial management training program. Currently, the initial training is conducted in Irvine, California. Initial training generally lasts approximately 6 days. The franchisor may require the Operating Principal and Lead Manager (if applicable) to attend additional training programs and seminars.

Territory: Franchisees will not receive an exclusive territory. The Franchise Agreement gives franchisees the right to operate a Flip Flop Shops Store at a site the franchisor accepts as meeting its site selection guidelines. If franchisees are in compliance with the Franchise Agreement and any other agreement they have with the franchisor or its affiliates, it and its affiliates will not establish or authorize anyone except franchisees to establish a Flip Flop Shops Store in the geographic area identified in the Franchise Agreement (the Protected Area) during the term of the Franchise Agreement. The Protected Area will be at least a 1-mile radius around the Location; however, the determination of the actual shape and size of the Protected Area is based on an analysis of various factors, including, population density, income level and the number of households and businesses in the area.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years. Two consecutive 5-year renewal periods are available, if requirements are met.

Obligations and Restrictions: When franchisees sign the Franchise Agreement, they must designate an individual to serve as the “Operating Principal.” If franchisees are an individual, they will be the Operating Principal. The Operating Principal must be the same person for all Stores that franchisees or their affiliate operates. If franchisees are not an individual, their Operating Principal must maintain a direct or indirect ownership interest in the franchise of not less than 10%, unless the franchisor consents otherwise. This interest may not be pledged, mortgaged, hypothecated, or be subjected to any lien, charge, or encumbrance, voting agreement, proxy, security interest or purchase right or option, without the franchisor’s consent. Unless a Lead Manager is appointed, the Operating Principal must devote his or her full time and best efforts to the supervision of operations under the Franchise Agreement and may not engage in any other business. All products franchisees use or sell at the Store must conform to the franchisor’s standards and specifications. These are described in the Manuals and other writings, including the Approved Inventory List. Franchisees must not deviate from the franchisor’s standards and specifications unless the franchisor first gives franchisees its written consent. Franchisees must also comply with all applicable laws and regulations and secure all appropriate governmental approvals for the Store.

Estimated Number of Units: 85

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $35,000 $35,000
Rent - First 3 Months $15,000 $22,500
Security Deposit $6,000 $7,500
Leasehold Improvements $35,000 $80,000
Signage $5,000 $10,000
Furniture, Fixtures and Equipment $24,000 $43,000
Initial Training Expenses (plus employee wages, if any) $3,000 $5,000
Point of Sale and Computer Hardware and Software $10,000 $11,000
Initial Inventory/Supplies $25,000 $35,000
Professional Services $8,000 $12,000
Promotional Expenses $2,500 $5,000
Insurance $800 $1,500
Additional Funds - First 3 Months $5,000 $12,000
ESTIMATED TOTAL $174,300 $279,500
Other Fees
Type of Fee Amount
Royalty Fee 5% of Gross Sales.
Brand Building Fund Contribution Up to 2% of Gross Sales.
Software License Fee Currently, $601 per year beginning in the 4th year – fees are subject to adjustment by supplier.
Software Support Fee Currently, $1,500 the first year and $1,000 the second and third years – fees are subject to adjustment by supplier.
Mood Media Music Service Current price, subject to adjustment by supplier – approximately $157 per month.
Air Scenting System Current price, subject to adjustment by supplier – approximately $69 per month.
Merchandise for Resale Reasonable cost.
Interest 18% per year or the maximum lawful rate.
Late Fee $100 for each late payment.
Late Fee for Sales Reports $2 per day.
Additional On-Site Evaluations Reasonable fee, plus costs and expenses associated with the additional on-site evaluations.
Intranet Reasonable fee.
Conferences Reasonable fee (currently, $500), plus your costs and expenses to attend.
Additional Training At the franchisor’s option, a per diem rate currently ranging from $250 to $500, based on its costs of providing the training.
On-Site Remedial Training The then-current per diem fee for remedial training, plus costs. The current per diem rate is $250
Transfer Fee An amount equal to one-half of the then-current initial franchise fee that the franchisor generally charges to new Flip Flop Shops franchisees.
Renewal Fee 50% of our then-current initial franchise fee.
Inspection and Testing Cost of inspection, if applicable, and cost of test.
Indemnification Varies according to loss.
Audit Fee Cost of audit.
Insurance Fee A reasonable amount based on the franchisor’s expenses.
Enforcement Costs Will vary.

The above information has been taken from the FDD of Flip Flop Shops. Year of FDD: 2016

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