In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a ZIPS Cleaners franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a ZIPS Cleaners franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned ZIPS Cleaners outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the ZIPS Cleaners franchise opportunity

Section V – Presentation and analysis of ZIPS Cleaners’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 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 Cleaners Plant Store Businesses operated by franchisees during the period January 1, 2023 to December 31, 2023

• 2023 average revenue, cost of production supplies, gross margin, labor, rent, repairs and maintenance, utilities, and income before general and administrative expenses for the 7 ZIPS Cleaners Drop Store Businesses operated by franchisees during the period January 1, 2023 to December 31, 2023

Section VI – Key ratios, comparables, computations, and analyses for the ZIPS Cleaners franchise opportunity (exclusive content for Platinum subscribers)

Section I – ZIPS Cleaners Franchise Costs

• Initial Franchise Fee:  $15,000 to $30,000
• New Store Marketing:  $10,000 to $25,000
• Real Property/Rent:  $10,000 to $20,000
• Utility Deposits:  $2,000 to $6,000
• Leasehold Improvements:  $195,000 to $290,000
• Architectural and Engineering Fees:  $10,000 to $35,000
• Furnishings, Fixtures, Marketing Materials, Supplies, and Other Branded Items:  $13,000 to $17,000
• Insurance:  $3,000 to $7,000
• Signage:  $20,000 to $25,000
• Point of Sale System/Technical Equipment:  $16,000 to $25,000
• Software:  $7,500
• Office Equipment and Supplies:  $1,200 to $4,000
• Dry Cleaning/Laundry Production Equipment and Installation:  $325,000 to $425,000
• Initial Production Supplies:  $10,000 to $15,000
• Training:  $500 to $30,000
• Licenses, Permits, and Professional Fees:  $1,500 to $13,500
• Additional Operating Funds – 6 Months:  $100,000 to $200,000
• Total Estimated ZIPS Cleaners Franchise Costs:  $739,700 to $1,175,000

Section II – ZIPS Cleaners’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $15,000 to $30,000

• Royalty:  6% of Royalty Net Sales

• Total Marketing Obligation:  5% of Royalty Net Sales divided among the National Marketing Fund, any Regional Marketing Fund (or, any Regional Co-op), and Local Store Marketing

• National Marketing Fund Contribution:  up to 4% of Royalty Net Sales; currently, 2.0% of Royalty Net Sales

• Regional Marketing Fund Contribution:  amount ZIPS determines (not to exceed 3% of Royalty Net Sales); currently, 2.0% of Royalty Net Sales

• Regional Co-op Fee:  amount determined by the Co-op which will not exceed 5% of Royalty Net Sales, unless the majority of the members of the Co-op vote for it to exceed 5% of Royalty Net Sales

• Local Store Marketing:  currently, 1% of Royalty Net Sales

Section III – Number of Franchised and Company-Owned ZIPS Cleaners Outlets

Franchised

2021

• Outlets at the Start of the Year:  66
• Outlets at the End of the Year:  64
• Net Change:  -2

2022

• Outlets at the Start of the Year:  64
• Outlets at the End of the Year:  63
• Net Change:  -1

2023

• Outlets at the Start of the Year:  63
• Outlets at the End of the Year:  66
• Net Change:  +3

Company-Owned

2021

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

2022

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

2023

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

Section IV – News Updates on the ZIPS Cleaners Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the ZIPS Cleaners Franchise (Item 19, 2024 FDD)

Part 1 – System-wide ZIPS Cleaners Businesses – Plant Stores: Statement of Average Total Revenue, Total Cost of Goods, Total Gross Profit, and Total Certain Costs (During Period January 1, 2023 to December 31, 2023)

• 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 Cleaners Plant Store Businesses operated by franchisees during the period January 1, 2023 through December 31, 2023.

• All 49 Franchised Businesses were open and operating during the 12-month period January 1, 2023 to December 31, 2023. These Franchised Businesses are located in California, the District of Columbia, Florida, Illinois, Indiana, Maryland, Ohio, Pennsylvania, Texas, and Virginia.

• Four Franchised Businesses are not included in these calculations because they did not provide financial detail for the entire year.

• This data was compiled from unaudited financial statements submitted to ZIPS Cleaners by the Franchised Businesses.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

• Average Revenue:  $1,117,710 (100.0%)
• Average Production Supplies:  $112,908 (10.1%)
• Average Gross Margin:  $1,004,802 (89.9%)

• Average Labor:  $494,289 (44.2%)
• Average Rent:  $140,161 (12.5%)
• Average Repairs and Maintenance:  $25,420 (2.3%)
• Average Utilities:  $48,319 (4.3%)

• Average Income Before General and Administrative Expenses:  $294,613 (26.5%)

Part 2 – System-wide ZIPS Cleaners Businesses – Drop Stores: Statement of Average Total Revenue, Total Cost of Goods, Total Gross Profit, and Total Certain Costs (During Period January 1, 2023 to December 31, 2023)

• 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 7 ZIPS Cleaners Drop Store Businesses operated by franchisees during the period January 1, 2023 through December 31, 2023.

• All 7 Franchised Businesses were open and operating during the 12-month period January 1, 2023 to December 31, 2023. These Franchised Businesses are located in Indiana, Maryland, Texas, and Virginia.

• One Franchised Business is not included in these calculations because they did not provide financial detail for the entire year.

• This data was compiled from unaudited financial statements submitted to ZIPS Cleaners by the Franchised Businesses.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

• Average Revenue:  $481,446 (100.0%)
• Average Production Supplies:  $40,521 (8.4%)
• Average Gross Margin:  $440,924 (91.6%)

• Average Labor:  $149,339 (31.0%)
• Average Rent:  $99,004 (20.6%)
• Average Repairs and Maintenance:  $1,885 (0.4%)
• Average Utilities:  $12,637 (2.6%)

• Average Income Before General and Administrative Expenses:  $178,059 (37.0%)

• 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. For 2023, the highest amount of revenue for a Plant Store Franchised Business was $2,262,360 and the lowest amount of revenue for a Plant Store Franchised Business was $284,308. For 2023, the highest amount of revenue for a Drop Store Franchised Business was $741,643 and the lowest amount of revenue for a Drop Store Franchised Business was $277,497.

• Production Supplies – The average Production Supplies includes the total costs of all services and products sold at ZIPS 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 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.

• You will set and pay compensation (and any benefits) for owners and management personnel at your Franchised Business at a rate you determine. Your benefits package to employees may include some, all, or none of the expenses incurred by the ZIPS Dry Cleaners Businesses covered in this Item 19. The total amount of salaries for your employees and managers at a particular location will vary according to local wages, the number of employees, and the number of hours that the Franchised Business is open for business. You must make labor, wage, and benefit determinations based on your market, experience, and other factors.

• 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.

• The amount or rate of taxation varies from jurisdiction to jurisdiction and you should consult with your tax advisors regarding the impact that these taxes will have on this analysis.

• 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 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.

Section VI – ZIPS Cleaners Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️