Flip Flop Shops Franchises In High Demand

Some may be quick to assume that the market for seasonal footwear would be hard to sustain in a franchise environment, but President Brian Curin is proving the …

Some may be quick to assume that the market for seasonal footwear would be hard to sustain in a franchise environment, but President Brian Curin is proving the naysayers wrong. Once part of the innovative teams responsible for Cold Stone Creamery and Moe’s Southwest Burrito, Curin has worked with CEO Darin Kraetsch to take the concept from single store to franchise, and now has plans to expand the company throughout the U.S., Canada and the Caribbean. The idea has shown great promise, particularly due to the product’s economical appeal and high repurchase rate. For more on this continue reading the following article from TheStreet.

At last count, Flip Flop Shops President Brian Curin had 140 pairs of flip-flops.

To some it might seem extreme, but when you’re an executive of a company that sells only flip-flops and sandals, it’s part of the job. And while Curin says he’s worn all his pairs at least once, he’s got three that are his favorites.

Flip Flop Shops has been franchising since 2008 but is still in its "infancy," Curin says. The potential for the franchise is large as the shoes gain acceptance as year-round fashionable items, not just as summer gear.

It’s not just what the store sells, but the way it sells it — essentially by selling the idea of a casual surfer-dude lifestyle that appeals to customers and therefore to franchisees. Along the walls of any Flip Flop Shop are brands such as Quiksilver and its women’s line Roxy, Reef, OluKai, O’Neill, Oakley, Vans and others representative of alternative apparel for sports such as surfing, skateboarding and snowboarding.

"The biggest piece is to make sure we got the right shop owners. It’s very easy to find [the] money. We match up the people that want to be part of Flip Flop Shops — not just people that have a big check. They already live this lifestyle or want to live this lifestyle," Curin says.

Of the 12,000 franchise applications, Curin says he’s accepted just 58 franchisees.

"We wear shorts and tees and listen to great music," he says. "This is truly a lifestyle for us. From our perspective we want to have fun and if we can’t have fun we don’t want to do it anymore. If I don’t want to sit down and have dinner with you, you’re probably not the right fit for our franchise concept."

Curin and CEO Darin Kraetsch met while working on brands such as Cold Stone Creamery and later as part of the now-dissolved Raving Brands, whose flagship brand was Moe’s Southwest Grill. (Curin and Kraetsch left Raving Brands in 2006 after Moe’s was sold and well before Ravings Brands’ legal troubles. The pair wanted to leave the food business and find something that fit their lifestyles more.)

Curin says it was on a trip to Arizona when he walked into an existing Flip Flop Shop and fell instantly in love.

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Realizing there was very little competition in the market, the pair didn’t waste any time. The two negotiated with Flip Flop Shops’ original owners — who already owned six locations in Boston, Arizona and California — to position the company for franchising. In just one month, they had redesigned, redeveloped and rebranded the concept, secured distribution rights for the brands they sell and opened their first franchise in Vancouver, British Columbia, in January 2008. (The original owners are still part of the executive team.)

The company has sold the rights to 147 stores, 57 of which are open, with the rest being in development across the U.S., Canada and Caribbean. Flip Flop Shops plans to have another 22 stores open by the end of 2012 and to open more stores internationally.

"Our goal is by the end of 2013 to have 236 Flip Flop Shops," Curin says. "Half the system is multi-unit owners. It’s a good sign you’re doing something right."

The franchise is the first of its kind specifically for the footwear sub-sector.

For those who don’t live in coastal markets, there are few places to go that sell flip-flops year round, Curin says.

Direct competitors are still few; Flip Flop Shops are up against department stores, shoe retailers such as DSW and Amazon’s Zappos and alternative apparel stores such as Pacific Sunwear and Tilly’s.

Curin points to the company’s positive sales. Despite launching in a recession, same-store sales have seen double-digit growth every year. Systemwide sales for last year were roughly $10 million. The company expects sales of more than $16 million this year.

Sales for total U.S. footwear is nearly $51 billion for the 12 months ending in May, according to the NPD Group. Sandals, a category that includes flip-flops, make up just 13% of that industry, but it is one that is growing, experts say.

"American consumers are steadfast in their quest for building their casual wardrobe. [Flip-flops] are a very disposable product, therefore the frequency of purchase is high," says Marshal Cohen, chief retail analyst at NPD. "The second part of the equation is: We are in a place right now where the consumer is looking for the most affordable option. What’s more economical than a pair of flip-flops?"

Curin and Kraetsch have franchise experience, and Curin emphasizes that they have surrounded themselves with experts in retail such as Chris Zimmerman, who held various senior positions as part of the Nike advertising team and serves as an adviser to the company.

"We’re really focused on doing all the right things and [making] the economics work," Curin says.

Scott Lehr, vice president of development and member services at the International Franchise Association, says the duo’s franchise knowledge is key.

"Knowing them from Raving Brands days and Cold Stone Creamery, it really is about systems and knowing … processes. It matters less about the actual business you’re in and more about the process and fulfilling the commitment to franchise a brand," he says.

Lehr says the simplicity of the stores is another factor in their appeal. Stores tend to be between 1,000 and 1,500 square feet with not a lot of inventory sitting around in a back room.

That national brands such as Quiksilver agreed to distribute through the franchise gives them credibility. "If you go to any surf shop you’re going to see these types of brands," Lehr says.

The challenge, though, will be to sell the concept in cold-weather areas. To the surf and beach communities, these brands might be second nature; outside those communities, it will likely be more of an uphill climb to get Flip Flop Shops stores accepted.

While Curin acknowledges that, he doesn’t seem deterred. Experts acknowledge that consumers — particularly younger demographics — have been trending toward casual wear, and that is fueling a growing popularity of flip-flops as year-round footwear even outside of warm-weather regions. Flip Flop Shops’ Denver store, for instance, is one of the chain’s top sellers.

Besides expanding store locations, Curin goals include doing private-label brands for other retailers. There are no plans to sell or go public soon.

"It doesn’t mean we won’t entertain it. But we wear jeans and T-shirts and shorts. We get to surf and skate and live in this world and it’s tough to think about doing anything else," Curin says.

This article was republished with permission from TheStreet.


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