Flip Flop Shops Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Flip Flop Shops is a retail franchise specializing in sandals, flip-flops, and casual footwear from popular brands. Franchisees run the stores, managing inventory, merchandising, and customer service in malls and resort areas.
FranchiseVerdict summary · 2026
A Flip Flop Shops franchise requires a total initial investment of $183K – $349K, including a $30K franchise fee and an ongoing 5.0% royalty[2]. Per the 2025 FDD, average unit revenue was $473K[2]. SBA 7(a) loans show a 52.6% charge-off rate across 26 loans[1]. FranchiseVerdict grade: F (Weakest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $183K – $349K
- 21st pct Retail
- Avg gross sales
- $473K
- Outlet subset3rd pct Retail
- Royalty
- 5.0%
- 6th pct Retail
- Units
- 47
- 19th pct Retail
- SBA charge-off
- 52.6%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Retail · color = vs category peers
Green = favorable by >10% vs Retail avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $183K – $349K including a $30K franchise fee, 5.0% ongoing royalty.
- RETURNSAverage unit revenue of $473K/year (median $333K) (reported for a subset of outlets rather than the whole system).
- RISKVerdict F (Weakest tier), verdict score 18/100 (higher is better). SBA loan charge-off rate of 52.6% across 26 loans (well above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- DECLINESystem contracting at -16.1% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- Flip Flop Shops, LLC
- Parent company
- Bearpaw Holdings, LLC
- Predecessor
- Flip Flop Shops Franchise Company
- Prior franchisor entity
- CEO title
- Managing Member & CEO
- Thomas A. Romeo
- Incorporated in
- CA
- HQ
- 7524 Old Auburn Road, Citrus Heights, California 95610
- Auditor
- Fineman West & Company
- Audited financials
- Franchisor revenue
- $826K
- vs $1.5M prior year
Overview
About
- CEO
- Thomas A. Romeo
- Headquarters
- CA
- Founded
- 2018
- FDD year
- 2025
- States available
- 12
Can you afford it, and what does the money buy?
Entry cost runs 36% below the typical retail franchise.
Source: FDD 2025 · Items 5–7
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $30K | $30K |
| Working capital (3–6 mo) | $0 | $55K |
| Equipment, build-out, other | $153K | $264K |
| Total initial investment | $183K | $349K |
Source: Flip Flop Shops 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $183K – $349K
- Top 40% of category vs category
- Liquid capital req'd
- $0 – $55K
- Top 40% of category vs category
- Franchise fee
- $30K – $30K
- Top 40% of category vs category
- Royalty
- 5.0%
- percentage · typical 6–8%
- Ad fund
- 1.0%
- typical 3–5%
- Total fee load
- 6.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 1.0% of gross sales |
| Training fee | $2K |
| Transfer fee | $15K |
| Renewal fee | $15K |
| Inventory (initial) | $80K – $120K |
| Total fee load | 6.0% of rev |
A 6.0% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
What do units actually make?
Average unit sales run 51% below the retail norm.
Reported for a subset of outlets rather than the whole system
Source: FDD 2025 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$43K
9.0% margin
Unlevered ROIC
15%
EBITDA / total invested capital
Payback
6.9 yrs
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one Flip Flop Shops unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
15%
Below the 30–60% attractive-franchise band
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 Flip Flop Shops units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$189K
on $947K purchase
Total debt
$757K
SBA $0.5M + senior + seller note
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
Reported for a subset of outlets rather than the whole system
- Avg gross sales
- $473K
- Per unit, per year
- Median gross sales
- $333K
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross sales
- Sample size
- 36 outlets
- vs category median 47
- Range (low → high)
- $91K→$1.4M
- Cohort dispersion (min → max)
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 4 / 10
- vs category median 3 / 10 · above
Compared against 278 Retail brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $473K/year in gross sales. Median is $333K — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 1.8x. Reported for a subset of outlets rather than the whole system.
Fee burden
Total ongoing fee load of 6.0% — below the Retail average of 8.9%.
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System contracting at -16.1% CAGR over 3 years. Investigate whether closures are franchisor-driven consolidation or franchisee exits.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Retail averages
How Flip Flop Shops Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 47
- Opened
- 10
- Last reporting year
- Closed
- 12
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 25.5%
- Company-owned
- 0
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Net growth (3-yr)
- -16.1%
- Net unit change over 3 years
- 3-yr CAGR
- -16.1%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 10
- Closed (3yr)
- 12
- Terminated (3yr)
- 0
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 3
- Reacquired (3yr)
- 0
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 19 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 26
- Loan volume
- $3.9M
- Median loan
- $172K
- 50th percentile
- Charge-off rate
- 52.6%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 47.4%
- 5-yr charge-off
- 66.7%
- Loans approved 2021+
- Active lenders
- 19
- Defaults
- 10
- Typical loan rate
- 6.9%
- avg rate to borrowers
- Franchised industry avg
- 27.1%
- brand above franchise avg ↑
- Jobs supported
- 117
- 3.3 per loan
- Lender concentration
- 17%
- top lender's share
Borrower mix: 100% went to startups / new businesses, 0% to established operators
Franchise vs independent — in shoe stores, franchised businesses charge off at 27.1% vs 24.2% for independents — franchising is associated with 12% higher SBA default risk in this category.
Top lenders financing Flip Flop Shops franchisees
Showing 3 of 19 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Flip Flop Shops's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 12 states
- Startup risk premium and job creation velocity
- 9-year lending trend
Instant access. No subscription.
A 52.6% charge-off rate means roughly 1 in 2 franchisees failed to repay their SBA loan. Investigate what changed.
What could kill this investment?
SBA loans charge off at 52.6% — 228% above the 16.0% national norm, i.e. higher lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Flip Flop Shops presents high risk due to a shrinking franchise system, going concern doubts, undisclosed profitability, and a pattern of litigation including fraud allegations and regulatory violations.
Litigation (Item 3)
1) DFPI consent order (CA government action) - FFS failed to properly disclose predecessor litigation in FDDs 2018-2022, sold 10 CA franchises while unregistered; paid $52,500 penalty, closed. 2) Vupico USA Inc. v. Flip Flop Shops Franchise Company (predecessor) - franchisee sued for fraudulent inducement; judgment against predecessor $429,581. 3) Deckers Outdoor Corp v. Romeo & Juliette, Inc. and Thomas Romeo - patent infringement; jury verdict $5,250,838; settled on appeal.
Largest disclosed settlement: $5,250,838
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Fineman West & Company
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: No
- Must buy proprietary products: No
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 18 / 100 verdict
- 01MINORUnit count declining 4.1% year-over-year (47 units) suggests system contraction and potential viability concerns
- 02HIGHMultiple litigation matters including fraud allegations against predecessor, California DFPI consent order for registration violations, and patent infringement suit against CEO create legal/reputational risk
- 03MEDNet income not disclosed despite $473K average revenue — inability or unwillingness to report profitability is a major transparency red flag
- 04HIGHGoing Concern status is False, indicating auditors have substantial doubt about the franchisor's ability to continue operations
- 05MED5% royalty on gross sales (not net profit) increases franchisee burden during low-margin periods; no disclosed Item 19 earnings claims to validate profitability
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 6.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 8 years |
|---|---|
| Renewal term | 5 years |
| Allowed renewalsℹ | 2 |
| Territory type | protected |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Territory radius | 1 mi |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 15 mi |
| Right of first refusalℹ | Yes |
| RoFR response window | 30 days |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Curable defaultsℹ | 5 |
| Mandatory arbitration | No |
| Arbitration location | Sacramento, California |
| Jury trial waiver | Yes |
| Governing law | CA |
| Litigation count | 3 |
View Item 3 litigation summary
1) DFPI consent order (CA government action) - FFS failed to properly disclose predecessor litigation in FDDs 2018-2022, sold 10 CA franchises while unregistered; paid $52,500 penalty, closed. 2) Vupico USA Inc. v. Flip Flop Shops Franchise Company (predecessor) - franchisee sued for fraudulent inducement; judgment against predecessor $429,581. 3) Deckers Outdoor Corp v. Romeo & Juliette, Inc. and Thomas Romeo - patent infringement; jury verdict $5,250,838; settled on appeal.
Items 10, 11
Training & Operations
- Classroom training
- 0 hrs
- On-the-job training
- 84 hrs
- Training location
- On-site at franchised location
- Ongoing training
- Required
- Time to open
- 9 mo
- From signing to launch
- Site selection
- Franchisee with franchisor approval
- Franchisor financing
- Not offered
- Item 10
- POS system
- RICS
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: RICS
Item 20 · call current owners
Franchisee Contacts
60 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Flip Flop Shops · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Flip Flop Shops franchise?
The total investment to open a Flip Flop Shops franchise ranges from $183K – $349K, with an initial franchise fee of $30K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Flip Flop Shops franchise owners earn?
According to Item 19 of the Flip Flop Shops FDD, the average gross sales per unit is $473K. The median is $333K. Important context: Reported for a subset of outlets rather than the whole system. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the Flip Flop Shops FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Flip Flop Shops FDD and qualifies whose outlets they describe.
What is Flip Flop Shops's franchise failure rate?
Based on SBA 7(a) loan data, Flip Flop Shops has a charge-off rate of 52.6% across 26 loans, meaning 52.6% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Flip Flop Shops franchise locations are there?
As of their most recent FDD filing, Flip Flop Shops has 47 total units in the United States, including 47 franchised units and 0 company-owned units. 10 new units were opened in the latest reporting year.
Is Flip Flop Shops a good franchise to buy?
FranchiseVerdict rates Flip Flop Shops as a F-grade franchise with a verdict score of 18 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.