Bottom line
- Total investment $183K – $349K including a $30K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $473K/year (median $333K).
- Rated MODERATE with a risk score of 59/100. SBA loan default rate of 0.0% across 34 loans (below the industry average).
- System 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
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Flip Flop Shops unit return on the cash you put in?
Unlevered ROIC · per unit
15%
Below typical band (30–60%)
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
Overview
About
Flip Flop Shops are flip-flop and casual footwear retail locations where franchisees manage inventory, customer sales, merchandising, and staff. Day-to-day operations involve retail store management, point-of-sale transactions, and brand-standard customer service in mall or street-front locations. Franchisees oversee local marketing, staffing decisions, and customer experience within a protected territory.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
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 phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
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.
Score breakdown · what drove the 59 / 100 rating
- 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
- 05MINORHigh investment range ($182,900-$349,400) paired with declining unit count suggests poor unit economics and deteriorating ROI
- 06MED5% 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
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
60 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Flip Flop Shops · FDD (2025) PDF