Free Your Toes...Houston!

Retail

Entrepreneurs find chains worth buying into
By DAVID KAPLAN
Feb. 20, 2009

A new franchise with the motto “Free your toes” is bound for Houston.

Selling nothing but flip-flops and sandals, priced from $20 to $120, the Flip Flop Shop will open in Baybrook Mall in May.

In a time when companies are downsizing, many people may be thinking about venturing out on their own.

Some may dip their toes in franchise waters, whether it’s an unusual concept like the Flip Flop Shop or a well-known chain like McDonald’s.

A franchise is no sure thing, but opportunities do still exist in today’s rough retail environment, consultants say, if you pick the right business and a reputable franchisor.

$20 billion industry

The Houston-area franchisee for the Flip Flop Shop is Anna Ruhl, who also owns Clear Lake Body Shop.

She picked the Flip Flop Shop as her first franchise venture because the concept fits her personality, she said.

In a $20 billion flip-flop industry, Flip Flop Shop is the only retailer to specialize in flip-flops, a hot trend, said Brian Curin, president of Atlanta-based Flip Flop Shops Holdings. His company has four stores, two in California and two in Arizona.

Its first six franchises are set to open in the next three months.

The chain’s line of flip-flops, which include leading brands such as Reef, Hurley and O’Neill, sell on average for $45. Higher-priced flip-flops by Havaianas are embedded with Swarovski crystals.

Flip Flop Shops carry the scent of coconut oil and feature cork flooring and bamboo counters and a surf and ski theme.

After opening her first Flip Flop store in Baybrook Mall, Ruhl said she plans to open her next location in The Woodlands a few months later. Her goal is to open two stores a year.

Trouble with funding

Given the unstable job market, franchisors are having no problem attracting potential franchisees, said Mary Tomzack, president of Franchise Help, a franchise consulting company near New York City.

The franchise industry is having difficulty, however, finding lenders to help franchisees with funding, she said.

Ruhl had the advantage of owning another business, which gave her a solid relationship with her bank, which helped her open.

The franchise fee is $25,000. She’s expecting to spend another $100,000 to $150,000 to get the business up and running.

The funding challenge faced by potential franchisees “hasn’t impacted us too much, but we hear about it all the time. It is tough out there,” said Curin, who with his partners also launched Cold Stone Creamery and Moe’s Southwest Grill franchises.

When looking for a franchise, it’s advisable to consider the ones in “recession-resistant categories,” including service businesses like home improvement and senior care, said Lori Kiser-Block, president of FranChoice, a Minneapolis-based franchise consulting company.

She noted that McDonald’s franchises have been performing particularly well lately.

Fast food and tax help

Other fast-food franchises, lower-end casual restaurants and tax services are doing well, Tomzack said, although some of those that she describes as “I can do it myself” services like house cleaning are struggling.

“The franchise industry is fraught with danger and failures,” and people should do lots of homework before buying a franchise, said Nick Bibby, president of bibbygroup.com in Shreveport, La.

Unfortunately, less than 30 percent of franchisors provide performance numbers on their franchise models, he said. They are not required to by law.

The first thing a potential franchisee should do is “decide what you’re suited for,” Bibby said.

david.kaplan@chron.com