Not sure if 1-800 Water Damage is right for you?
Take our 1-minute franchise matching quiz to get in touch with a Franchise Advisor that can match you with your perfect franchise based on your goals, experience, and investment range.
Take the Quiz & Get Matched
1-800 Water Damage
How much does 1-800 Water Damage cost?
Initial Investment Range
$72,903 to $315,448
Franchise Fee
$44,000 to $119,000
We offer qualified individuals the right to operate a business offering water damage restoration services, mold remediation, odor removal, fire, smoke and-related cleaning and remediation products and services utilizing the 1-800 WATER DAMAGE system.
Enjoy our partial free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
1-800 Water Damage March 28, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The FDD explicitly flags the franchisor's financial condition as a special risk. Audited financials for the guarantor, BFG Holdco, Inc., show significant net losses for three consecutive years, including ($44.2M) in 2023 and ($11.1M) in 2024. This pattern of losses and declining equity raises questions about the franchisor's long-term ability to support you. Several states have required the franchisor to secure a surety bond due to this condition.
Potential Mitigations
- An experienced franchise accountant must perform a thorough review of the guarantor's financial statements, including all footnotes and trends.
- Discuss the significant, consecutive net losses and their potential impact on franchisor support with your financial advisor.
- Your attorney should explain the protections, and their limitations, afforded by any state-mandated surety bonds.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a significant increase in franchisee attrition in the most recent year, 2024. There were 19 terminations and 1 cessation of operations for other reasons, totaling 20 outlets leaving the system negatively. This represents an 11.2% turnover rate of the starting base. This sharp increase from prior years (9 negative departures in 2023, 7 in 2022) could indicate underlying problems within the franchise system that warrant further investigation.
Potential Mitigations
- Contacting a significant number of former franchisees from the list in Exhibit G is crucial to understand the reasons for this high turnover.
- Your accountant should analyze the multi-year trends in the Item 20 tables to assess system stability.
- Discuss the potential impact of high franchisee turnover on brand reputation and support with a business advisor.
Rapid System Growth
Medium Risk
Explanation
Item 20 shows the system has been growing, adding a net of 13 outlets in 2022 and 11 in 2023 before a small net decline of 3 in 2024. However, this growth has occurred while the franchisor's guarantor has been experiencing significant financial losses, as seen in Item 21. There is a risk that support infrastructure may not keep pace with the needs of a larger system, especially given the financial pressures.
Potential Mitigations
- Question the franchisor directly about their capacity and plans for scaling support infrastructure with your business advisor.
- Interviewing a broad range of existing franchisees about the current quality and responsiveness of franchisor support is advisable.
- Your accountant should review the franchisor's financials in Item 21 to assess if they have the resources to support the system.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified. The franchisor, 1-800 WATER DAMAGE International, LLC, was formed in 2015 and has been franchising since then, succeeding a prior system that began in 2002. While not a brand-new startup, it operates under a complex corporate structure with a history of acquisitions. The risks associated with its financial performance and predecessor history are addressed in other risk items.
Potential Mitigations
- For any franchise, conducting extensive due diligence on the founders' and management's experience is important; your business advisor can help.
- It is wise to speak with the earliest franchisees to understand the evolution of support and system maturity.
- An accountant's assistance is valuable in assessing the capitalization and long-term viability of any franchisor.
Possible Fad Business
Low Risk
Explanation
This risk was not identified. The business offers water damage restoration, mold remediation, and related cleaning services. This is a mature industry driven by recurring needs from events like plumbing failures, storms, and fires, rather than a fleeting trend. The business model appears to be based on sustained, event-driven demand, not a temporary fad.
Potential Mitigations
- With any franchise, it is prudent to assess the long-term market demand for the product or service with a business advisor.
- Evaluating a franchisor's plans for innovation and adaptation can provide insight into their long-term strategy.
- Your financial advisor can help consider the sustainability of any business model beyond current trends.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 details the experience of the management team. The executives listed generally have extensive experience in the restoration, cleaning, and franchising industries, many with long tenures at the franchisor, its parent company BELFOR, or other related franchise brands. This suggests the management team possesses relevant industry and franchising experience.
Potential Mitigations
- It is always a good practice to vet the management team's background and specific experience with your business advisor.
- Speaking with existing franchisees about the quality of management's support and strategic direction is a key due diligence step.
- An attorney can help you understand the roles and responsibilities of the key personnel listed in Item 2.
Private Equity Ownership
Medium Risk
Explanation
Item 1 discloses that the franchisor is part of a complex corporate structure ultimately owned by a private equity sponsor. The parent company, BELFOR Holdings, Inc., was acquired by ASP BF Intermediate Sub, LLC in 2019. This ownership structure may create a focus on investment returns, which could potentially influence decisions regarding fees, support levels, and the long-term strategy for the franchise system. The significant goodwill impairment charges in recent years could also reflect this dynamic.
Potential Mitigations
- Researching the private equity firm's track record with other franchise systems they have owned can be a useful task for your business advisor.
- Discussing any changes in support or system direction since the acquisition with long-term franchisees is recommended.
- Your attorney can help assess the implications of the franchisor's right to sell the system to another entity.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. Item 1 clearly discloses the parent companies, including BELFOR Franchise Group, LLC, BELFOR (USA) Group, Inc., and BFG Holdco, Inc. Further, Item 21 clarifies that BFG Holdco, Inc. guarantees the franchisor's obligations, and its audited financial statements are provided as Exhibit B. The disclosure of the corporate structure appears to be transparent.
Potential Mitigations
- An attorney should always verify the corporate structure and the legal entity you are contracting with.
- If a parent company provides a guarantee, your accountant should review the parent's financial statements.
- Understanding the relationships between the franchisor and its affiliates in Item 1 is crucial for assessing potential conflicts.
Predecessor History Issues
Medium Risk
Explanation
Item 1 discloses that the franchisor purchased assets from a predecessor, LLB Group, Inc., in 2015. Item 3 discloses that this predecessor had concluded litigation with California and New York regulators between 2005-2006 for selling unregistered franchises and failing to make proper disclosures. While this history is dated and relates to a prior owner, it is a material fact about the brand's lineage that suggests past systemic problems.
Potential Mitigations
- Your attorney should carefully review the information disclosed about the predecessor in Items 1 and 3.
- Asking long-term franchisees who operated under the predecessor about their experience could provide valuable context.
- A business advisor can help you assess whether any of the predecessor's historical issues might still affect the current system.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 does not disclose a pattern of litigation brought by franchisees against the current franchisor alleging fraud, misrepresentation, or similar claims. The only pending litigation listed was initiated by the franchisor against a former franchisee for breach of contract, which is common in franchising. The disclosed predecessor litigation is over 15 years old.
Potential Mitigations
- Your attorney should review the details of any litigation disclosed in Item 3 to understand the nature of the disputes.
- Independent online research for news articles or other information about litigation involving the franchisor can sometimes be fruitful.
- Asking current franchisees about the franchisor's relationship with the franchisee community can provide context beyond the FDD.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Related Services Franchises
1-800-Packouts Holdco, LLC
$269,300 to $514,000
AdvantaClean
$116,880 to $197,400
Bar-B-Clean
$78,200 to $833,700
Biosweep®
$161,787.89 to $186,867.89
Blue Kangaroo Packoutz
$129,231 to $596,046
Homestretch Home Services II LLC
$109,700 to $467,750
Mr. Appliance
$116,500 to $214,850
Oh Deer
$95,450 to $127,400
Pacific Lawn Sprinklers
$23,100 to $111,650
PestMaster
$103,900 to $206,300
Shine Window Care
$141,570 to $189,295
Worried Bird
$91,285 to $125,035