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1-800-Flowers.Com

1-800-Flowers.Com Franchise Co., Inc.
https://www.1800flowers.com
1-516-237-6000
Two Jericho Plaza, Suite 200, Jericho, New York 11753

Initial Investment Range

$18,500 to $932,500

Franchise Fee

$0 to $70,500

1-800-Flowers.com Franchise Co., Inc. offers franchises for retail flower shops that offer flowers, plants, fresh fruit products, including fresh cut fruit bouquets and related products, cookies, candy, gift baskets, gift items, novelty items, personalized gift and novelty items and related products and services to the general public.

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1-800-Flowers.Com October 11, 2024 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.

1

Franchisor Stability Risks

Start Here
Total: 10
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD openly warns that the franchisor's financial condition calls its ability to provide support into question. Financial statements confirm this, showing a shareholder deficit of over $8.1 million and continued net losses. While a parent company provides financial support, this commitment is disclosed to end in October 2025, posing a significant risk to the long-term stability and support you may receive.

Potential Mitigations

  • An experienced franchise accountant must review the franchisor's and parent company's financial statements, focusing on the nature and duration of the support commitment.
  • Discuss the franchisor's financial health and the limited-term parent guarantee with your attorney to understand the potential consequences.
  • Your business advisor should help you assess the risk of the franchisor's potential instability on your long-term business viability.
Citations: Item 21, FDD "Special Risks" section, Exhibit P

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a significant and consistent decline in the number of franchised outlets over the last three years, shrinking from 65 to 50 units. The tables show a pattern of franchisee exits, particularly through a high number of non-renewals and other cessations of operation. This rate of franchisee turnover could indicate potential systemic issues with profitability, franchisee satisfaction, or the business model itself, posing a considerable risk to your investment.

Potential Mitigations

  • It is critical to contact a significant number of former franchisees listed in Exhibit O to understand their reasons for leaving the system.
  • Your franchise attorney can help you formulate key questions to ask former and current franchisees regarding their experiences and profitability.
  • A detailed analysis of the turnover trends with your business advisor is necessary to assess the long-term stability of the franchisee base.
Citations: Item 20, Exhibit O

Rapid System Growth

High Risk

Explanation

The franchisor's system has been shrinking, not growing, over the past three years. This trend, combined with the franchisor's weak financial position, presents a significant risk. Instead of managing growth, the franchisor may be focused on mitigating decline, which could impact resources available for innovation, marketing, and support for the remaining franchisees. The risk here is one of system decline rather than overly rapid expansion.

Potential Mitigations

  • Your business advisor should help you assess the viability of joining a franchise system that is currently contracting in size.
  • Discuss the system's decline and the franchisor's strategies for stabilization and future growth with existing franchisees.
  • An accountant should review the financials to determine if the franchisor has the resources to reverse the negative trend and support existing units.
Citations: Item 20, Item 21, Exhibit P

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified in the FDD package. The franchisor, 1-800-Flowers.com Franchise Co., Inc. (1-800-Flowers Franchise Co.), and its parent have extensive operating history dating back decades. Assessing a new or unproven system involves scrutinizing the founders' experience and the business model's viability, as there is often limited historical performance data, which increases investment risk.

Potential Mitigations

  • For any franchise, it is wise to have a business advisor help you research the franchisor's history and the experience of its management team.
  • An accountant can help analyze the financial statements of any new system to gauge its initial capitalization and sustainability.
  • Legal counsel should be consulted to understand any additional risks associated with investing in an emerging franchise.
Citations: Not applicable

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The business of a retail flower shop is a well-established industry with consistent, albeit seasonal, consumer demand. A 'fad' business, by contrast, relies on a temporary trend and lacks a history of long-term consumer interest, which can pose a significant risk to an investment with a multi-year contractual commitment.

Potential Mitigations

  • When considering any franchise, a business advisor can help you analyze the long-term market demand and potential for industry disruption.
  • Your accountant can help project the financial viability of a business over a 10-year term, considering potential shifts in consumer trends.
  • It is important to discuss the franchisor's commitment to research and development with them to understand how they plan to adapt to market changes.
Citations: Item 1, Item 11

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD package. Item 2 discloses that the franchisor's key management personnel have extensive experience in the floral and franchise industries, with many individuals having been with the parent company for several years or decades. Inexperienced management can be a significant risk, as it may lead to poor strategic decisions, weak support systems, and a lack of understanding of franchisee challenges.

Potential Mitigations

  • A business advisor can help you research the background and track record of the key executives for any franchise opportunity.
  • You should always ask existing franchisees about the quality and competence of the management team and the support they provide.
  • Your attorney can review Item 2 to assess the disclosed experience of the leadership team.
Citations: Not applicable

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 indicates the franchisor is a subsidiary of 1-800-Flowers.com, Inc., a publicly traded company, not one owned by a private equity firm. Private equity ownership can sometimes introduce risks related to short-term profit motives, which may not align with the long-term health of franchisees. This can manifest as increased fees or reduced support.

Potential Mitigations

  • It is prudent to have a business advisor help you research the ownership structure of any franchisor you are considering.
  • If a franchisor is owned by a private equity firm, you should ask existing franchisees about any changes they have experienced since the acquisition.
  • Your attorney can help you understand any clauses in the franchise agreement that relate to the sale or transfer of the franchise system.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

The franchisor is a wholly-owned subsidiary of 1-800-Flowers.com, Inc., a large, public parent company. The franchisor's own financials show significant weakness. While the FDD notes a financial support commitment from the shareholder, the parent company itself does not provide a formal, written guarantee of the franchisor's obligations as an exhibit to the FDD. The parent's financials are not included, which might obscure a full picture of the entity providing support.

Potential Mitigations

  • Your accountant must analyze the disclosed financials and the nature of the parent company's support commitment.
  • Ask your attorney to clarify the legal enforceability of the informal support commitment mentioned in the financial statement footnotes.
  • A business advisor can help investigate the overall financial health of the public parent company, 1-800-Flowers.com, Inc.
Citations: Item 1, Item 21, Exhibit P

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 notes that the franchisor has no predecessors. When a franchisor has acquired a system from a predecessor, it's important to understand the history of that predecessor, including its litigation record and franchisee turnover. This history can provide valuable insight into potential inherited problems within the franchise system.

Potential Mitigations

  • Your attorney should carefully review Item 1 for any mention of predecessors and cross-reference with Items 3 and 4 for litigation or bankruptcy history.
  • If a predecessor exists, asking long-term franchisees about their experience under the previous ownership can provide valuable context.
  • A business advisor can assist in researching the public record of any predecessor entity.
Citations: Not applicable

Pattern of Litigation

High Risk

Explanation

Item 3 discloses significant litigation brought by a group of franchisees alleging serious claims including fraud, breach of contract, and unfair trade practices, which resulted in the franchisor paying settlements totaling $425,000. It also discloses a regulatory action by the State of Maryland for disclosure law violations. This history of franchisee-initiated litigation and regulatory enforcement suggests potential systemic issues in the franchisor's practices and relationships, representing a major risk.

Potential Mitigations

  • A franchise attorney must carefully analyze the details and allegations of the litigation disclosed in Item 3 to understand the underlying issues.
  • Treat this pattern of franchisee disputes and regulatory action as a significant warning sign and discuss the implications with your attorney.
  • It is crucial to discuss these past issues with current and former franchisees to gauge whether the problems have been resolved.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
1
11

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

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3

Financial & Fee Risks

Total: 10
2
7
1

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.

4

Legal & Contract Risks

Total: 16
4
7
5

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.

5

Territory & Competition Risks

Total: 5
4
0
1

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.

6

Regulatory & Compliance Risks

Total: 10
4
4
2

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.

7

Franchisor Support Risks

Total: 4
1
2
1

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.

8

Operational Control Risks

Total: 12
3
6
3

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.

9

Term & Exit Risks

Total: 18
7
6
5

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.

10

Miscellaneous Risks

Total: 1
0
1
0

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.