Blue Moon Franchise Systems
Initial Investment Range
$57,015 to $234,225
Franchise Fee
$29,600 to $62,100
Blue Moon Franchise Systems, LLC (“Blue Moon”) offers franchises for the operation of a business that provides services dedicated to selling the personal property including, but not limited to, furniture, tools, jewelry, and décor; move management services; and the provision of consignment sales for those who are downsizing, relocating, or are deceased.
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Blue Moon Franchise Systems March 17, 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 franchisor’s parent, CFC Holding Company, LLC (Blue Moon), has significant financial weaknesses. The audited financial statements in Exhibit A show a Members' Deficit of over $27 million in 2024, growing from an $8 million deficit in 2023. The company also reported net losses in each of the last three years. This financial condition, also highlighted as a “Special Risk,” may impact Blue Moon’s ability to provide support and grow the brand, even with a parent guarantee.
Potential Mitigations
- A thorough review of the parent company's complete financial statements with your accountant is essential to assess its long-term viability and ability to support the franchise system.
- Your attorney should investigate if any state has required Blue Moon to post a bond or establish an escrow account due to its financial condition.
- Ask the franchisor directly about its plans to address the net losses and negative equity, and have a business advisor evaluate the response.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a notable franchisee turnover rate. In 2024, a total of 13 outlets exited the system (9 terminations, 1 reacquisition, 3 cessations) from a base of 109, an 11.9% turnover rate. The significant number of terminations, which are forced exits, is particularly concerning as it may indicate franchisee-franchisor disputes or struggles within the system. This rate suggests potential underlying issues with the business model, support, or franchisee satisfaction.
Potential Mitigations
- It is critical to contact a significant number of current and former franchisees, especially those who were terminated or ceased operations, to understand their experiences.
- Your accountant can help you analyze the turnover data over the three-year period to identify any negative trends.
- Discuss the reasons for the high number of terminations with the franchisor, and have your business advisor help you evaluate their explanation.
Rapid System Growth
Medium Risk
Explanation
The franchise system is expanding at a fast pace, growing from 92 to 123 franchised outlets in the last two years. While growth can be positive, such rapid expansion combined with the parent company's reported net losses and significant member deficit raises concerns. There is a risk that Blue Moon's support infrastructure, including training and operational assistance, may not keep pace with the growth in the number of franchisees needing support.
Potential Mitigations
- In discussions with current franchisees, you should specifically inquire about the quality and responsiveness of the support they receive from the corporate office.
- A business advisor can help you question the franchisor about its specific plans for scaling its support staff and systems to match franchise sales.
- Your accountant should review the franchisor's financial statements to assess if they are reinvesting sufficiently in support infrastructure.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified in the FDD Package. Blue Moon has been franchising since 2013 and is not considered a new or unproven system. However, investing in any franchise carries risk, and newer systems often have underdeveloped support and brand recognition. They may also have a higher failure rate as they work to refine their business model and operational procedures. Thorough due diligence is always recommended.
Potential Mitigations
- When evaluating any franchise, a business advisor can help you assess the franchisor's history and the maturity of its systems.
- It is wise to have your accountant review the franchisor's financial statements for at least three years to check for stability and consistent performance.
- Consulting with an attorney will help you understand the contractual risks, which may be greater with less established brands.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. The business of providing estate sale services caters to a consistent need driven by life events such as downsizing, relocation, and death. This type of business is not typically considered a fad. A prospective franchisee should still assess the long-term market demand and competitive landscape in their specific area to ensure viability.
Potential Mitigations
- A business advisor can help you conduct local market research to confirm sustained demand for estate sale services in your area.
- Creating a business plan with the assistance of an accountant can help you project long-term financial viability.
- Your attorney can advise on the contract term and renewal options to ensure they align with a long-term business strategy.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD Package. The executive team described in Item 2 appears to have relevant experience in franchising and related industries. For example, key personnel have prior experience with other franchise systems like Brightstar Care and ComForCare. When evaluating a franchise, inexperienced management can be a significant risk, potentially leading to poor strategic decisions and inadequate support for franchisees, so this is a positive finding.
Potential Mitigations
- When analyzing any FDD, it is good practice to have a business advisor help you review the backgrounds of the key management team in Item 2.
- Speaking with current franchisees is a valuable way to gauge their opinion of the management team's competence and responsiveness.
- Your attorney can help you understand the franchisor's contractual obligations for providing support, regardless of their experience level.
Private Equity Ownership
High Risk
Explanation
Item 1 discloses that Blue Moon is part of a portfolio of brands owned by The Riverside Company, a private equity firm. This ownership structure can create risks. Private equity firms often have a focus on maximizing short-term returns for their investors, which may lead to decisions that are not in the best long-term interest of franchisees, such as cutting support services, increasing fees, or preparing the entire system for a sale.
Potential Mitigations
- You should discuss the implications of private equity ownership with your business advisor and franchise attorney.
- It is important to ask current franchisees about any changes in culture, support, or costs since the private equity acquisition.
- Researching the private equity firm's reputation and its track record with other franchise brands can provide valuable insight.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The FDD discloses a multi-layered parent company structure, with Blue Moon's ultimate parent being CFC Holding Company, LLC. While the parent company does provide a guarantee of performance, its own financial statements show a significant and growing members' deficit and recurring net losses. This situation calls into question the financial strength backing the guarantee, potentially leaving you exposed if Blue Moon fails to perform its obligations and the parent is unable to honor the guarantee.
Potential Mitigations
- Your accountant must carefully review the parent company's financials to assess the real value and strength of the performance guarantee.
- It is advisable to discuss the potential risks associated with a financially weak guarantor with your franchise attorney.
- A business advisor can help you understand the operational implications if both the franchisor and its parent face financial difficulties.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package, as Item 1 explicitly states that the franchisor has no predecessors to disclose. In some franchise offerings, a history of predecessors can obscure past problems like litigation, bankruptcy, or high franchisee turnover. The absence of a predecessor simplifies the due diligence process, as the franchisor's own track record is the primary focus of the investigation.
Potential Mitigations
- When reviewing any FDD, your attorney should confirm whether any predecessor history is disclosed in Item 1.
- If predecessors exist, it's crucial that an accountant and attorney review their history as disclosed in Items 3, 4, and 20.
- Independent online research can sometimes reveal information about a brand's history that may not be fully detailed in the FDD; a business advisor may assist.
Pattern of Litigation
Medium Risk
Explanation
Item 3 discloses litigation involving Blue Moon's affiliated franchise brands, ComForCare and CarePatrol. These cases include claims brought by the franchisors against franchisees (e.g., for non-compete violations) and a counterclaim by a franchisee against a franchisor seeking significant damages. While there is not a pattern of litigation against Blue Moon itself, these actions within the parent company's ecosystem may suggest a potentially litigious environment that could affect your franchisee-franchisor relationship.
Potential Mitigations
- A thorough review of all litigation disclosed in Item 3 with your attorney is critical to understand the nature and potential implications of these disputes.
- Your attorney can help you assess whether the disclosed litigation suggests a broader pattern of conflict within the parent company's franchise systems.
- Discussing the company's approach to dispute resolution with current franchisees can provide practical insight.
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
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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
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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
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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
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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
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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.
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