Bluefrog Plumbing + Drain
Initial Investment Range
$15,346 to $345,648
Franchise Fee
$11,649 to $72,549
We offer franchises for businesses plumbing services, drain cleaning services, water and gas leak detection and repair services, and water heater, water softener, water filtration system services and related products and services.
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Bluefrog Plumbing + Drain April 30, 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 audited financial statements for BlueFrog Plumbing and Drain, LLC (BlueFrog) show a net loss of $79,384 for the fiscal year ending December 31, 2024, a decline from a small profit in 2023. The notes also state the company receives financial support from an affiliate for liquidity needs. This reliance on an affiliate and the recent net loss may indicate financial weakness, potentially impacting its ability to support you.
Potential Mitigations
- Your accountant must conduct a thorough review of the complete financial statements, including all footnotes and the auditor's report, to assess the franchisor's financial viability.
- Discuss the franchisor's reliance on affiliate support and its plans to achieve standalone profitability with your financial advisor.
- It is advisable to ask your attorney about any state-mandated financial assurances, such as bonds or escrow accounts, that may be required due to the financial performance.
High Franchisee Turnover
High Risk
Explanation
Item 20 reveals a very high rate of franchisee exits. In 2024, 14 territories were terminated out of a starting base of 42, representing a 33% turnover rate from terminations alone. Furthermore, the FDD notes that six additional outlets have ceased operations since the end of the fiscal year. This level of turnover is a significant indicator of potential systemic problems, franchisee dissatisfaction, or lack of profitability within the system.
Potential Mitigations
- With your accountant, you should analyze the turnover data across all three years to understand the trends in terminations, cessations, and transfers.
- Engaging a business advisor to help you contact a significant number of former franchisees from the list in Exhibit F is critical to understanding why they left the system.
- Your attorney should help you formulate specific questions for the franchisor regarding the high exit rate and the circumstances behind the terminations.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. Rapid, uncontrolled growth can strain a franchisor's ability to provide quality support to its franchisees. A system that expands too quickly may lack the necessary infrastructure for training, site selection, and ongoing operational assistance, potentially leaving you without adequate guidance despite paying fees. Careful review of Item 20 data for sudden spikes in outlet numbers is important.
Potential Mitigations
- You should discuss the franchisor's growth plans and support infrastructure capacity with your business advisor.
- Speaking with both new and established franchisees can provide insight into the current quality and responsiveness of franchisor support.
- An accountant can help you review the franchisor's financials to determine if they have the capital to support their projected growth.
New/Unproven Franchise System
Medium Risk
Explanation
BlueFrog has been offering franchises since 2014, so it is not a new system. However, Item 1 states that the franchisor itself has never operated a business of the type being franchised. This lack of direct operational experience could potentially impact the quality of practical guidance and support provided to franchisees, as their expertise may be more theoretical than hands-on.
Potential Mitigations
- A thorough investigation of the management team's direct, hands-on experience in the plumbing industry should be conducted with your business advisor.
- Speaking with existing franchisees about the quality and practicality of the operational support they receive is crucial.
- Your accountant can assess the franchisor's financial investment in support systems to compensate for any lack of direct operational history.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. Plumbing services represent a fundamental and ongoing need, not a business model based on a short-term trend or fad. Such businesses typically have more stable, long-term demand. However, it is always important to assess how a franchisor adapts to new technologies and market shifts to stay competitive and relevant over the long term.
Potential Mitigations
- You can evaluate the long-term stability of the plumbing services market with your business advisor.
- It is wise to assess the franchisor's commitment to innovation and research and development to maintain a competitive edge.
- Analyzing the business model's resilience to economic shifts with a financial advisor is a prudent step.
Inexperienced Management
Medium Risk
Explanation
BlueFrog discloses in Item 1 that it has never operated a corporate-owned unit of the type being franchised. While the management team has experience with other franchise brands under the parent company, this specific lack of direct, hands-on operational experience in the plumbing business could affect the relevance and quality of the support and systems provided to you. Their experience is primarily in managing franchise systems, not running a plumbing company.
Potential Mitigations
- You should thoroughly vet the management team's specific experience in the plumbing industry with a business advisor.
- Speaking directly with current franchisees about the quality of operational training and day-to-day support is essential.
- It is wise to ask the franchisor how they supplement their lack of direct operational experience, for example, through experienced field consultants.
Private Equity Ownership
Medium Risk
Explanation
Item 1 shows BlueFrog is a subsidiary of Stellar Brands, LLC, which is owned by a group of investment-focused entities, indicating a private equity ownership structure. This can create a risk that decisions prioritize short-term investor returns over the long-term health of franchisees. This is heightened by the disclosure of a competing affiliate brand (Zoom Drain) in Item 12 and the franchisor's unrestricted right to sell the system in Item 17.
Potential Mitigations
- You should research the parent company's reputation and track record with its other franchise brands with the help of a business advisor.
- It is important to discuss with current franchisees whether they have observed any negative changes in support or increases in fees since the current ownership took over.
- Your attorney should review the assignment clauses in the Franchise Agreement to understand your rights if the system is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor clearly discloses its parent companies in Item 1. However, the financials of these parent companies are not provided. While this may be compliant with disclosure laws, it means you cannot independently assess the financial strength of the ultimate entities that control the franchise system and on which BlueFrog may rely for financial support, as noted in its own financial statements.
Potential Mitigations
- Your accountant should carefully review the provided franchisor financials and the note regarding reliance on affiliate support.
- Understanding the terms of any financial support provided by the parent company is a topic to discuss with your attorney.
- A business advisor can help you research the reputation and stability of the parent entities, even without their financial statements.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 does not disclose any predecessors for BlueFrog. A predecessor is a company from which the franchisor acquired the main assets of the franchise system. It is important to review this item carefully, as a history of predecessors could indicate instability or frequent changes in ownership and strategy, which may impact the long-term health of the brand.
Potential Mitigations
- Confirming the lack of a predecessor history with the franchisor is a simple due diligence step.
- Your attorney can help you verify the corporate history through public records if there are any concerns about undisclosed predecessors.
- You could ask long-tenured franchisees about the history of the brand's ownership and management.
Pattern of Litigation
Medium Risk
Explanation
Item 3 discloses one regulatory action against an affiliate for a franchise sales violation. While this is not against BlueFrog directly, the high franchisee turnover disclosed in Item 20 (14 terminations in 2024) suggests a high level of disputes, even if they have not yet resulted in litigation that requires disclosure under Item 3 rules. The combination suggests a potentially contentious franchisor-franchisee relationship within the system.
Potential Mitigations
- Your attorney should carefully review the details of any disclosed litigation and assess its implications.
- It is critical to speak with a significant number of former franchisees listed in Item 20 to inquire about disputes or legal actions, which a business advisor can facilitate.
- You should treat the high termination rate as a strong indicator of franchisee dissatisfaction, which could lead to future litigation.
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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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
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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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