Boulder Designs
Initial Investment Range
$146,815 to $220,865
Franchise Fee
$138,750 to $185,750
You will provide high-quality custom landscape boulders and business signage for residential, commercial, and industrial customers under the service mark “BOULDER DESIGNS.”
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Boulder Designs March 31, 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 financial statements for Boulder Designs Franchising, LLC (Boulder Designs) show significant instability. As of year-end 2024, the company had a member's deficit of over $4.1 million and a working capital deficit of over $950,000, meaning current liabilities far exceed current assets. The franchisor also explicitly flags its own financial condition as a special risk. This financial weakness may severely impact its ability to provide support, grow the brand, or even remain in business.
Potential Mitigations
- Your accountant must conduct a deep analysis of the franchisor's audited financial statements, including all footnotes and the 'going concern' language in Note 2.
- Discuss the implications of the negative equity and working capital deficit on the franchisor's long-term viability with your business advisor.
- An experienced franchise attorney should review the state-mandated financial assurance requirements (like fee deferrals) and explain how they may or may not protect you.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a significantly high franchisee turnover rate, which the franchisor also highlights as a special risk. In 2024, 22 units exited the system (via termination, non-renewal, or cessation) from a starting base of 84, a churn rate of over 26%. In 2023, the churn was also very high at over 26%. These figures strongly suggest systemic problems, potential franchisee unprofitability, dissatisfaction, or other significant issues within the franchise system.
Potential Mitigations
- It is critical to contact a significant number of the former franchisees listed in Item 20 to understand their reasons for leaving the system.
- Your business advisor should help you analyze the year-over-year turnover trends and discuss their potential impact on your own investment risk.
- You should directly question the franchisor about the causes of this high turnover, and your attorney can help you evaluate their response.
Shrinking or Stagnant System
High Risk
Explanation
The system is shrinking, not growing, declining from 97 outlets at the start of 2022 to 77 at the end of 2024. While the franchisor is still selling new franchises, the high number of exits significantly outpaces new openings. This trend, combined with the weak financials in Item 21, indicates that the system is not stable and may be contracting due to underlying issues, which could negatively affect brand value and support infrastructure.
Potential Mitigations
- Your business advisor should help you assess the risks of investing in a shrinking system, including potential impacts on brand recognition and support.
- A thorough review of the franchisor's financial statements with your accountant is necessary to determine if they can sustain operations amid unit closures.
- Engaging with current franchisees is crucial to understand their perspective on the system's recent decline and future prospects.
New/Unproven Franchise System
Medium Risk
Explanation
Boulder Designs was formed in 2017 and, as disclosed in Item 1, has never operated a business of the type it franchises. While its principals have prior industry and franchise experience, the franchising entity itself lacks a direct operational track record. This can increase risk, as the company's ability to successfully support a network of franchisees is based on its management's experience rather than its own history of running a corporate-owned unit.
Potential Mitigations
- With your business advisor, thoroughly vet the management team's specific experience in supporting a franchise system of this type and scale.
- Speaking with a broad range of current franchisees listed in Item 20 is essential to gauge the actual quality and effectiveness of the support provided.
- Your attorney should help you scrutinize the franchisor's contractual support obligations outlined in Item 11 to ensure they are specific and sufficient.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A fad business is one tied to a fleeting trend, which can create long-term risk for a franchisee locked into a multi-year agreement after consumer interest has faded. Evaluating a concept's staying power and its ability to adapt is a key piece of due diligence.
Potential Mitigations
- Working with a business advisor to research the industry's long-term trends and the product's sustained consumer demand is recommended.
- Assess the business model's resilience to economic shifts and its potential for evolution with your financial advisor.
- Your attorney can review the franchise agreement to see how much flexibility you have to adapt your product or service offerings over time.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. The key executives listed in Item 2 appear to have several years of experience in the franchising industry and/or in related landscape or construction businesses. However, this does not eliminate all risks associated with management's ability to successfully lead the franchise system.
Potential Mitigations
- It is still advisable to conduct your own due diligence on the backgrounds of the key management team members with the help of a business advisor.
- Engaging with current franchisees to inquire about their direct experiences with the management team's competence and support is a valuable step.
- Your attorney can help you understand the contractual obligations of the management team to provide support and assistance.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package, as there is no disclosure of the franchisor being owned by a private equity firm. This type of ownership can sometimes introduce risks related to short-term profit motives over the long-term health of the brand, so its absence can be a positive indicator. However, the franchisor's ownership could change in the future.
Potential Mitigations
- Your attorney should review the franchise agreement for any terms regarding the franchisor's right to sell or assign the system.
- A discussion with a business advisor about the current ownership structure and its potential implications for franchisees is still worthwhile.
- Asking the franchisor about their long-term vision and any potential plans for selling the company can provide useful context.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor does not appear to have a parent company whose financials would be material. However, it does disclose an important relationship with an affiliate, Mogavero Investments, which owns the trademarks. This affiliate relationship presents its own unique risks.
Potential Mitigations
- Your attorney should analyze the licensing agreement between the franchisor and its affiliate that owns the intellectual property.
- An accountant should review the financial statements to assess any significant transactions or dependencies between the franchisor and its affiliates.
- Understanding the stability of all related entities is important, so a business advisor can help research the affiliate's history.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 clearly discloses the franchisor's predecessors, Mogavero Investments, LLC, and Border Magic, LLC, and provides history on their franchising activities. The information appears to be presented as required. A prospective franchisee can use this information to research the history and track record of the overall system and its management.
Potential Mitigations
- Your attorney should still review the disclosed predecessor information in Items 1, 3, and 4 for any potential concerns.
- It is advisable to ask long-tenured franchisees about their experiences under the predecessor entities to gain historical context.
- A business advisor can help you use this information to conduct independent research on the predecessors' business history.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a significant litigation history. Most notably, a former franchisee sued the franchisor, its affiliate, and its CEO for claims including fraud and deceptive trade practices, which resulted in the franchisor paying $120,000 in a settlement. A franchisee-initiated lawsuit alleging fraud that results in a payment by the franchisor is a significant red flag. Other disclosed cases involve the franchisor suing franchisees to enforce its agreements, which is more common.
Potential Mitigations
- Your attorney must carefully review the details and outcome of the franchisee-initiated fraud lawsuit.
- It is highly advisable to try and contact the former franchisee who brought the suit to understand the basis of their claims.
- A business advisor should help you weigh the risks indicated by this litigation pattern against other factors in your due diligence.
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
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.
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