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How much does Crumbl cost?
Initial Investment Range
$816,066 to $1,442,533
Franchise Fee
$78,000 to $86,000
As a Crumbl® franchisee, you will operate a cookie baking and delivery business.
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Crumbl April 10, 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
Crumbl Franchising, LLC's (Crumbl LLC) audited financial statements disclose significant risks. The balance sheet for year-end 2024 shows a Member's Deficit of over $23 million and current liabilities greatly exceeding current assets. This negative working capital and net worth raises questions about the company's long-term financial stability and its ability to support its franchisees, invest in the brand, and weather economic challenges. This is also highlighted as a “Special Risk” by the franchisor.
Potential Mitigations
- A thorough review of the franchisor's financial statements, including all notes, with your accountant is essential to assess the potential impact of this instability.
- In discussions with the franchisor, you should inquire about their strategies for addressing the net worth deficit and improving their financial position.
- Your attorney should investigate if any financial performance bonds or escrow of initial fees are required by state regulators due to this financial condition.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data from 2022-2024 shows a low number of terminations relative to the system's size. However, the number of transfers to new owners is notable, with 31 in 2024 and 26 in 2023. While transfers can be a normal part of business, a consistent pattern can sometimes mask franchisee distress, as struggling owners may be pressured to sell rather than close or be terminated. This data warrants further investigation into the reasons for these transfers.
Potential Mitigations
- It is important to contact a significant number of former franchisees on the provided list to discuss their reasons for leaving the system.
- Your business advisor can help you analyze the transfer and termination data in Item 20 to better understand the rate of churn.
- When speaking with current franchisees, you should ask about the health of the system and their perspective on why others have left.
Rapid System Growth
Medium Risk
Explanation
The system has grown from 326 to 1,058 franchised outlets in three years, as shown in Item 20. This exceptionally fast growth, combined with the franchisor's disclosed financial instability, creates a risk that support systems for training, site selection, and operations may not have kept pace. An overextended franchisor could lead to diminished support quality for you and other franchisees, potentially affecting store performance and brand consistency.
Potential Mitigations
- Questioning the franchisor about how they have scaled their support staff and infrastructure to manage this rapid growth is advisable.
- Inquiring with recent franchisees about their experience with the onboarding process and the quality of support received would be insightful.
- A review of the franchisor's investment in support infrastructure with your business advisor can help assess their capacity to service all units.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified in the FDD package. Crumbl LLC began franchising in 2018 and, according to Item 20, has over 1,000 locations. A new or unproven system presents higher risks because its business model, brand recognition, and support structures are not yet time-tested, which can lead to higher franchisee failure rates. This does not appear to be the case here given the system's size and operating history.
Potential Mitigations
- When evaluating any franchise, it's wise to have a business advisor help you assess the maturity and stability of the brand and its operating systems.
- An attorney can help review the franchisor’s history as disclosed in Item 1 to understand its track record and experience.
- Speaking with the earliest-opening franchisees can provide insight into how the system has evolved and matured over time.
Possible Fad Business
Medium Risk
Explanation
The business model is centered on gourmet cookies with a weekly rotating menu, a concept that has gained immense popularity through social media. You should consider the risk that this product category could be a trend with uncertain long-term, mainstream demand. A decline in consumer interest could significantly impact revenue and the viability of your investment, even as your long-term contractual obligations to Crumbl LLC remain.
Potential Mitigations
- Engaging a business advisor to research the long-term market trends for specialty dessert concepts would be a prudent step.
- You should ask the franchisor about their strategies for product innovation and adaptation to evolving consumer tastes.
- An accountant can help you model different revenue scenarios, including a potential decline from peak trendiness, to assess financial resilience.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 shows a management team with significant experience both within the Crumbl system since its inception and, for some executives, with other major national brands. Inexperienced management can be a major risk, as it may lead to poor strategic decisions, weak operational support, and an inability to manage system growth effectively, thereby jeopardizing franchisee success.
Potential Mitigations
- For any franchise opportunity, having a business advisor help you vet the backgrounds of the key executives is a crucial due diligence step.
- Asking existing franchisees about their confidence in the current management team provides valuable, real-world insight.
- An attorney can help you understand if there are any contractual protections in the event of major changes in the management team.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 indicates the franchisor is a subsidiary of Crumbl Enterprises, LLC, which appears to be founder-controlled. Private equity ownership can introduce risks, as the firm's goal is typically to generate returns for investors over a fixed period, which may lead to decisions (like increased fees or reduced support) that benefit the PE firm's short-term goals over the long-term health of franchisees.
Potential Mitigations
- When evaluating a franchise, it is prudent to have your attorney research the ownership structure for any private equity involvement.
- If a franchise is owned by a private equity firm, a business advisor can help you investigate that firm's track record with other franchise brands.
- Discussing any changes in system culture or support with franchisees who have been with the brand before and after a PE acquisition is important.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 discloses the parent company, Crumbl Enterprises, LLC, and various affiliates. When a franchisor is a subsidiary, especially one that is thinly capitalized, the financial health of the parent company becomes critical. Failing to disclose a parent company or its financials, when required, can obscure significant risks to the stability and support capability of the entire system.
Potential Mitigations
- Your attorney should always verify that all parent and affiliate companies mentioned in the FDD are properly disclosed.
- If a parent company guarantees the franchisor's obligations, it is important for your accountant to review the parent's financial statements.
- Understanding the complete corporate structure can be achieved by having your attorney conduct a corporate records search.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor does not disclose any predecessors in Item 1. A predecessor is a company from which the franchisor acquired the rights to the franchise system. A history of predecessors can sometimes indicate instability or a pattern of rebranding to escape a negative reputation, and it's important to understand the full history of the system you are buying into.
Potential Mitigations
- A careful review of Item 1 of any FDD with your attorney is necessary to identify any disclosed predecessors.
- If predecessors exist, a business advisor can help you research their history and reputation.
- Asking long-term franchisees about their experiences under any previous ownership can provide valuable context.
Pattern of Litigation
High Risk
Explanation
The FDD discloses a significant history of litigation. Item 13 details numerous trademark infringement lawsuits Crumbl has initiated against competitors and lawsuits filed against Crumbl or its franchisees by other bakeries. This indicates the brand name is heavily contested, which could create ongoing legal uncertainty and potential costs for you. Item 3 also discloses a pending class-action lawsuit from customers regarding service fees, which could create reputational and financial risk for the franchisor.
Potential Mitigations
- A franchise attorney should be consulted to analyze the nature and potential impact of the disclosed litigation.
- Understanding your potential obligation to bear costs related to trademark defense is a key discussion to have with your attorney.
- The financial risk posed by this litigation to the franchisor should be assessed with your accountant.
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
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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
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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
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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