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Moldman

Moldman Franchisor, LLC
https://www.moldmanusa.com
1-312-878-6444
2607 W. 25th Street, Chicago, IL 60608

Initial Investment Range

$18,378 to $49,648

Franchise Fee

$10,958

We offer qualified individuals and entities the right to own and operate a franchised business that offers mold inspections, mold testing, mold remediation, water damage remediation and biohazard remediation services utilizing our MOLDMAN System.

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Moldman 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.

1

Franchisor Stability Risks

Start Here
Total: 10
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The financial statements for Moldman Franchisor, LLC (Moldman) show a history of significant net losses, negative operating cash flow, and low members' equity. For 2022 and 2023, the company operated at a loss. While 2024 shows a small profit, the company relies on owner contributions and a new line of credit to function. Financial weakness may affect Moldman's ability to support you and grow the brand, and there is a high concentration of revenue from just two franchisees.

Potential Mitigations

  • Your accountant must conduct a thorough review of the audited financial statements, including the footnotes and cash flow statements, to assess the franchisor's stability.
  • Discuss the high revenue concentration and historical losses with your business advisor to evaluate the overall risk to the system.
  • It is prudent to ask your attorney about the implications of the franchisor's financial health on its ability to fulfill its contractual obligations.
Citations: Item 21, Exhibit B

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a very high rate of franchisee turnover. In 2024, two of the six franchises that started the year were terminated, representing a 33% annual termination rate. Additionally, the former franchisee list includes two others who terminated their agreements prior to opening. This level of churn is a significant indicator of potential systemic problems, franchisee dissatisfaction, or issues with profitability that could directly affect your potential for success in the system.

Potential Mitigations

  • A discussion with your business advisor is essential to understand the severe implications of such a high turnover rate.
  • You should contact as many current and former franchisees as possible from the list in Exhibit D to inquire about their experiences.
  • Your attorney should be consulted to discuss the risks associated with joining a system that exhibits this level of franchisee churn.
Citations: Item 20, Exhibit D

Rapid System Growth

High Risk

Explanation

The franchise system grew by 200% in a single year (from two to six units in 2023), which constitutes very rapid expansion. When combined with the franchisor's historically weak financial position and limited franchising experience, this rapid growth presents a considerable risk. The support infrastructure may not be able to keep pace with the number of new franchisees, potentially leading to inadequate training, field support, and overall assistance for you.

Potential Mitigations

  • Engaging a business advisor to assess whether the franchisor's support systems can handle this growth is a critical step.
  • It is wise to ask current franchisees about the quality and responsiveness of the support they have received as the system has expanded.
  • Your accountant should review the financials to determine if the franchisor has allocated sufficient resources to support its growing network.
Citations: Items 11, 20, 21

New/Unproven Franchise System

High Risk

Explanation

Moldman began franchising in May 2021, making it a new and unproven franchise system. While the founder has industry experience since 2006, the franchise company itself has a very short track record. Investing in such a young system carries higher risks, including the possibility of an unrefined business model, underdeveloped support systems, and minimal brand recognition, all of which could impact your business's viability and success.

Potential Mitigations

  • Thoroughly investigate the business and franchising experience of the management team with your business advisor.
  • It is crucial to speak with the earliest franchisees to learn about their experiences and the evolution of the system's support.
  • An accountant's review of the financial statements is necessary to assess if the new franchisor is adequately capitalized for long-term survival.
Citations: Items 1, 2, 20, 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. The business offers mold inspection and remediation services, which are based on consistent property maintenance and health needs rather than a short-term trend. A fad business carries the risk of collapsing consumer demand, which does not appear to be a significant concern for this industry.

Potential Mitigations

  • A business advisor can help you research the long-term stability and demand within the property services industry in your local market.
  • To better assess market potential, consider reviewing independent industry reports on the restoration and remediation sectors.
  • Your financial advisor can assist in evaluating the business model's resilience to economic cycles.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The management team, as detailed in Item 2, has substantial experience in the mold remediation industry. However, their experience in managing a franchise system is very limited, beginning only in May 2021. This lack of deep franchising expertise could lead to challenges in providing effective franchisee support, developing mature operational systems, and making strategic decisions for the franchise network, which creates a risk for you.

Potential Mitigations

  • Asking current franchisees about the quality of management's support and their understanding of franchisee needs is a vital due diligence step.
  • A business advisor can help you evaluate whether the management team has compensated for its limited franchising experience by hiring seasoned personnel.
  • During discussions with the franchisor, inquire about their specific strategies for managing the franchise system's growth and support.
Citations: Items 1, 2, 11

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 does not indicate that Moldman is owned or controlled by a private equity firm. Private equity ownership can sometimes introduce a focus on short-term profitability over the long-term health of the franchise system, but that does not appear to be a factor here.

Potential Mitigations

  • Your attorney can help you confirm the ownership structure of the franchisor by reviewing corporate records.
  • If ownership changes in the future, it would be wise to research the track record of any new controlling entity.
  • A business advisor can explain the potential impacts that different ownership structures, like private equity, can have on a franchise system.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 discloses the existence of an affiliate, Moldman Enterprises, LLC, but does not identify a parent company. The relationship with the affiliate, which owns the trademarks, is described. Therefore, there is no evidence of an undisclosed parent company whose financial status might be concealed.

Potential Mitigations

  • Your attorney can verify the franchisor's corporate structure and affiliate relationships as disclosed in Item 1.
  • If a franchisor is a subsidiary, an accountant should always review the parent company's financials if they are provided or required.
  • Understanding the full corporate structure is key to assessing where financial strength and obligations truly lie; a business advisor can help.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 describes the founder's prior sole proprietorship but does not define it as a legal predecessor. No negative history, such as bankruptcy or significant litigation associated with a predecessor entity, is disclosed in Items 3 or 4. Therefore, there are no apparent risks from a disclosed predecessor's history.

Potential Mitigations

  • A thorough review of Items 1, 3, and 4 with your attorney is crucial to identify any disclosed predecessor entities and their history.
  • If a predecessor is mentioned, speaking with long-term franchisees about their experience under previous ownership can provide valuable context.
  • A business advisor can help you research the history of a brand, which may uncover information about prior entities.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 3 states that there is no litigation that requires disclosure. This suggests the franchisor has not been involved in significant legal disputes with franchisees, regulators, or other parties that would meet the criteria for disclosure, which is a positive sign.

Potential Mitigations

  • Your attorney can perform independent searches for litigation involving the franchisor or its principals as a final check.
  • Always ask current and former franchisees about any disputes they may have had, even if they didn't result in litigation.
  • Reviewing Item 3 is a critical step in due diligence; your attorney should confirm that no material litigation is present.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
6
3
6

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
5
4
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
7
7
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.

5

Territory & Competition Risks

Total: 5
3
2
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.

6

Regulatory & Compliance Risks

Total: 10
3
3
4

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
2
2
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.

8

Operational Control Risks

Total: 12
4
5
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
10
5
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.

10

Miscellaneous Risks

Total: 2
2
0
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.