1-TOM-PLUMBER
Home Services
Founded 202043 locations1 Tom Plumber Global Inc. offers franchises to operate a 1-Tom-Plumber® plumbing business focused on emergency plumbing services and repairs at commercial and residential properties. Franchisees operate from a central office in light industrial space, not accessible to customers. They are assigned a primary operating area (defined by zip codes) and must concentrate business efforts there. Services include drain cleaning and full-service plumbing, but new construction or planned remodeling is prohibited without franchisor consent. The franchisor operates a call forwarding system, directing customer calls to the appropriate franchisee based on location. Franchisees are required to purchase at least one hydrojetter and at least three 1-Tom-Plumber outfitted service trucks, which must be fully stocked at all times. The business model emphasizes prompt emergency service and routine maintenance for commercial clients. A national account program may be established to provide franchisees with referrals from master contracts.
Company Profile
Website:www.1tomplumber.com
Year Founded:2020
1-TOM-PLUMBER Franchise Cost
| Franchise Fee: | $50,000Key Metric |
| Total Investment: | $515,719 - $2,796,495Key Metric |
| Liquid Capital: | $217,500 |
| Royalty Fee: | 6% of gross sales |
| Marketing Fee: | 2% of gross sales |
Quick ROI Calculator
Based on 1-TOM-PLUMBER's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:43
Scale relative to 1,000 locations
Franchised Units:28
Corporate Units:15
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AI-Powered Due Diligence Analysis
Our advanced AI analyzes Franchise Disclosure Documents (FDDs) to identify potential risks and opportunities across 10 critical categories.
12
High Risk
Critical items
35% of total
19
Medium Risk
Monitor closely
56% of total
3
Low Risk
Manageable items
9% of total
34
Total Items
Factors analyzed
10 categories
6.32
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
3 risks identified
1
2
Limited Operating History and Franchise Experience
High
Explanation:
- The franchisor, 1 Tom Plumber Global Inc., was founded in 2020 and has limited operating history. Their experience in franchising is also limited, having only offered franchises since October 2020.
- This lack of experience poses a significant risk as the franchisor's business model and support systems are relatively untested. There's a higher chance of unforeseen challenges and inadequate support for franchisees.
- The rapid expansion of a young franchise system can strain resources and lead to inconsistencies in training and support.
Potential Mitigations:
- Thoroughly research the management team's background and experience in the plumbing industry and franchising.
- Speak with existing franchisees about their experiences with the franchisor's support and training.
- Carefully review the FDD, particularly Item 20 (Financial Performance Representations), to assess the financial viability of the business model.
FDD Citations:
- Item 1: "We are an Ohio corporation formed on January 27, 2020."
- Item 1: "We have offered franchises in the United States since October 2020."
Complex Corporate Structure and Interrelated Entities
Medium
Explanation:
- The franchisor is part of a complex corporate structure involving multiple interrelated entities (1 Tom Plumber Global Inc., 1 Tom Plumber Brand Inc., 1 Tom Plumber LLC, 1 Tom Plumber Supply Inc.).
- This complexity can create confusion and potential conflicts of interest, especially regarding the allocation of resources and profits among the different entities.
- The planned dissolution of 1-Tom Supply adds further complexity and raises questions about the future supply chain for franchisees.
Potential Mitigations:
- Carefully review the FDD to understand the relationships between the different entities and their respective roles.
- Consult with a legal and financial professional to assess the potential implications of the complex corporate structure.
- Inquire about the future supply chain arrangements after the dissolution of 1-Tom Supply.
FDD Citations:
- Item 1: Describes the various entities and their relationships.
- Item 1: "1-Tom Supply no longer has any business activities and we plan to dissolve it... during 2025."
Dependence on Call Center and Dispatch System
Medium
Explanation:
- The franchise model relies heavily on the franchisor's call forwarding system for lead generation.
- This dependence creates a single point of failure. Problems with the call center or dispatch system could significantly impact franchisees' ability to acquire customers.
- The franchisor's discretion in assigning leads outside the franchisee's Operating Area could lead to lost revenue opportunities.
Potential Mitigations:
- Inquire about the call center's infrastructure, redundancy measures, and historical performance.
- Clarify the lead assignment process and any potential limitations on marketing efforts outside the designated Operating Area.
- Explore alternative lead generation strategies to reduce dependence on the franchisor's system.
FDD Citations:
- Item 1: "We will operate a call forwarding system for fulfilling requests to provide Services."
- Item 1: "If the Services are to be performed in a zip code that is not in the Operating Area of a franchisee, we will assign the Services, in our sole discretion…"
Disclosure & Representation Risks
3 risks identified
1
2
Financial Instability of Franchisor (Illinois)
High
Explanation:
- The Illinois Addendum reveals the franchisor is required by the Illinois Attorney General to escrow all initial franchise fees due to its financial condition. This indicates potential financial instability, which could significantly impact the franchisor's ability to provide ongoing support and fulfill its obligations to franchisees.
- This escrow requirement raises concerns about the franchisor's long-term viability and its capacity to invest in system growth, marketing, and other essential resources for franchisee success.
Potential Mitigations:
- Request a copy of the Escrow Agreement filed with the Illinois Attorney General's office to understand the terms and conditions.
- Carefully review the franchisor's financial statements (Item 21) to assess their current financial health and identify any concerning trends.
- Inquire about the specific reasons for the escrow requirement and the franchisor's plans to address their financial situation.
FDD Citations:
- Illinois Addendum to Disclosure Document, Item 5: "Due to its financial condition, Franchisor is required...to escrow the payment of all initial franchise fees..."
- Item 21: Franchisor's Financial Statements
Unilateral Multiple Unit Requirement (Illinois)
Medium
Explanation:
- The franchisor retains the sole discretion to require franchisees to purchase multiple units if they deem the territory too large to service from a single location. This could lead to unexpected and substantial additional investment beyond the initial franchise fee.
- The lack of clear criteria for determining the need for multiple units creates uncertainty and potential for unfair application of this requirement.
Potential Mitigations:
- Negotiate specific criteria for multiple unit requirements in the Franchise Agreement.
- Clearly define the territory boundaries and service expectations in the Franchise Agreement.
- Seek legal counsel to review the Franchise Agreement and ensure adequate protection against arbitrary multiple unit requirements.
FDD Citations:
- Illinois Addendum to Disclosure Document, Item 6: "The Franchisor in its sole discretion may require YOU to purchase multiple units..."
National Accounts Override (Illinois)
Medium
Explanation:
- The franchisor reserves the right to establish and service national accounts within a franchisee's exclusive territory, potentially bypassing the franchisee and impacting their revenue potential.
- While franchisees may be offered the opportunity to service these accounts at pre-negotiated rates, declining this offer results in no compensation, effectively granting the franchisor or another franchisee the right to operate within their territory.
Potential Mitigations:
- Negotiate clear terms regarding national accounts in the Franchise Agreement, including compensation for bypassed business.
- Seek clarification on the criteria for selecting franchisees to service national accounts and ensure a fair process.
- Understand the potential impact of national accounts on projected revenue and profitability.
FDD Citations:
- Illinois Addendum to Disclosure Document, Item 7: "NATIONAL ACCOUNTS MAY EXIST...Franchisor reserves the right...with no compensation paid to you."
Financial & Fee Risks
3 risks identified
1
2
Variable and Potentially High Initial Investment
High
Explanation:
- The initial investment range is broad ($515,719 - $2,796,495), indicating significant variability depending on factors like territory size, equipment package, and leasehold improvements.
- Item 8 states leasehold improvement costs are not included in estimates if land acquisition or building construction is required, posing a substantial unforeseen cost risk.
- Items 11, 12, and 15 highlight variable equipment needs based on territory and package selection, impacting initial investment.
- Item 27 acknowledges that actual costs may exceed estimates due to local labor rates, adherence to procedures, management skills, and economic conditions.
- Item 28 advises consulting advisors and developing a detailed business plan to account for potential cost variations.
- Ongoing fees, including royalties (6% or $3,000 minimum every four weeks), population fees ($295-$995 monthly), brand fund contributions (2%), and technology fees (variable), add to the financial burden (Item 6).
Potential Mitigations:
- Thoroughly analyze the high end of the investment range to prepare for potential cost overruns.
- Secure detailed quotes for leasehold improvements, equipment packages, and all other startup expenses specific to the chosen territory.
- Develop a comprehensive business plan with realistic revenue projections and sensitivity analysis to assess financial viability under various scenarios.
- Negotiate favorable lease terms and explore financing options to minimize upfront capital outlay.
- Consult with experienced franchise attorneys and financial advisors to evaluate the FDD and associated risks.
FDD Citations:
- Item 6: Fee Schedule
- Item 8: Leasehold Improvement Costs
- Items 9, 11, 12, 15: Variable Costs
- Items 27, 28: Cost Uncertainty and Recommendation for Advisor Consultation
Dependence on Franchisor-Approved Suppliers
Medium
Explanation:
- Item 11 states franchisees may be required to purchase equipment and branded materials from approved suppliers, potentially including the franchisor or its affiliates, limiting negotiating power and potentially increasing costs.
- Item 13 acknowledges the franchisor doesn't guarantee the lowest costs or best terms from suppliers, even with negotiated agreements.
Potential Mitigations:
- Carefully review the approved supplier list and compare pricing with alternative vendors to assess potential cost differences.
- Negotiate with approved suppliers for better terms, leveraging the collective bargaining power of other franchisees if possible.
- Clarify the process for requesting approval for non-approved suppliers and understand the criteria for evaluation.
FDD Citations:
- Item 11: Requirement for Approved Suppliers
- Item 13: No Guarantee of Lowest Costs
Uncertainty Regarding Technology Fees
Medium
Explanation:
- Item 6 mentions the franchisor may introduce additional technology fees for future technology or licenses with 30 days' prior written notice. This creates uncertainty about future costs and potential budget impacts.
Potential Mitigations:
- Inquire about the franchisor's plans for future technology implementations and potential associated costs.
- Budget for potential technology fee increases to avoid financial strain.
- Negotiate a cap on technology fee increases in the franchise agreement.
FDD Citations:
- Item 6: Potential Future Technology Fees
Legal & Contract Risks
7 risks identified
2
3
2
Restrictive State Franchise Laws
High
Explanation:
- The FDD highlights specific state regulations (Virginia and Washington) that supersede the Franchise Agreement in areas like termination, renewal, and non-compete clauses. This creates complexity and potential conflict between the general agreement and state-specific laws.
- Virginia's Retail Franchising Act requires "reasonable cause" for termination, potentially limiting the franchisor's ability to enforce termination clauses in the standard agreement.
- Washington's Franchise Investment Protection Act dictates arbitration/mediation locations and litigation venues, potentially increasing costs and complexity for the franchisee if disputes arise.
- Washington law also restricts non-compete clauses for employees and independent contractors based on earnings, potentially impacting the franchisor's ability to protect its business model and intellectual property.
Potential Mitigations:
- Carefully review the state-specific addenda and consult with legal counsel specializing in franchise law in Virginia and Washington to fully understand the implications for your specific situation.
- Assess the impact of these state laws on your business plan, particularly regarding exit strategies and employee/contractor relationships.
- Negotiate specific terms within the Franchise Agreement that address these state-specific requirements while protecting your interests.
FDD Citations:
- Item 17.h: Virginia addendum regarding reasonable cause for termination.
- Washington Addendum: Various sections addressing termination, renewal, dispute resolution, and non-compete clauses.
Waiver of Rights Restrictions (VA, WA)
Medium
Explanation:
- Both Virginia and Washington restrict the ability of franchisees to waive certain rights, including claims under state franchise laws and reliance on franchisor statements. This limits the franchisor's ability to protect itself from certain legal challenges.
- Washington specifically prohibits waivers of rights under the Franchise Investment Protection Act except in limited circumstances, further restricting the franchisor's flexibility.
Potential Mitigations:
- Ensure all agreements and disclosures comply with these state-specific restrictions on waivers.
- Consult with legal counsel in Virginia and Washington to understand the limitations on waivers and how to structure agreements accordingly.
- Implement transparent and ethical business practices to minimize the risk of disputes and legal challenges.
FDD Citations:
- Item 17: Virginia addendum regarding waiver of claims and reliance.
- Washington Addendum: Section on waiver of rights under the Washington Franchise Investment Protection Act.
Transfer Fee Limitations (WA)
Low
Explanation:
- Washington State limits transfer fees to the franchisor's reasonable estimated or actual costs, potentially impacting the franchisor's revenue stream from franchise resales.
Potential Mitigations:
- Maintain detailed records of all costs associated with franchise transfers to justify any fees charged.
- Consult with legal counsel in Washington to ensure compliance with transfer fee limitations.
FDD Citations:
- Washington Addendum: Section on transfer fees.
Employee Solicitation Restrictions (WA)
Medium
Explanation:
- Washington law prohibits franchisors from restricting franchisees from soliciting or hiring employees of other franchisees or the franchisor itself. This could lead to increased employee turnover and competition between franchisees.
Potential Mitigations:
- Develop strong employee retention programs to minimize turnover.
- Focus on building a positive and supportive franchisee network to foster collaboration rather than competition.
- Consult with legal counsel in Washington to ensure compliance with employee solicitation restrictions.
FDD Citations:
- Washington Addendum: Section on employee solicitation.
Choice of Law/Forum Selection (WA)
Low
Explanation:
- The Washington addendum specifies that Washington law will prevail in case of conflict and dictates arbitration/litigation locations, potentially creating logistical and cost disadvantages for the franchisor if disputes arise.
Potential Mitigations:
- Factor the potential costs and complexities of litigating or arbitrating in Washington into your risk assessment.
- Consult with legal counsel in Washington to understand the implications of these provisions.
FDD Citations:
- Washington Addendum: Sections on choice of law and dispute resolution.
Financial Stability of Franchisor
Medium
Explanation:
- The FDD includes audited financial statements, which are essential for assessing the franchisor's financial health. A thorough review of these statements is crucial, but the provided excerpt doesn't offer enough detail to assess the franchisor's stability. A full review is needed to understand potential risks related to the franchisor's financial performance, debt load, and overall ability to support its franchisees.
Potential Mitigations:
- Carefully review the complete financial statements in Exhibit F with a qualified financial advisor or accountant experienced in franchise analysis.
- Assess key financial ratios, such as liquidity, profitability, and leverage, to understand the franchisor's financial health.
- Compare the franchisor's financials to industry benchmarks to gauge its performance relative to competitors.
FDD Citations:
- Item 21, Exhibit F: Franchisor's Financial Statements.
Limited Operating History
High
Explanation:
- 1-TOM-PLUMBER was founded in 2020, indicating a relatively short operating history. This presents a higher risk compared to established franchisors with proven track records. The limited history makes it harder to predict the franchisor's long-term viability, support capabilities, and ability to adapt to changing market conditions.
Potential Mitigations:
- Thoroughly research the franchisor's management team and their experience in the industry.
- Speak with existing franchisees to understand their experiences and assess the level of support provided by the franchisor.
- Carefully evaluate the franchisor's business plan and growth projections, considering the inherent uncertainties associated with a young company.
FDD Citations:
- General Information: Franchisor's founding date (2020).
Territory & Competition Risks
3 risks identified
1
2
Limited Operating Area
Medium
Explanation:
- The FDD states that the franchisor determines the Operating Area, which could restrict growth potential and customer reach. The size is negotiated, but the franchisor has ultimate control.
- While the Operating Area is exclusive, it might be too small to generate sufficient revenue, especially in densely populated areas or if the assigned area has limited customer demand.
Potential Mitigations:
- Thoroughly research the demographics and market potential of the proposed Operating Area before signing the Franchise Agreement.
- Negotiate aggressively for the largest possible Operating Area, considering factors like population density, competition, and travel times.
- Clearly understand the criteria used by the franchisor to determine Operating Area size and ensure it aligns with your business goals.
FDD Citations:
- Item 12: "Your Operating Area will be determined by us and stated in an Attachment A of the Franchise Agreement."
- Item 12: "The exact size of an Operating Area will be negotiated with each Franchisee based upon its experience and ability to service customers."
Franchisor's Right to Compete
High
Explanation:
- The franchisor retains the right to operate company-owned units and license others outside the franchisee's Operating Area, potentially creating competition and impacting customer acquisition.
- The franchisor can also market and sell under different trademarks within or outside the Operating Area, further increasing competition.
- The franchisor's right to merge with or acquire other plumbing businesses, potentially converting them to 1-TOM-PLUMBER brands, poses a significant competitive threat.
Potential Mitigations:
- Carefully review the FDD for specific details on the franchisor's competition clauses and understand the potential impact on your business.
- Seek legal counsel to review the Franchise Agreement and assess the level of competition risk.
- Develop a strong local marketing strategy to differentiate your business and build customer loyalty.
FDD Citations:
- Item 12: "We retain the right to operate and license or franchise other persons to operate a Unit at any location outside of your Operating Area."
- Item 12: "We retain the right to market and sell within or outside the Operating Area without compensation to you at any location under trademarks... different from the Marks."
- Item 12: "We and our affiliates also reserve the right to merge with, acquire or become associated with any business... which businesses may convert to or operate under the 1-Tom-Plumber Marks..."
National Account Partnerships (NAPs)
Medium
Explanation:
- The franchisor's right to enter into NAPs could lead to servicing clients outside the Operating Area or losing potential clients within the Operating Area to the franchisor or other franchisees.
- While the FDD mentions prior notice, the franchisee can only refuse to service a NAP, potentially impacting revenue and growth.
Potential Mitigations:
- Seek clarification on the typical terms and conditions of NAPs, including service areas, pricing, and revenue sharing.
- Evaluate the potential impact of NAPs on your business operations and profitability.
- Negotiate for greater transparency and involvement in NAP decisions that affect your Operating Area.
FDD Citations:
- Item 12: "We have entered into any National Account Partnerships... and reserve the right to negotiate and enter into NAPs with clients to provide Services at locations both within and outside your Operating Area."
- Item 12: "...you may be asked to service a National Account Partner, unless you provide us with notice of your refusal to do so..."
Regulatory & Compliance Risks
3 risks identified
2
1
Limited Operating History and Franchise Experience
High
Explanation:
- The franchisor, 1 Tom Plumber Global Inc., was founded in 2020 and has limited operating history. Their experience in franchising is also limited, having only offered franchises since October 2020.
- This lack of experience poses a significant risk as the franchisor's business model and support systems are relatively untested. There's a higher chance of unforeseen challenges and inadequate support for franchisees.
- The FDD mentions the franchisor does not operate any units themselves, relying on an affiliate, 1-Tom, for operational experience. This separation creates potential conflicts of interest and may limit the franchisor's direct understanding of day-to-day operational challenges.
Potential Mitigations:
- Thoroughly research the background and experience of the franchisor's management team, particularly in franchising and the plumbing industry.
- Speak with existing franchisees to assess their experience with the franchisor's support and the viability of the business model.
- Consult with experienced franchise attorneys and financial advisors to evaluate the risks and potential rewards of investing in a relatively new franchise system.
FDD Citations:
- Item 1: "We are an Ohio corporation formed on January 27, 2020."
- Item 1: "We have offered franchises in the United States since October 2020."
- Item 1: "We do not operate any Unit."
Intense Competition
High
Explanation:
- The FDD acknowledges the plumbing market is "highly competitive, generally mature and well developed." Franchisees will face competition from established national, regional, and local players, including other franchises and independent businesses.
- Some competitors may have greater brand recognition, financial resources, and market share, making it challenging for new franchisees to establish themselves.
Potential Mitigations:
- Carefully analyze the competitive landscape in your target market. Identify your key differentiators and develop a strong marketing strategy to stand out from the competition.
- Focus on providing exceptional customer service and building a strong local reputation.
- Leverage the franchisor's marketing and advertising programs to increase brand awareness in your area.
FDD Citations:
- Item 1: "The plumbing market for a Unit is highly competitive, generally mature and well developed."
- Item 1: "You will compete with national, regional and local businesses including company owned and franchised chains as well as independently owned plumbing businesses."
Dependence on Franchisor's Call Center and Lead Generation
Medium
Explanation:
- The FDD states the franchisor operates a call forwarding system for distributing leads to franchisees. This creates a dependence on the franchisor's system and their ability to generate and fairly distribute leads.
- The franchisor's discretion in assigning leads outside a franchisee's Operating Area and to national accounts could potentially impact a franchisee's revenue stream.
Potential Mitigations:
- Clearly understand the lead distribution process outlined in the Franchise Agreement and Operations Manual.
- Inquire about the franchisor's historical lead generation performance and the criteria used for lead assignment.
- Develop local marketing initiatives to generate leads independently of the franchisor's system.
FDD Citations:
- Item 1: "We will operate a call forwarding system for fulfilling requests to provide Services."
- Item 1: "If the Services are to be performed in a zip code that is not in the Operating Area of a franchisee, we will assign the Services, in our sole discretion, to a franchisee whom we deem capable to perform the Services."
Franchisor Support Risks
3 risks identified
1
2
Limited Pre-Opening Support for Site Selection
Medium
Explanation:
- While the franchisor reviews and approves the site, the primary responsibility for selection falls on the franchisee. This puts a significant burden on the franchisee, who may lack the experience and market knowledge to identify a suitable location. The FDD explicitly states "The site we accept may not be successful for your Franchised Business."
- The franchisor's limited involvement increases the risk of choosing a poor location, which can significantly impact business performance.
Potential Mitigations:
- Thoroughly research the local market and demographics before proposing a site.
- Consult with experienced real estate professionals and business advisors.
- Seek feedback from existing franchisees about their site selection process and experiences.
- Negotiate a clear agreement with the franchisor regarding site selection criteria and support.
FDD Citations:
- Item 11, Site Selection: "We will not select the Central Office location...You will have responsibility for selecting the site...The site we accept may not be successful for your Franchised Business."
- Item 11, Pre-Opening Assistance (2): "We will review the information you submit...and accept or reject the site."
Dependence on Franchisor's Call Routing System and Website
High
Explanation:
- Franchisees are completely reliant on the franchisor's call routing system, website, and social media presence. Any disruption or malfunction of these systems could severely impact lead generation and customer acquisition.
- Franchisees are prohibited from maintaining their own website, limiting their ability to establish an independent online presence and control their digital marketing efforts.
Potential Mitigations:
- Inquire about the franchisor's system redundancy and disaster recovery plans.
- Seek clarification on the franchisor's website maintenance and update procedures.
- Negotiate for greater control over local online marketing activities.
- Develop alternative marketing strategies to mitigate reliance on the franchisor's systems.
FDD Citations:
- Item 11, Post-Opening Assistance (7): "We will maintain and update the 1-Tom-Plumber call routing system, website...You are not authorized to maintain a website for your Franchised Business."
Limited Control over Employee Management
Medium
Explanation:
- While the franchisor provides staffing standards and suggestions, franchisees have ultimate control over hiring, scheduling, and other employment decisions. This can lead to inconsistencies in service quality and brand image across different locations.
- The franchisor explicitly states they do not control "the terms and conditions of employment for your employees or contractors."
Potential Mitigations:
- Implement robust hiring and training procedures to ensure consistent service delivery.
- Establish clear performance standards and evaluation metrics for employees.
- Actively participate in any training or support programs offered by the franchisor related to employee management.
FDD Citations:
- Item 11, Post-Opening Assistance (3): "We will provide suggestions for staffing models and job descriptions that you are free to follow or not in your discretion."
- Item 11, Post-Opening Assistance (8): "Under no circumstances will we act directly or indirectly to control...the terms and conditions of employment for your employees or contractors."
Exit & Transfer Risks
3 risks identified
2
1
Limited Transferability Due to State Regulations
Medium
Explanation:
- The FDD highlights specific regulations in Virginia and Washington that impact franchise transfer rights and processes. These regulations may create complexities and restrictions on the franchisee's ability to sell or transfer their franchise, potentially impacting the exit strategy.
- Virginia law requires "reasonable cause" for franchise cancellation, potentially making it more difficult for a franchisor to terminate a franchise agreement even if the franchisee wishes to exit.
- Washington state law adds further complexities regarding transfer fees, non-compete clauses, and employee solicitation, all of which can impact the value and transferability of the franchise.
Potential Mitigations:
- Carefully review the specific regulations in Virginia and Washington as they pertain to franchise transfers.
- Consult with legal counsel specializing in franchise law in these states to understand the implications and potential challenges.
- Factor these regulations into the initial franchise investment decision and develop a clear exit strategy that accounts for these potential limitations.
FDD Citations:
- Item 17.h: Discussion of Virginia Retail Franchising Act restrictions.
- Washington Addendum: Detailed provisions regarding transfer fees, non-compete clauses, and employee solicitation in Washington.
Transfer Fee Uncertainty
Medium
Explanation:
- The Washington Addendum states that transfer fees are collectable only to the extent they reflect the franchisor's reasonable estimated or actual costs. This lacks clarity and could lead to disputes over what constitutes "reasonable" costs.
- The absence of a specified transfer fee or a clear formula for calculating it creates uncertainty for franchisees planning their exit strategy.
Potential Mitigations:
- Request clarification from the franchisor regarding their typical transfer fee calculation and supporting documentation for these costs.
- Negotiate a clear and predetermined transfer fee structure in the franchise agreement.
- Consult with a franchise attorney to review the transfer fee provisions and ensure they are reasonable and compliant with Washington law.
FDD Citations:
- Washington Addendum: "Transfer fees are collectable to the extent that they reflect the franchisor’s reasonable estimated or actual costs in effecting a transfer."
Limited Resale Market
Low
Explanation:
- 1-TOM-PLUMBER is a relatively young franchise (founded in 2020). A limited operating history and smaller number of existing franchisees may result in a smaller and less developed resale market, potentially making it harder to find a buyer when exiting.
Potential Mitigations:
- Research the existing resale market for similar franchises in the home services industry.
- Discuss the franchisor's plans for future growth and franchise development, as a larger network can improve resale opportunities.
- Network with other franchisees to gauge their experiences and perspectives on resale potential.
FDD Citations:
- No specific citation, but inferred from the company's founding date (2020).
Operational & Brand Risks
3 risks identified
1
2
Dependence on Approved Suppliers
High
Explanation:
- Franchisees are required to purchase approximately 85-90% of their operating supplies and 95% of opening expenses from franchisor-approved suppliers. This heavy reliance creates a significant risk of supply chain disruptions, price increases, and quality control issues if approved suppliers fail to perform or if the franchisor's relationship with them deteriorates.
- The franchisor's sole discretion in approving suppliers limits franchisees' flexibility and negotiating power, potentially leading to higher costs and reduced profitability.
- The franchisor reserves the right to terminate its approval of a supplier at any time, potentially disrupting operations and requiring franchisees to quickly find alternative sources.
Potential Mitigations:
- Thoroughly review the list of approved suppliers and their track records. Negotiate with the franchisor for greater flexibility in sourcing supplies, especially if existing suppliers prove unreliable or expensive.
- Develop relationships with alternative suppliers who meet the franchisor's standards as a contingency plan.
- Carefully analyze the franchisor's supplier approval process and criteria to understand potential risks and challenges.
FDD Citations:
- Item 8: "Required Purchases and Approved and Designated Suppliers" section: "You must operate the Franchised Business according to these standards...The designated or approved suppliers of these Materials may be limited to or include us in our sole discretion."
- Item 8: "Percentage of Total Purchases Represented by Required Purchases" section: "Your required purchases represent approximately 95% of your total opening expenses...and approximately 85% to 90% of your overall purchases."
- Item 8: "Approval of Alternative Suppliers" section: "We may terminate our approval of a supplier or any Materials at any time, with or without cause, upon reasonable written notice."
Potential for Franchisor's Supplier Revenue Bias
Medium
Explanation:
- While the franchisor currently receives minimal revenue from designated suppliers, they explicitly reserve the right to do so in the future. This creates a potential conflict of interest, as the franchisor may prioritize suppliers that generate revenue for them over suppliers that offer the best value to franchisees.
Potential Mitigations:
- Seek clarification from the franchisor regarding their plans for receiving revenue from suppliers and how this might impact supplier selection and pricing.
- Request transparency in supplier agreements and pricing structures.
- Consult with a franchise attorney to understand the implications of this potential conflict of interest.
FDD Citations:
- Item 8: "Payments to Franchisor from Designated Suppliers" section: "We currently receive no revenue...although we reserve the right to do so in the future."
Limited Pre-Opening Assistance for Central Office
Medium
Explanation:
- The franchisor provides limited assistance in establishing the Central Office, leaving franchisees responsible for locating, leasing, and setting up the premises. This can be challenging for new business owners and may lead to delays, cost overruns, or unsuitable locations.
Potential Mitigations:
- Engage a qualified real estate broker specializing in commercial properties to assist with site selection and lease negotiations.
- Develop a detailed budget and timeline for Central Office setup.
- Consult with other franchisees for advice and best practices.
FDD Citations:
- Item 11: "Pre-Opening Assistance" section: "We do not own or lease...the Central Office premises...You must locate the Central Office premises and enter into a lease."
Performance & ROI Risks
3 risks identified
2
1
Dependence on Franchisee's Abilities and External Factors
High
Explanation:
- The FDD explicitly states that the franchise's success depends heavily on the franchisee's skills, experience, business acumen, work hours, selected location, management practices, pricing strategies, and local market conditions.
- It also highlights the influence of external factors like interest rates, the economy, inflation, employee management, competition, and financing terms.
- This heavy reliance on individual franchisee performance and unpredictable macroeconomic factors creates a significant risk, as these elements are largely outside the franchisor's control.
Potential Mitigations:
- Thoroughly assess your own skills, experience, and business acumen to ensure alignment with the franchise's requirements.
- Develop a robust business plan that accounts for potential market fluctuations and economic downturns.
- Seek expert advice on location selection, pricing strategies, and employee management.
- Secure favorable financing terms and explore available resources for small business support.
FDD Citations:
- Item 2: "Do you understand that the success or failure of your franchise business will depend in large part upon your skills and experience..."
No Guaranteed ROI
High
Explanation:
- While the provided FDD excerpt doesn't include Item 19, the question regarding financial performance representations suggests its existence.
- The absence of specific financial performance representations in this excerpt raises concerns about the predictability of ROI.
- Franchises often avoid guaranteeing ROI, placing the onus of profitability entirely on the franchisee.
Potential Mitigations:
- Carefully review Item 19 of the complete FDD for any available financial performance representations, even if they are not guarantees.
- Conduct thorough independent market research and financial projections to assess potential profitability.
- Consult with experienced franchise attorneys and financial advisors to evaluate the investment's feasibility.
FDD Citations:
- The introductory question referencing Item 19 implies its existence and potential relevance to financial performance.
Competition Within and Outside the Operating Area
Medium
Explanation:
- The FDD clarifies that while the franchisor won't establish another franchise within the franchisee's designated Operating Area, they are permitted to operate or franchise businesses outside this area, including adjacent locations.
- This creates potential competition from both other 1-TOM-PLUMBER franchises and the franchisor's own operations.
Potential Mitigations:
- Carefully review the defined Operating Area in the Franchise Agreement to understand its boundaries and limitations.
- Research the existing competitive landscape within and around the Operating Area, including other plumbing services and potential future franchise locations.
- Develop a strong local marketing strategy to differentiate your franchise and build a loyal customer base.
FDD Citations:
- Item 2: "... (c) allows us to operate or franchise a Franchised Business anywhere outside the Operating Area, and (d) allows us to open and operate or authorize any other party to open and operate a Unit adjacent to your Operating Area?"
FDD Documents by Year
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FDD Year: 2025
Uploaded: 8/5/2025
FDD Year: 2024
Uploaded: 8/25/2025
FDD Documents
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