Bumble Roofing
Home Services
Founded 201959 locationsCompany Profile
Year Founded:2019
Bumble Roofing Franchise Cost
| Franchise Fee: | $49,500Key Metric |
| Total Investment: | $172,000 - $314,000Key Metric |
| Liquid Capital: | $42,500 |
| Royalty Fee: | 6% of gross sales |
| Marketing Fee: | 1% of gross sales |
Quick ROI Calculator
Based on Bumble Roofing's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:59
Scale relative to 1,000 locations
Franchised Units:55
Corporate Units:4
Additional Information
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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.
14
High Risk
Critical items
37% of total
20
Medium Risk
Monitor closely
53% of total
4
Low Risk
Manageable items
11% of total
38
Total Items
Factors analyzed
10 categories
6.32
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
2
3
1
Limited Operating History and Rapid Expansion
High
Explanation:
- Bumble Roofing has a very limited operating history, founded in 2019 and only starting to franchise in 2024.
- Item 20 reveals rapid expansion from 0 to 55 franchisees in a single year. This aggressive growth can strain resources, support systems, and potentially lead to quality control issues.
- The franchisor's lack of experience managing a large franchise network poses a significant risk.
Potential Mitigations:
- Thoroughly investigate the franchisor's support infrastructure and training programs. Speak with existing franchisees about their experiences.
- Assess the franchisor's financial stability to ensure they can support rapid growth. Review Item 21 (Financial Statements) carefully.
- Consider the market saturation risk in your target territory given the planned expansion.
FDD Citations:
- Item 20, Table 1: "Outlets at the Start of the Year 0... Outlets at the End of the Year 55"
- Item 20, Table 3: Shows the rapid increase in franchised outlets across multiple states.
Lack of Franchisee Organization
Medium
Explanation:
- The absence of a franchisee organization (Item 20) limits the collective bargaining power of franchisees and their ability to address concerns with the franchisor.
- This can lead to less influence over system-wide decisions and potential conflicts between franchisees and the franchisor.
Potential Mitigations:
- Connect with existing franchisees independently to gauge their satisfaction and assess the franchisor's responsiveness to concerns.
- Carefully review the franchise agreement for dispute resolution mechanisms and protections for franchisees.
FDD Citations:
- Item 20: "There are no trademark-specific franchisee organizations associated with the franchise system…and we are not aware of any independent franchisee organizations…"
Confidentiality Clauses Limiting Feedback
Medium
Explanation:
- The FDD discloses the existence of confidentiality clauses that restrict current and former franchisees from openly discussing their experiences (Item 20).
- This can hinder your ability to gain a complete and unbiased understanding of the franchise system and its potential challenges.
Potential Mitigations:
- Speak with as many current and former franchisees as possible, focusing on questions that are not likely covered by confidentiality clauses (e.g., training, support, marketing).
- Consult with a franchise attorney to understand the implications of the confidentiality clauses and how they might affect your due diligence.
FDD Citations:
- Item 20: "In some instances, current and former franchisees sign provisions restricting their ability to speak openly about their experience with BUMBLE ROOFING®."
Potential for Misaligned Incentives with Employee Discount Program
Medium
Explanation:
- The substantial discounts offered to franchisee employees (up to 50%) could incentivize inexperienced individuals to become franchisees without adequate business acumen or capital.
- This could lead to higher failure rates and negatively impact the brand's reputation.
Potential Mitigations:
- Carefully evaluate the franchisor's vetting process for employee-franchisees. Inquire about their business experience and financial qualifications.
- Assess the support provided to these franchisees to ensure they receive adequate training and guidance.
FDD Citations:
- FDD Section: "Discount for Employees of Franchisees" outlines the discount structure based on years of employment.
- FDD Section: "Combination and Application of Discounts" details the clawback provision for the discount if certain conditions are not met.
Dependence on Empower Brands Affiliation
High
Explanation:
- Bumble Roofing's affiliation with Empower Brands introduces a dependency on the parent company's overall health and strategic direction.
- Negative events impacting Empower Brands could have ripple effects on Bumble Roofing franchisees, even if Bumble Roofing itself is performing well.
Potential Mitigations:
- Research Empower Brands' financial stability, litigation history, and overall reputation.
- Analyze the franchise agreement to understand the implications of the affiliation and any potential impact on franchisees in case of issues with Empower Brands.
FDD Citations:
- FDD Section: "Existing Franchisee: Additional Concept Discount" highlights the connection to Empower Brands.
Clawback Provision on Discounts Creates Financial Risk
Low
Explanation:
- The requirement to repay the discounted franchise fee if certain ownership or transfer conditions are not met within the first three years creates a financial risk for franchisees who utilize the VetFran or employee discounts.
Potential Mitigations:
- Fully understand the conditions that trigger the clawback provision and ensure you can comply with them.
- Factor the potential repayment into your financial projections and assess the impact on your business.
FDD Citations:
- FDD Section: "Combination and Application of Discounts" outlines the specific conditions and repayment requirements.
Disclosure & Representation Risks
6 risks identified
2
3
1
Related Party Transactions
High
Explanation:
- The auditor's report emphasizes significant related party transactions (Notes 2, 5, 6, and 7). This raises concerns about potential conflicts of interest and the possibility that transactions may not be at arm's length, potentially impacting the franchisor's financial health and the franchisee's costs.
- Lack of transparency on the nature and extent of these related party transactions makes it difficult to assess their true impact.
Potential Mitigations:
- Carefully review the cited notes (2, 5, 6, and 7) to understand the nature, extent, and terms of related party transactions.
- Consult with a financial advisor to assess the potential impact of these transactions on the franchisor's financial stability and the franchisee's potential profitability.
- Request clarification from the franchisor regarding the rationale and necessity of these transactions, ensuring they are beneficial to the franchise system as a whole.
FDD Citations:
- Exhibit A, Independent Auditors' Report: "Emphasis of Matter – Related Party Transactions. As discussed in Notes 2, 5, 6, and 7, the Company has significant transactions with related parties."
Retroactive Change in Accounting Policy
Medium
Explanation:
- The franchisor retrospectively changed its accounting policy regarding the allocation of its parent company's income tax provision (Note 10). While the auditor's opinion isn't modified, such changes can indicate underlying financial complexities and make it difficult to compare performance across periods.
- Understanding the rationale and impact of this change is crucial for assessing the franchisor's true financial performance.
Potential Mitigations:
- Thoroughly review Note 10 to understand the reasons for the change, its impact on the financial statements, and the adjustments made to prior periods.
- Consult with an accountant to assess the implications of this change and its potential impact on the franchisor's financial health.
- Compare the restated financials with the original filings (if available) to understand the magnitude of the adjustments.
FDD Citations:
- Exhibit A, Independent Auditors' Report: "Emphasis of Matter – Change in Accounting Policy. We draw attention to Note 10…which describes a change in the Company's accounting policy…"
Limited Operating History
Medium
Explanation:
- Bumble Roofing was founded in 2019, indicating a relatively short operating history. This presents a higher risk compared to established franchisors, as there's less data to assess the long-term viability and success of the franchise model.
- The limited track record makes it harder to project future performance and assess the franchisor's ability to provide ongoing support.
Potential Mitigations:
- Thoroughly research the franchisor's management team and their experience in the roofing industry.
- Speak with existing franchisees to understand their experiences and assess the level of support provided by the franchisor.
- Carefully analyze the franchisor's financial projections and understand the underlying assumptions.
FDD Citations:
- FDD, General Information: "Founded: 2019"
Franchisor's Financial Performance
Medium
Explanation:
- The FDD provides financial statements for Outdoor Living Brands Holdco, LLC. It's crucial to understand the relationship between this entity and Bumble Roofing. Is it the parent company? Are the financials representative of the specific Bumble Roofing franchise operations, or are they consolidated with other brands, potentially masking the true financial health of the Bumble Roofing franchise offering?
- Without clear segmentation of Bumble Roofing's financials, it's difficult to assess the profitability and sustainability of the franchise opportunity.
Potential Mitigations:
- Clarify the relationship between Outdoor Living Brands Holdco, LLC and Bumble Roofing. Request separate financial statements for Bumble Roofing if they are not provided.
- Analyze the provided financials carefully, paying attention to revenue trends, profitability, and cash flow. Consult with a financial advisor to assess the franchisor's financial health.
- Inquire about the franchisor's unit-level economics and request data on the average revenue and profitability of existing Bumble Roofing franchisees.
FDD Citations:
- Exhibit A: "Outdoor Living Brands Holdco, LLC Consolidated Financial Statements"
Dependence on Parent Company
High
Explanation:
- The FDD mentions "Due from/to affiliated companies" in the balance sheet and the auditor highlights related party transactions. This suggests a significant financial interdependence between Bumble Roofing and its parent company or affiliates. This dependence creates a risk for franchisees if the parent company experiences financial difficulties.
- The interconnectedness raises concerns about the potential for the parent company to prioritize its own interests over those of the franchisees.
Potential Mitigations:
- Investigate the financial health and stability of the parent company and affiliated entities.
- Assess the terms of any intercompany agreements and their potential impact on the franchisee's business.
- Consult with a legal advisor to understand the implications of the franchisor's dependence on related parties.
FDD Citations:
- Exhibit A, Balance Sheet: "Due from/to affiliated companies"
- Exhibit A, Independent Auditors' Report: "Emphasis of Matter – Related Party Transactions"
Lack of Detailed Franchisee Performance Data
Low
Explanation:
- The provided FDD excerpt doesn't include Item 20, which typically contains information about franchisee performance. The absence of this information makes it difficult to assess the potential profitability and success of the franchise opportunity.
Potential Mitigations:
- Request a complete FDD and carefully review Item 20 for information on franchisee performance, including average revenues, costs, and profits.
- If Item 20 is not available or lacks sufficient detail, request additional information from the franchisor regarding the financial performance of existing franchisees.
- Contact existing franchisees and inquire about their financial results and experiences with the franchise system.
FDD Citations:
- N/A - Item 20 not included in the provided excerpt.
Financial & Fee Risks
2 risks identified
1
1
Franchisor Financial Instability
High
Explanation:
- Item 5 discloses that the Maryland Securities Commissioner has required a financial assurance due to the franchisor's financial condition. This indicates potential financial instability and raises concerns about the franchisor's ability to meet its obligations and support franchisees.
- The requirement for deferral of initial fees and payments until pre-opening obligations are met suggests a lack of readily available capital and potential cash flow issues within the franchisor's operations.
Potential Mitigations:
- Carefully review the franchisor's financial statements and seek professional financial advice to assess their financial health and stability.
- Inquire about the specific reasons for the required financial assurance from the Maryland Securities Commissioner and the nature of the assurance provided.
- Negotiate stronger guarantees or protections in the franchise agreement to mitigate the risk of franchisor default or inability to provide promised support.
- Consider alternative franchise opportunities with more established and financially stable franchisors.
FDD Citations:
- Item 5: "Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance."
- Item 5: "Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement."
Lack of Financial Performance Representations
Medium
Explanation:
- Item 19 explicitly states that the franchisor does not provide any representations about future financial performance or past performance of other outlets, except for records of existing units being purchased. This lack of information makes it difficult to assess the potential profitability and financial viability of the franchise opportunity.
- While not uncommon, the absence of financial performance representations increases the uncertainty and risk associated with the investment.
Potential Mitigations:
- Conduct thorough independent market research and analysis to assess the demand for roofing services in your target market.
- Develop realistic financial projections based on your market research, operating expenses, and potential revenue streams.
- Consult with existing franchisees to gain insights into their financial performance and experiences (while acknowledging that their results may not be representative of your potential outcomes).
- Seek professional advice from a financial advisor and/or franchise consultant to evaluate the investment opportunity and assess the potential risks and rewards.
FDD Citations:
- Item 19: "Other than as described above, we do not make any representations about a franchisee’s future financial performance or the past financial performance of affiliate-owned or franchised outlets."
- Item 19: "We also do not authorize our employees or representatives to make any such representations either orally or in writing."
Legal & Contract Risks
3 risks identified
1
2
Washington-Specific Franchise Laws Superseding Franchise Agreement
High
Explanation:
- The FDD repeatedly emphasizes that Washington's Franchise Investment Protection Act (FIPA) may supersede the franchise agreement, especially regarding termination and renewal. This creates uncertainty and potential vulnerability for franchisees outside of Washington, as their agreements might be less protective than those under FIPA.
- This also highlights potential inconsistencies between the franchise agreement and state law, leading to legal disputes and challenges in enforcing contract terms.
Potential Mitigations:
- Carefully review the Washington Addendum and the Franchise Agreement with legal counsel specializing in franchise law, particularly in Washington state.
- Compare the protections offered under FIPA with those in the standard franchise agreement to understand potential discrepancies and negotiate stronger protections if necessary.
- If operating outside Washington, consider the implications of FIPA potentially setting a precedent for other states and consult with legal counsel about potential vulnerabilities.
FDD Citations:
- Item 17, Washington Addendum: "RCW 19.100.180 may supersede the franchise agreement...including the areas of termination and renewal."
- Item 17, Washington Addendum, Section 1: "Notwithstanding anything to the contrary contained in the Franchise Agreement..."
Non-Compete Restrictions Limited in Washington
Medium
Explanation:
- Washington law significantly restricts the enforceability of non-compete agreements for employees and independent contractors earning below specific thresholds. This could make it difficult to protect the franchise system's confidential information and business model, especially from employees leaving to start competing businesses.
Potential Mitigations:
- Understand the specific income thresholds under RCW 49.62.020 and 49.62.030.
- Structure compensation packages for key employees and independent contractors to exceed these thresholds, if feasible and legally permissible, to enhance the enforceability of non-compete agreements.
- Implement robust confidentiality and trade secret protection measures, such as non-disclosure agreements, to safeguard intellectual property even in the absence of enforceable non-compete clauses.
FDD Citations:
- Item 17, Washington Addendum: "Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable..."
Restrictions on Employee Solicitation in Washington
Medium
Explanation:
- Washington law prohibits franchisors from restricting franchisees from hiring employees of other franchisees or the franchisor itself. This could lead to increased employee turnover within the franchise system and potential loss of trained personnel to competitors.
Potential Mitigations:
- Develop strong employee retention programs, including competitive compensation, benefits, and opportunities for professional development, to reduce the incentive for employees to leave.
- Foster a positive and supportive work environment to enhance employee loyalty and reduce turnover.
FDD Citations:
- Item 17, Washington Addendum: "RCW 49.62.060 prohibits a franchisor from restricting...a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor."
Territory & Competition Risks
3 risks identified
2
1
Non-Exclusive Territory & Competition from Franchisor
High
Explanation:
- The FDD explicitly states "You will not receive an exclusive territory." This means you may face direct competition from other Bumble Roofing franchisees, corporate-owned locations, and other distribution channels operated by the franchisor.
- The franchisor reserves the right to operate competing businesses, even within your territory, without compensating you. This significantly limits your market share potential and creates a direct conflict of interest.
- The franchisor's broad reservation of rights to use alternative distribution channels (e.g., internet, catalog sales) further increases competition and potentially undermines the franchisee's local marketing efforts.
Potential Mitigations:
- Carefully evaluate the competitive landscape in your desired territory. Research the presence of existing roofing businesses, including other Bumble Roofing franchisees and corporate-owned locations.
- Thoroughly analyze the FDD's provisions regarding the franchisor's reserved rights and alternative distribution channels. Understand the potential impact on your business and seek clarification from the franchisor.
- Consult with a franchise attorney to fully understand the implications of a non-exclusive territory and the franchisor's competitive activities.
FDD Citations:
- Item 12: "You will not receive an exclusive territory."
- Item 12: "We reserve the right to own, franchise, or operate Roofing Businesses at any location outside of the Territory, regardless of the proximity to your Roofing Business."
- Item 12: "We reserve the right to use the Marks and the System to sell any products or services... through any alternate channels of distribution within or outside of the Territory."
Territory Modification and Household Limit Changes
High
Explanation:
- The franchisor reserves the right to modify your territory upon renewal of the franchise agreement, potentially reducing its size or requiring multiple agreements for the same area.
- The franchisor can change, modify, or delete the Household Limit at its sole discretion, impacting the potential customer base and requiring additional fees for exceeding the limit.
- The criteria for determining territory boundaries and household limits are vague and subject to the franchisor's discretion, creating uncertainty and potential for unfair adjustments.
Potential Mitigations:
- Negotiate for clearer and more specific territory boundaries in the franchise agreement.
- Seek legal advice on the enforceability of the Household Limit provisions and potential challenges to changes made by the franchisor.
- Request historical data on territory modifications and Household Limit adjustments to assess the franchisor's past practices.
FDD Citations:
- Item 12: "We reserve the right to modify your Territory at the time you execute a Successor Franchise Agreement..."
- Item 12: "We reserve the right to change, modify, or delete the Household Limit in our sole discretion."
- Item 12: "Your Territory is based on demographics and other characteristics..." (lack of specific criteria)
National Accounts Program
Medium
Explanation:
- The franchisor controls the National Accounts Program, including customer selection, contract negotiation, and franchisee compensation. This limits your control over potentially lucrative clients.
- You are required to refer National Account leads to the franchisor and cannot negotiate contracts directly, potentially reducing your earning potential.
- The franchisor can modify or terminate the National Accounts Program at any time, creating uncertainty and potential loss of income.
Potential Mitigations:
- Carefully review the terms and conditions of the National Accounts Program in the Operations Manual and seek clarification on any ambiguities.
- Assess the potential impact of the National Accounts Program on your revenue projections and business plan.
- Discuss with existing franchisees their experiences with the National Accounts Program and any associated challenges.
FDD Citations:
- Item 12: "We or our affiliates have the right to sell and enter into agreements with National Accounts..."
- Item 12: "You must participate in any national accounts program..."
- Item 12: "You understand that we will establish the rules under which you will participate, and be compensated for participation, in the National Accounts Program..."
Regulatory & Compliance Risks
3 risks identified
2
1
Inconsistent Discount Application and Enforcement
Medium
Explanation:
- The FDD outlines various discounts (existing Empower Brands franchisee, employee, VetFran). The combination and application rules, especially concerning clawbacks, appear complex and potentially inconsistently applied. This lack of clarity could lead to disputes and legal challenges.
- The FDD states the VetFran discount is the only one combinable with others, but doesn't explicitly address scenarios where a franchisee qualifies for multiple discounts besides VetFran (e.g., existing Empower Brands franchisee and employee discount). This ambiguity could create confusion and unfair application of discounts.
- The clawback clause related to maintaining 75% interest or transfer within the first 3 years applies only to VetFran and employee discounts. This inconsistency in applying clawbacks across different discount types could raise fairness concerns and potential legal challenges.
Potential Mitigations:
- Request clarification in writing from the franchisor regarding all possible discount combinations and their application, including specific examples. Ensure the franchisor confirms the absence of other discounts beyond those explicitly mentioned.
- Consult with a franchise attorney to review the discount and clawback provisions and assess potential risks and legal implications. Negotiate clearer and more consistent language in the Franchise Agreement regarding discount application and clawback triggers.
- If financial performance representations (FPRs) are provided (Item 19), analyze them carefully to understand how discounts are factored in and whether they create a realistic picture of potential earnings. If discounts are not adequately reflected, request adjusted FPRs.
FDD Citations:
- Item 3: Existing Franchisee, Discount for Employees of Franchisees, Combination and Application of Discounts sections.
- Item 1 (if applicable): Reference to Empower Brands affiliates.
- Item 19 (if applicable): Financial Performance Representations.
Employee Discount Program Dependence on Franchisee Recommendation
Medium
Explanation:
- The employee discount program requires a written recommendation from a franchisee. This creates a potential dependency and could lead to favoritism or bias in the selection process. Qualified employees might be overlooked if their franchisee, for whatever reason, chooses not to recommend them.
- This dependency could also discourage employees from raising concerns about franchisee practices for fear of jeopardizing their recommendation and potential discount.
Potential Mitigations:
- Inquire about the specific criteria used by franchisees to recommend employees for the discount program. Request written guidelines or policies from the franchisor regarding the recommendation process.
- Discuss with the franchisor the possibility of an alternative qualification path for employees that doesn't solely rely on franchisee recommendation, such as direct application and evaluation by the franchisor.
- Consult with a franchise attorney to assess the potential legal implications of the recommendation requirement and explore options for ensuring a fair and transparent selection process.
FDD Citations:
- Item 3: Discount for Employees of Franchisees section.
Compliance Requirement for Empower Brands Affiliate Discount
Low
Explanation:
- The discount for existing Empower Brands franchisees requires “full compliance” for at least two consecutive years. The FDD doesn't define “full compliance,” creating ambiguity. Minor infractions could potentially disqualify a franchisee from the discount.
Potential Mitigations:
- Request a clear, written definition of “full compliance” from the franchisor, including specific examples of what constitutes a breach. This should encompass all aspects of the franchise agreement, including operational, financial, and reporting requirements.
- Review Item 8 of the FDD (Restrictions on Sources of Products and Services) to understand any specific compliance requirements related to sourcing and vendor relationships, as these could impact eligibility for the discount.
FDD Citations:
- Item 3: Existing Franchisee section.
- Item 8: Restrictions on Sources of Products and Services (for related compliance requirements).
Franchisor Support Risks
3 risks identified
1
2
Lack of Transparency and Control over National Branding & Marketing Fund
High
Explanation:
- The franchisor has significant discretion over the National Branding & Marketing Fund, including how it's spent and whether to contribute their own funds.
- No independent audits are conducted, limiting franchisee oversight and potentially creating conflicts of interest.
- Franchisor can reimburse themselves and affiliates for various expenses from the fund, raising concerns about potential misuse.
- No guarantee that expenditures will directly benefit individual franchisees.
Potential Mitigations:
- Request a detailed accounting of the fund's usage and future plans.
- Negotiate for greater transparency and franchisee representation in fund management.
- Consult with a franchise attorney to understand your rights and options.
FDD Citations:
- Item 11: "We may reimburse ourselves...from the National Branding & Marketing Fund for administrative costs...and all other direct or indirect expenses..."
- Item 11: "Since we do not have this fund audited, audited financial statements are not available to Franchisees."
- Item 11: "We do not guarantee that advertising expenditures from the National Branding & Marketing Fund will benefit you or any other franchisee directly..."
Limited Marketing Control and Mandatory Supplier
Medium
Explanation:
- Franchisees are strongly encouraged to use designated suppliers for marketing materials, potentially limiting creativity and cost-effectiveness.
- Using other marketing materials requires prior written approval, which can be a cumbersome process.
- Franchisor has sole discretion over internet marketing, restricting franchisee online presence and potentially hindering local efforts.
Potential Mitigations:
- Clarify the approval process for using alternative marketing materials and negotiate for more flexibility.
- Request a list of approved suppliers and compare their pricing and quality.
- Discuss potential local marketing strategies with existing franchisees.
FDD Citations:
- Item 11: "You are strongly encouraged to order sales and marketing material from our designated supplier(s)."
- Item 11: "If you desire to use your own advertising materials, you must obtain our prior approval."
- Item 11: "We retain the sole right to market on the Internet..."
Uncapped Technology Costs and Mandatory Fees
Medium
Explanation:
- Franchisees are responsible for ongoing, potentially substantial costs related to computer system upgrades and maintenance.
- No contractual limitations on the frequency or cost of these upgrades.
- Mandatory monthly technology fee and software license fees add to the financial burden.
Potential Mitigations:
- Negotiate a cap on technology upgrade costs or a longer timeframe for implementation.
- Inquire about the frequency and average cost of past upgrades from existing franchisees.
- Explore alternative software options if permitted.
FDD Citations:
- Item 7 & Item 11: "You must update your Computer System, at your expense, as we may require periodically...There are no contractual limitations on the frequency and cost of your obligations..."
- Item 11: "In addition, you must pay us a monthly Technology Fee (currently $345 per month)..."
Exit & Transfer Risks
6 risks identified
2
3
1
Washington State Franchise Law Superseding Franchise Agreement
High
Explanation:
- The FDD states that Washington's Franchise Investment Protection Act (FIPA) may supersede the franchise agreement, particularly regarding termination and renewal. This creates uncertainty and potential vulnerability for franchisees outside of Washington, as differing state laws could lead to inconsistent application of the franchise agreement.
- Court decisions could also supersede the agreement, adding another layer of legal complexity and potential for variation in franchisee rights and obligations depending on location.
Potential Mitigations:
- Carefully review the Washington FIPA and compare it to your state's franchise laws to understand potential discrepancies and how they might affect your rights and obligations as a franchisee.
- Consult with a franchise attorney specializing in both Washington and your state's laws to assess the potential impact of these legal variations on your specific situation.
- Engage in open communication with the franchisor to clarify how they intend to navigate potential conflicts between the franchise agreement and varying state laws.
FDD Citations:
- Item 17, Washington Addendum: "RCW 19.100.180 may supersede the franchise agreement...including the areas of termination and renewal..."
- Item 17, Washington Addendum: "There may also be court decisions which may supersede the franchise agreement..."
Restrictions on Non-Compete and Employee Solicitation in Washington
High
Explanation:
- The FDD highlights Washington state law restrictions on non-compete clauses for employees and independent contractors earning below specific thresholds. This could limit the franchisor's ability to protect its intellectual property and business model, potentially impacting all franchisees if these restrictions are replicated in other states.
- Washington law also prohibits restrictions on franchisees soliciting employees from other franchisees or the franchisor. This could create a highly competitive environment within the franchise system and make it difficult to retain skilled employees.
Potential Mitigations:
- Inquire about the franchisor's strategies for protecting its intellectual property and trade secrets in Washington and other states with similar restrictions.
- Assess the potential impact of increased employee mobility on your franchise's operations and develop strategies for attracting and retaining talent in a competitive environment.
- Discuss with the franchisor how they plan to address potential conflicts or disputes arising from employee solicitation within the franchise system.
FDD Citations:
- Item 17, Washington Addendum: "Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable..."
- Item 17, Washington Addendum: "RCW 49.62.060 prohibits a franchisor from restricting...soliciting or hiring any employee..."
Reliance on Franchise Brokers
Medium
Explanation:
- The FDD mentions the use of franchise brokers, who are paid by the franchisor and therefore represent their interests. Relying solely on information from a broker could lead to a biased perspective and potentially overlook critical aspects of the franchise opportunity.
Potential Mitigations:
- Conduct independent research and due diligence, including speaking directly with current and former franchisees, to verify information provided by brokers.
- Consult with a franchise attorney to review the franchise agreement and other disclosure documents objectively.
FDD Citations:
- Item 17: "The franchisor [uses/may use] the services of franchise brokers...Do not rely only on the information provided by a franchise broker..."
Transfer Fee Limitations
Medium
Explanation:
- The FDD states that transfer fees are limited to the franchisor's reasonable costs. While this protects franchisees from excessive fees, it could also disincentivize the franchisor from actively assisting with transfers, potentially making it harder to sell your franchise in the future.
Potential Mitigations:
- Clarify with the franchisor their typical process and level of involvement in franchise resales, even within the cost limitations.
- Research the resale market for similar franchises to understand potential challenges and opportunities.
FDD Citations:
- Item 17, Washington Addendum: "Transfer fees are collectable to the extent that they reflect the franchisor’s reasonable estimated or actual costs..."
Choice of Law and Forum Selection (Washington Focus)
Medium
Explanation:
- The FDD specifies Washington as the likely forum for legal disputes for franchisees located there. This could be inconvenient and costly for franchisees in other states, potentially deterring them from pursuing legitimate claims.
Potential Mitigations:
- Consult with a franchise attorney to understand the implications of the forum selection clause and how it might affect your rights in case of a dispute.
- Negotiate with the franchisor to include a more neutral or mutually agreeable forum selection clause in your franchise agreement, if possible.
FDD Citations:
- Item 17, Washington Addendum: "In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington..."
Waiver of Claims Limitations
Low
Explanation:
- The FDD clarifies that franchisees cannot waive claims under state franchise laws, even if they sign documents suggesting otherwise. This is generally a positive provision, but it also highlights the potential for legal disputes and the importance of understanding your rights under applicable state laws.
Potential Mitigations:
- Review your state's franchise laws and the Washington FIPA to understand your protections and limitations regarding waivers.
- Consult with a franchise attorney to ensure you fully understand your rights and obligations before signing any agreements.
FDD Citations:
- Item 17, Washington Addendum: "No statement, questionnaire, or acknowledgment...shall have the effect of (i) waiving any claims under any applicable state franchise law..."
Operational & Brand Risks
3 risks identified
1
2
Lack of Transparency and Control over National Branding & Marketing Fund
High
Explanation:
- The franchisor has significant discretion over the National Branding & Marketing Fund, including how it's spent and whether to keep it in a separate account. There's a lack of independent auditing, limiting franchisee oversight.
- The franchisor can reimburse itself and affiliates for various expenses from the fund, potentially creating conflicts of interest.
- No guarantee that expenditures will directly benefit individual franchisees.
Potential Mitigations:
- Request a detailed annual accounting of the fund and compare it to other franchisees' experiences.
- Form a franchisee association to collectively negotiate for greater transparency and control over the fund.
- Consult with a franchise attorney to understand your rights and options regarding the fund.
FDD Citations:
- Item 11: "Unless required by law, we will not be required to deposit the National Branding & Marketing Fee in a separate bank account…"
- Item 11: "We may reimburse ourselves, our authorized representatives or our affiliates…"
- Item 11: "We do not guarantee that advertising expenditures… will benefit you… directly… or at all."
Mandatory Marketing Material Purchases and Restrictions
Medium
Explanation:
- Franchisees are strongly encouraged to purchase marketing materials from designated suppliers, potentially limiting flexibility and cost-effectiveness.
- Using other marketing materials requires prior written approval, which can be a cumbersome process and may be denied.
- This restriction could stifle creativity and responsiveness to local market conditions.
Potential Mitigations:
- Negotiate for flexibility in sourcing marketing materials during the franchise agreement process.
- Compare pricing and quality from designated suppliers with other vendors before making purchases.
- Document all marketing material requests and approvals to avoid disputes.
FDD Citations:
- Item 11: "You are strongly encouraged to order sales and marketing material from our designated supplier(s)."
- Item 11: "It is a material breach of the Franchise Agreement to use other marketing material without prior written approval."
Limited Local Marketing Control and Internet Marketing Restrictions
Medium
Explanation:
- The franchisor retains sole control over internet marketing, including website development and domain names.
- Franchisees cannot independently market online, potentially hindering their ability to reach local customers.
- This restriction could limit franchisees' ability to adapt to evolving online marketing trends.
Potential Mitigations:
- Clarify the franchisor's internet marketing strategy and how it will benefit individual franchisees.
- Negotiate for some level of local online marketing control, such as managing social media accounts.
- Ensure the franchisor's website adequately represents your local business and target market.
FDD Citations:
- Item 11: "We retain the sole right to market on the Internet…"
- Item 11: "You may not independently market on the Internet…"
Performance & ROI Risks
3 risks identified
2
1
Lack of Financial Performance Representations
High
Explanation:
- Item 19 explicitly states no financial performance representations are provided. This makes it difficult to assess potential profitability and ROI.
- The absence of financial benchmarks increases the uncertainty of achieving desired returns.
- Without historical data or projections, franchisees are left to rely solely on their own market research and assumptions.
Potential Mitigations:
- Conduct thorough independent market research in your target territory. Analyze local competition, demand for roofing services, and pricing.
- Develop realistic financial projections based on your market research and operating expenses. Consult with a financial advisor to assess feasibility.
- Request written substantiation for any claims made by the franchisor regarding market potential or growth opportunities (as mentioned in Item 19).
FDD Citations:
- Item 19: "We do not make any representations about a franchisee’s future financial performance or the past financial performance of affiliate-owned or franchised outlets."
- Item 20: Provides unit growth and status information, but no financial data.
Limited Operating History
High
Explanation:
- Bumble Roofing was founded in 2019 and only began franchising in 2024 (Item 20). This limited history provides little insight into the long-term viability of the franchise model.
- The lack of a proven track record increases the risk of unforeseen challenges and operational inefficiencies.
- The rapid expansion of 55 franchises in 2024 (Item 20, Table 3) could strain support resources and impact franchisee success.
Potential Mitigations:
- Thoroughly investigate the franchisor's background and experience in the roofing industry.
- Speak with existing franchisees about their experiences, challenges, and support received from the franchisor.
- Carefully review the FDD for any disclosures related to litigation, bankruptcy, or other financial difficulties.
FDD Citations:
- Item 20, Table 1: Shows zero franchised units until 2024.
- Item 20, Table 3: Indicates rapid growth of 55 franchised units in 2024.
Rapid Expansion
Medium
Explanation:
- The rapid growth of 55 franchises in a single year (Item 20, Table 3) could lead to market saturation and increased competition among franchisees.
- Rapid expansion may also strain the franchisor's resources and ability to provide adequate training and support.
Potential Mitigations:
- Carefully evaluate the market potential in your designated territory and assess the potential impact of new franchisees entering the market.
- Inquire about the franchisor's plans for managing growth and ensuring adequate support for all franchisees.
- Negotiate a protected territory or other provisions in the franchise agreement to mitigate the impact of competition.
FDD Citations:
- Item 20, Table 3: Shows 55 new franchised units in 2024.
- Item 20, Table 5: Projects 55 new franchised outlets in the next fiscal year.
FDD Documents by Year
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FDD Year: 2025
Uploaded: 8/8/2025
FDD Documents
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