1-800 Water Damage Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$220,803 - $315,448
Franchise Fee
$27,900
Total US Locations
175
Business Summary
1-800 WATER DAMAGE operates businesses that provide water damage restoration, mold remediation, odor removal, and fire/smoke-related cleaning and restoration services. With proper licensing and approval, 1-800 WATER DAMAGE businesses may also offer reconstruction services such as drywall, flooring, painting, and structural repairs. The business model utilizes proprietary methods and operating systems.
Corporate History
1-800 WATER DAMAGE International, LLC was formed as a Delaware Limited Liability Company on April 16, 2015, and operates under the 1-800 WATER DAMAGE name. The company's primary business is franchising. Its predecessor, LLB Group, Inc., initially offered and sold 1-800 WATER DAMAGE franchises from 2002 to 2013. In May 2015, 1-800 WATER DAMAGE International, LLC acquired key assets, including the brand marks and business system, from LLB Group, Inc. and officially began offering franchises on October 15, 2015.
Financial Overview
Investment Range
$220,803 - $315,448
Franchise Fee (Low)
$27,900
Franchise Fee (High)
$84,500
Royalty %
10%
Marketing %
2%
Equipment Costs (Low)
$134,900
Equipment Costs (High)
$179,075
Working Capital
$20,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
1-800 WATER DAMAGE's financial condition, as reflected in its financial statements, raises questions about its ability to provide services and support to franchisees. The company's affiliate, BFG Holdco, Inc., which guarantees 1-800 WATER DAMAGE's obligations, has reported significant consolidated net losses for the years 2022, 2023, and 2024, including substantial goodwill impairment losses in 2023 and 2024. Additionally, management itself has identified conditions or events that raise substantial doubt about BFG Holdco, Inc.'s ability to continue as a going concern.
Financing Details
1-800 WATER DAMAGE may offer financing for a portion of the Initial Franchise Fee to qualified Standard, Related, or Expansion Franchisees, requiring a minimum 50% down payment. For Conversion Franchisees, the minimum down payment is 25%. The financing comes with a 9% interest rate and a term of up to 36 months, secured by a personal guaranty from the franchisee and their spouse. 1-800 WATER DAMAGE also provides assistance in facilitating SBA loans.
Performance Metrics
Total US Locations
175
Franchised Units
175
Corporate Units
0
Avg Square Footage
1,350
Franchising Since
2002
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
3
Litigation Summary
1-800 WATER DAMAGE's predecessor, LLB Group, Inc., had two concluded litigation matters. In 2006, it settled with the California Corporations Commissioner for selling unregistered franchises and for disclosure document deficiencies between 2002-2004. In 2006, it also settled with New York for similar disclosure issues in 2003, offering rescission to a franchisee (who declined) and paying a small fine. Currently, 1-800 WATER DAMAGE has one pending lawsuit filed in January 2024 against a former franchisee for breach of contract, unjust enrichment, and trademark infringement, alleging the former franchisee is operating a competing business using 1-800 WATER DAMAGE business profiles after termination. This litigation is ongoing.
Bankruptcy History
1-800 WATER DAMAGE has no bankruptcy history to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their 1-800 WATER DAMAGE franchise agreement, franchisees must be in substantial compliance with their existing agreement and not have a history of repeated defaults. They need to provide notice of their intent to renew within the specified timeframe and sign 1-800 WATER DAMAGE's then-current franchise agreement, which might have different terms. Franchisees are also required to upgrade and remodel their business as needed, meet the current net worth and financial qualifications for new franchisees, and achieve the minimum gross sales requirements for a business in its 11th year of operation. Additionally, they must sign a general release and pay a renewal fee.
Training & Support Program
Franchisor Assistance
1-800 WATER DAMAGE provides extensive assistance to its franchisees. Before opening, it designates the territory, supplies an Initial Package including equipment and marketing materials, loans operations manuals, and approves business stationery and advertising. It also specifies insurance limits and offers the initial Business Manager and Technical Operations Training. After opening, 1-800 WATER DAMAGE continues to support franchisees by introducing new products, services, and methods, formulating marketing and advertising programs through the Brand Marketing Fund, and offering general business and marketing advice. It provides support for the WATER DAMAGE Software, assists with financial and daily operations, maintains a 24-hour call-in center to distribute leads, and updates operations manuals. Additionally, 1-800 WATER DAMAGE offers periodic refresher training courses and conferences up to once per year.
Initial Training Hours
151
Training Location
Ann Arbor, MI or virtual
Ongoing Support
After opening, 1-800 WATER DAMAGE provides ongoing support including new product development, marketing and advertising program implementation (including the Brand Marketing Fund), and general business and marketing advice. The franchisor also offers support for its proprietary WATER DAMAGE Software, guidance on financial and daily operations, and maintains a 24-hour call-in center to distribute leads. Additionally, 1-800 WATER DAMAGE provides periodic updates to the Operations Manuals and offers refresher training courses and conferences up to once per year.
Franchise Requirements
Ideal Candidate Profile
1-800 WATER DAMAGE seeks qualified individuals who are dedicated, hands-on operators, available 24/7 due to the emergency nature of the business. The ideal candidate should be willing to devote full-time personal best efforts to managing, promoting, and enhancing the 1-800 WATER DAMAGE Business and must not engage in any other conflicting business or activity, or have an interest in a competitor. For those interested in offering Reconstruction Services, prior construction experience is beneficial, and they must be able to meet minimum standards and complete necessary training. The candidate must possess the qualifications required to perform water damage restoration, mold remediation, odor removal, fire, smoke, and related cleaning and remediation services, and potentially reconstruction.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
full-time
Territory Type
Non-Exclusive
Territory Size Requirements
1-800 WATER DAMAGE territories generally consist of 350,000 people, defined using political boundaries like county, city, or ZIP code boundaries. Each territory has a maximum population of 500,000 people, and the size is determined using data from a national demographics company like GbBIS.
Staffing Notes
1-800 WATER DAMAGE businesses are required to employ at least one full-time experienced Service Technician to perform and oversee Remediation Services, who must be trained to the franchisor's specifications. If the owner works hands-on, they can work alongside the technician; otherwise, a certified crew leader and a technician are typically employed. All Service Technicians, sales, and account management employees must sign non-disclosure and confidentiality agreements. The business must also employ a sufficient number of qualified personnel for operations and customer service.