Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Junk King Franchise Costs (2017 FDD)

by Franchise Chatter on March 15, 2014

in Franchise Costs, Hauling Franchise

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Junk King

This post was updated on June 25, 2017 to reflect information from Junk King’s 2017 FDD (Item 7).

Detailed Estimates of Junk King Franchise Costs Based on Item 7 (Estimated Initial Investment) of Junk King’s 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $30,000 to $100,000

  • The franchise fee is 10 cents per person living in the territory. Junk King set forth an Initial Franchise Fee in the chart based on the purchase of a territory with 300,000 to 1,000,000 persons.

2.  Local Advertising:  $4,500 to $7,500

  • For the first three years after the opening date of your franchise, franchisee shall expend monthly on local (in the vicinity of the franchised location) advertising and promotions a minimum of 10% of the average gross revenue per month during the immediately preceding calendar quarter, but not less than $2,500 per month, or $1,500 per month for a Small Market Territory.
  • “Small Market Territory” means any Territory that has a population less than 500,000, or as specifically designated by the franchisor.
  • For the chart, the franchisor used $1,500 to $2,500 per month for the first three months. These are the minimum amounts required.
  • Over a period of six to nine months from launch date, the franchisor encourages each franchise to invest a launch marketing budget equal to 3 cents multiplied by the total population to develop their brand and marketing activities within the Territory. The launch marketing budget is a guideline based on the franchisor’s experience but is not required.

3.  Travel and Living Expenses While Training:  $1,500 to $3,500

  • Travel and living expenses to attend initial training will vary significantly depending upon the distance you travel to attend initial training, whether you travel at peak or off season, which day of the week you travel, the amount of advance time before booking, the grade or level of lodging that you choose, and grade of restaurants at which you predominantly choose to eat.
  • The franchisor provides estimated dollar figures based upon one person attending initial training. The franchisor allows you to bring up to four employees.

4.  Inventory and Supplies:  $500 to $1,000

  • You will need uniforms and standard office supplies.

5.  Fixtures, Furniture, and Equipment:  $2,000 to $3,000

  • Unless you have these items already, you will need a computer with internet access, software, antivirus protection, printer, email, telephone, scanner, desk, chairs, file cabinet, tools, trash cans, recycling bins, cell phones, GPS, and truck equipment.
  • Further, you must maintain a dedicated telephone number for use as a franchisee. Further, the franchisor reserves the right to specify your purchase and use of reasonable software for operation of the franchise.

6.  Signs:  $1,000 to $2,000

7.  Vehicles:  $10,000 to $15,000

  • You will need to purchase or lease a Mitsubishi or Isuzu truck equipped with a custom made 18 cubic yard box on the back. The above figures are based upon your making a down payment on a truck and paying the balance over time.
  • If you choose to pay cash, or if you are unable to obtain financing, the cash price of the truck will be approximately $70,000 to $75,000.

8.  Leases and Rentals:  $4,500 to $6,000

  • You must secure administrative office space and space for recycling. You must maintain sufficient space to operate computer and telephone equipment, maintain records, and provide a processing area for material that will be recycled.
  • The franchisor estimates that you will need approximately 900 to 1,200 square feet of space.

9.  Leasehold Improvements:  $1,000 to $6,000

  • If you build out or refurbish your office space, you may incur expense for this work.

10.  Prepaid Expenses/Insurance:  $200 to $400

11.  Payroll:  $9,000 to $24,000

  • You will typically need a minimum of one full-time and one part-time employee to start this business, one Driver and one Navigator.
  • Wage rates vary by geographic area and nature of job position.

12.  Minimum Capital:  $12,500 to $25,000

  • You must maintain sufficient capital to operate the business and which amount Junk King may determine from time to time, provided it shall not determine such amount to be less than $25,000 per 1.5 million persons in the Territory or $12,500 for a Small Market Territory.
  • For this purpose, capital shall be calculated as the aggregate amount of cash in share capital and shareholders’ loans maintained by a corporate franchisee, or cash contributed to the franchised business in the case of a personal franchisee.

13.  Additional Funds:  $3,000 to $4,500

  • Additional funds are to pay local license and other government fees, miscellaneous supplies, utility costs, professional expenses, and similar items.

14.  Total:  $79,700 to $197,900

  • These figures do not include Royalty or Customer Care Center Fund fees.
  • These figures are estimates of your initial expenses covering your initial three months of operation. Additional funds will be required to finance operations until a positive cash flow is produced. Do not construe these estimates as a break even point.
  • The franchisor relied on its eight years of experience in the business to compile these estimates.

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