Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of 1-800-Got-Junk? Franchise Costs (2015 FDD)

by Franchise Chatter on June 26, 2014

in Franchise Costs, Hauling Franchise

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1-800-Got-Junk? Photo by Photo Nut 2011

This post was updated on August 9, 2015 to reflect information from 1-800-Got-Junk?’s 2015 FDD (Item 7).

Detailed Estimates of 1-800-Got-Junk? Franchise Costs Based on Item 7 (Estimated Initial Investment) of 1-800-Got-Junk’s 2015 Franchise Disclosure Document

For a Franchisee with 4 Subterritories (which is the typical-sized new territory 1-800-Got-Junk? offers)

1.  Initial Franchise Fee:  $45,000

  • This figure includes the Subterritory Initial Fee of $18,000 for the first Subterritory, plus $9,000 for each of the three additional Subterritories.

2.  Initial Marketing Fee:  $12,000

  • The Initial Marketing Fee will be used by 1-800-Got-Junk? in its discretion to market and promote the Franchised Business prior to and/or during the first 6 months of operation.

3.  Computer Hardware and Software:  $1,500 to $3,000

  • You must obtain computer, telephone, and other related equipment that meet 1-800-Got-Junk’s specifications. These amounts represent the estimated cost to purchase this equipment.

4.  Miscellaneous Opening Costs:  $5,000 to $10,000

  • This estimates your initial miscellaneous start-up expenses, including your initial truck-based marketing kit, yellow page and/or Universal Business Listing ads, uniforms, truck equipment, deposits, business licenses, and legal expenses.
  • Your expenses may vary substantially, upward or downward, depending upon the nature of your existing operations, whether you currently own computers and telephone equipment, and whether you currently have an office.
  • You will also have to pay to join 1-800-Got-Junk’s health and safety program, and fuel and maintenance costs for your trucks. These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses in starting your business.

5.  Equipment (vehicle lease with dump box):  $0 to $10,000 (lease/purchase deposit)

  • Total truck cost is estimated at $47,500 per gasoline-powered truck and $59,000 per diesel-powered truck. The above figure assumes that the truck is leased or financed and does not include applicable taxes or shipping for the truck box.
  • You must obtain a truck equipped with a dump box from 1-800-Got-Junk’s supplier. Truck cost is estimated and will vary depending upon market prices. You are encouraged to check with your local auto dealership.
  • The franchisor requires a minimum of two trucks but you may require more if you have multiple subterritories.  If you have multiple subterritories, the franchisor recommends that you commence operating all vehicles as soon as reasonably possible; however, you are only required to purchase or lease two trucks upon start-up, and purchase or lease further trucks according to a schedule after start-up to which the franchisor agrees.

6.  Real Estate/Rent:  $1,200

  • You must secure administrative office space for your franchise at the commencement of operations. You must maintain sufficient space to operate computer and telephone equipment and maintain records. 1-800-Got-Junk? estimates that you will need a minimum of 300 to 400 square feet.
  • The above estimate is based upon rental payments of $400 per month, with payment of first and last month’s rent and a damage deposit equal to one month’s rent at the beginning of the lease.

7.  Local Marketing (3 months):  $3,600

  • You are required to expend 6% of Gross Revenue on local advertising, but in any event no less than $3,600 per quarter on local advertising during your first year of operations.
  • A significant amount of working capital may be allocated to additional marketing during the start-up phase of the business. The prices for these items will vary depending upon your location and on market prices.

8.  Insurance:  $800

  • This is an estimate for insurance on your trucks and equipment, public liability, workers’ compensation, and property insurance for your franchise. Note that workers’ compensation insurance varies widely throughout the United States  and may differ substantially from 1-800-Got-Junk’s estimate of $800 per month.

9.  Training Expenses:  $1,500 to $3,000

  • The training expenses are incurred by you for your travel, accommodations, and meals while training at 1-800-Got-Junk’s training facility. Per person expected costs are based upon a 4-day estimated stay, with accommodations from $100 to $200 per night; one meal per day (the franchisor provides breakfast and lunch during training); air transportation at $500 to $1,000 per person; and local transportation at $10 to $25 per day.
  • The franchisor will train you and one additional employee at no charge to you; however, you must pay for all related training expenses as outlined.

10.  Additional Funds (6 months):  $56,200 to $70,000

  • This estimates your initial operating expenses, including working capital and marketing fees, during the initial start-up months.

11.  Total:  $126,800 to $158,600

  • 1-800-Got-Junk? relied on its experience in the business in the United States to compile these estimates. These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses in starting your business.
  • The purchase and lease of items from approved suppliers or that meet the franchisor’s specifications represent approximately 10% to 25% of your total expenses in connection with the establishment of the Franchised Business, and approximately 50% to 60% of your total expenses in connection with the ongoing operation of the Franchised Business.

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