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FDD Talk 2017: What You Need to Know About the Junk King Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on June 29, 2017

in FDD Talk 2017: Service Franchises, Franchise Earnings, Hauling Franchise

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In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Junk King franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Junk King franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Junk King franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Junk King’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 gross hauling revenue (lowest, second lowest, first quartile, median, third quartile, second highest, and maximum) for year 1, year 2, year 3, year 4, and year 5 Junk King franchised outlets
  • actual 2005 to 2016 annual gross sales for an affiliate-owned Junk King business operating in San Mateo county, California since 2005
  • 2016 income and costs per job (specifically, average revenue per job, gross profit margin, gas, labor, dump fees, royalty, call center expenses, overhead for a single truck operation, rent, truck, auto insurance, liability insurance, and advertising) that a franchisee can expect to obtain, based on actual system wide data

Section I – Background Information

14 Things You Need to Know About the Junk King Franchise

New Junk King Locations

1.  In early April, Justin Oakley opened a new Junk King franchise in Temecula, California that will service Temecula, Murrieta, Lake Elsinore, Hemet, and the entire Southern Inland Empire, California area. Oakley will be managing the location’s daily operations.

2.  According to Oakley, the demand for high quality junk removal services continues to grow and he is confident that he and his team will make a difference in the cities and neighborhoods in the Temecula area. Michael Andreacchi, CEO and co-founder of Junk King Franchise Systems, says he has no doubt that Oakley will be successful as Oakley has the passion and experience to expand the Junk King brand into the new territory.

3.  At the end of May, entrepreneurs Kevin Schultz and Joe Howard III opened a Junk King franchise in Grand Rapids, Michigan, which is the first Junk King location in the West Michigan area – there are two other Junk King locations in Michigan (one in Detroit and the other in Ann Arbor).

4.  Schultz and Howard were drawn to the company’s business model of recycling, reusing, and repurposing 60 to 70 percent of the materials collected. According to Schultz and Howard, a Grand Rapids non-profit is already using the appliances and furniture that they have collected to create new opportunities for families who are trying to get back on their feet.

Franchisees Give Back to Their Local Community

5.  Julius and Jacqueline McQueen, Junk King franchisees in Fishers, Indiana, announced at the beginning of the year that they were planning on launching an initiative called Fill the Truck later this year as a way to help their local community.

6.  Since opening their Junk King franchise about a year ago, the McQueens have participated in various giving-back campaigns around Hamilton County such as helping Sotheby’s Real Estate collect items to give to fire victims, and donating recycled items to Goodwill, the Salvation Army, Habitat for Humanity, and the Julian Center.

7.  According to the McQueens, they will use their Fill the Truck initiative to ask donations from local businesses. They will then take their truck to these local businesses to fill with items and then distribute the items collected to homeless people, people with low income, or people in the Hamilton County community who need them.

8.  The McQueens hope to collect nonperishable food items, clothing, and some furniture. The Fill the Truck campaign is expected to launch around the 2017 holiday season.

Eco-Friendly Business Model

9.  Junk King stands out from the competition because of its commitment to being the greenest junk removal company. According to Junk King, the company was a pioneer in recycling-based junk removal when it started in 2005.

10.  Junk King takes the time to sort through the items collected at each job and look for metals, e-waste, paper, household goods, textiles, furniture, and appliances at its recycling warehouses. In addition to sorting the items, Junk King donates, recycles, and repurposes up to 70 percent of what the franchises collect.

11.  Junk King also stays eco-friendly by running its trucks on biodiesel, a domestically-produced fuel made from more environmentally-safe, non-petroleum, renewable resources.

Company History

12.  Junk King was founded in 2005 by childhood friends Mike Andreacchi and Brian Reardon in San Carlos, California. Andreacchi got the idea of opening his own junk removal business after working at his previous job with 1-800-GOT-JUNK?

13.  After finding success in the California Peninsula and the San Francisco Bay Area, Andreacchi and Reardon started franchising Junk King in 2010. Junk King now also franchises in Canada under the name Junk Works. As of April 2017, Junk King and Junk Works have over 75 locations (combined) in the U.S. and Canada.

Entrepreneur’s Franchise 500

14.  Although Junk King has been franchising since 2010, the company has yet to appear on Entrepreneur’s annual Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Junk King franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Junk King’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

  • The franchisor provides here three financial performance representations:

Part 1 – Franchised Outlets Gross Hauling Revenues

  • Below the franchisor sets forth Financial Performance Representations (“FPR”) in quartiles, of Gross Hauling Revenues, of franchisee outlet performance for outlet performance in the 2016 calendar year, of franchisees who operated a full year in 2016, based on the age of the outlet in 2016.
  • In 2016, Junk King had 71 outlets. Of those, 63 operated a full year in 2016. 11 were year 1 outlets, 6 were year 2 outlets, 10 were year 3 outlets, 6 were year 4 outlets, and 10 were year 5 outlets.
  • The data below is comprised of units who were open between 2010 through 2016. Shown are the individual unit’s gross hauling revenues only in each year of being open, with the exception of any outlet who has not completed a complete year (for any of the below intervals) or who has ever transferred ownership.
  • The Gross Hauling Revenues in the table below are overall hauling sales and do not include recycling or resale income and are not adjusted for cost of goods sold, operating expenses, royalties, or other costs or expenses that must be deducted from the gross sales to obtain net income or profit.
  • The actual numbers you experience will vary depending upon several factors, including your individual abilities, competition, management, market demographics, and the number of trucks you operate in the territory.
  • Some outlets have earned this. Your individual results may differ. There is no assurance you will earn as much.

Year 1 Gross Hauling Revenues

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