If you are considering a College Hunks Hauling Junk franchise, don’t get blindsided by these 30 important franchise fees (from the initial franchise fee, to the royalty fee, to 28 other fees found in Items 5 and 6 of College Hunks Hauling Junk’s 2018 FDD).
1. Initial Franchise Fee: $35,000 to $50,000
- When you sign the Franchise Agreement for either a College Hunks Hauling Junk franchise or a College Hunks Moving franchise, you must pay to the franchisor an initial franchise fee of $40,000 for a standard Zone.
- A standard Zone includes a range of anywhere from 300,000 to 400,000 in population.
- If you purchase a College Hunks Hauling Junk franchise and a College Hunks Moving franchise concurrently, the initial franchise fee is $50,000 for a standard Zone.
- If you are a qualified U.S. veteran, the franchisor will discount the initial franchise fee by $5,000. A qualified U.S. veteran must have at least a 51% interest in the Franchised Business at all times.
2. Continuing Royalty Fee: 7% of Gross Sales
- Due Date: Payable on the 3rd and 18th days of each month by electronic funds transfer.
- This amount is due on all Gross Sales for Services within your Designated Territory.
- The franchisor charges a 7% Continuing Royalty Fee for Gross Sales outside your Designated Territory (the “Outside Gross Sales”).
- However, if your Outside Gross Sales are more than 30% of the total Gross Sales of your Franchised Business, you must either purchase the additional Zone or the franchisor may charge you an additional 5% Continuing Royalty Fee on the Outside Gross Sales in addition to your other fees including the standard 7% Continuing Royalty Fee.
- You may not provide Services outside the Designated Territory without the franchisor’s prior written consent. You must stop providing Services outside the Designated Territory immediately upon receipt of notice from the franchisor to stop.
3. Minimum Annual Royalty – Moving Only / Junk & Moving: $6,000 per Zone during 1st year of operations; $7,200 per Zone during 2nd year of operations; $9,600 per Zone during 3rd year of operations; $12,000 per Zone during 4th year of operations; and $14,400 per Zone during each subsequent year of operations
- The amount payable by you is the amount by which the Minimum Annual Royalty exceeds the total Continuing Royalty Fees actually paid by you during that year of operations.
- Due Date: Within 15 days of each anniversary of the date the business commences operations.
- This is only payable if the total Continuing Royalty Fees paid by you in any year of operations are less than the total Minimum Annual Royalty for that year.
4. Minimum Annual Royalty – Junk Only: $4,500 per Zone during 1st year of operations; $5,400 per Zone during 2nd year of operations; $7,200 per Zone during 3rd year of operations; $9,000 per Zone during 4th year of operations; and $10,800 per Zone during each subsequent year of operations
- The amount payable by you is the amount by which the Minimum Annual Royalty exceeds the total Continuing Royalty Fees actually paid by you during that year of operations.
- Due Date: Within 15 days of each anniversary of the date the business commences operations.
- This is only payable if the Total Continuing Royalty Fees paid by you in any year of operations are less than the total Minimum Annual Royalty for that year.
5. SLC Support Fee: $799 per month for junk-only franchises which includes software, service, and support. $945 per month for moving only or junk and moving franchises which includes software, service, and support.
- Due Date: Payable at the same time and in the same manner as the Continuing Royalty Fee.
- This fee compensates the franchisor for administering the SLC (including staffing and equipment purchases), software license and upgrades, and maintenance fees for the franchisor’s intranet.
- There is no SLC Fee for the first 6 months unless the franchise results from a transfer or renewal.
6. SLC Appointment Fee: $19 per scheduled appointment by the SLC
- Due Date: Payable at the same time and in the same manner as the Continuing Royalty.
- You will not be required to pay this fee for self-generated sales, self-booked sales, online bookings, or jobs that cancel prior to the day of the scheduled appointment.
7. Brand Development Fee: 2% of Gross Sales
- Due Date: Payable at the same time and in the same manner as the Continuing Royalty Fee.
8. Local Advertising: if you have a moving business, you must spend the greater of $1,500 or 8% of Gross Sales each month on local advertising. If you have a junk hauling business, you must spend the greater of $1,100 or 8% of Gross Sales each month on local advertising.
- The required minimum local advertising expenditures described above is in addition to marketing collateral and supplies.
- Due Date: To be spent each month.
- Payable to local advertising suppliers.
- The franchisor must approve all local advertising before its use.
9. E-mail Account: the franchisor currently does not charge for the first 3 e-mail addresses, but you must pay $8 per month for each additional e-mail address/account
- Due Date: As invoiced.
10. CHC Bookkeeping Program: $150 per month to $950 per month depending on your monthly revenue. If you ask the franchisor to provide Accounting Services outside the scope of its typical Accounting Services, it may charge you $20 per hour.
- Due Date: 10 days after invoice.
- Generally, this program is optional, but the franchisor may require you to participate if you fail to provide any financial information the franchisor requires.
11. Transfer Fee (Franchise Agreement): $15,000
- Due Date: Upon transfer.
- No fee is imposed for transfers to an entity formed by you for the convenience of ownership.
- Fees are paid by either you or the buyer and will apply to each Franchise Agreement that is transferred or assigned to an approved third party.
12. Renewal Fee: $5,000
- Due Date: At time of renewal.
13. Late Renewal Fee: $50 per day
- Due Date: As incurred.
- If you sign the Renewal Franchise Agreement after the Franchise Agreement expires, you must pay the franchisor $50 per day for every day that your Franchised Business operates without a Renewal Franchise Agreement.
14. Non-Compliance Fee: infraction fee up to $2,000 per infraction
- Due Date: On demand, after written warning for non-compliance occurs.
- If there are 3 or more infractions in any 12-month period (whether or not such infractions are cured after notice), the franchisor may terminate your Franchise Agreement.
15. Late Reporting Fee: $150 per late report; increases to $250 for any consecutive violation(s)
- Due Date: On demand.
- For any reports that are not provided to the franchisor within 3 business days of their due date.
16. Initial Training and Additional Personnel Training: no fee for the first 2 people who attend Initial Training ($500 per person after the first 2). A per person fee will be determined by the franchisor for Additional Personnel Training and depends on the instructor’s fee, travel, lodging, meals, and any instructional materials associated with the training topic.
- Due Date: 15 days prior to training.
- You are responsible for all travel, meals, lodging, and wages for your trainees.
17. Refresher Training Program/Continuing Education: $500
- Due Date: As incurred.
- The franchisor has the option of providing refresher training or other training programs, which can last up to 5 days, but can be on-line or in class, as the franchisor determines.
18. Enrichment Training: $500 per person
- Due Date: On demand.
- You must pay all expenses you incur related to enrichment training if the franchisor requires you to participate because your Franchised Business is not performing satisfactorily, including all travel, meals, lodging, and wages for you and your trainees.
19. Liquidated Damages: your average monthly royalties during 12 months prior to termination, times the greater of (a) 24 or (b) the number of months remaining in the term at the time of termination
- Due Date: 15 days after termination.
- This only applies if the franchisor terminates your Franchise Agreement for cause prior to its expiration.
20. Supplier Testing: the franchisor’s costs to evaluate the proposed supplier
- Due Date: On demand.
- If you request that the franchisor approve a supplier or product, you must reimburse it for its costs in evaluating the supplier or product.
21. Service Vehicle Replacement: as incurred
- Due Date: As negotiated.
- The franchisor may require you to replace your service vehicle if an existing vehicle is no longer in good condition (including paint and graphics and working condition). The franchisor will not make this request more frequently than every 7 years.
- Payable to vehicle suppliers and/or finance companies.
22. Insurance: reimbursement of the franchisor’s costs
- Due Date: On demand.
- If you do not obtain the required insurance, the franchisor may (but is not required to) obtain insurance on you behalf.
23. Management Fee: $3,000 per month, plus expenses
- Due Date: As incurred.
- If the franchisor has to step in and operate your Franchised Business for you in certain circumstances due to your failure to operate in accordance with its standards, you must pay the franchisor’s management fee and reimburse its expenses.
24. Additional Principal: $2,500
- Due Date: If incurred.
- If you request that the franchisor modify the Franchise Agreement to include an additional person as either a franchisee or a franchisee’s principal.
25. Violation of Non-Competition Covenant: $1,000
- Due Date: On demand.
- If you violate any of the non-competition covenant.
26. Mystery Shopper Program: $200 per shop
- Due Date: On demand.
- Payable by you if the franchisor determines your Franchised Business has received a significant amount of negative feedback.
- This is in addition to enrichment training.
27. Penalty Fee for Sales in Another Franchisee’s Designated Territory: amount equal to 20% of job revenue for 1st violation, 50% of job revenue for 2nd violation, and 100% of job revenue for 3rd violation
- Due Date: On demand.
- If you perform services in a designated territory granted to another franchisee (or reserved for the franchisor or its affiliate), you must pay a penalty fee equal to a percentage of the job revenue for each violation.
- Repeated violations may result in termination of your Franchise Agreement.
28. National Account Commission: varies on a case-by-case basis, depending on the size of the National Account and the scope of services that the franchisor provides in managing or servicing the National Account or the National Accounts program
- Due Date: As incurred.
- If you participate in the franchisor’s National Accounts Program, the franchisor may charge you a commission or other fee, in addition to the Continuing Royalty Fee, for securing and/or servicing any National or Regional Account(s) and/or administering the National Accounts program.
29. Temporary Zip Codes Leasing Fee: $50 per month
- Due Date: As incurred.
- Payable if you and the franchisor agree that you are permitted to service clients in zip code(s) outside of your designated territory.
30. Resale Assistance Program: 3%-8% of the purchase price of the Franchised Business
- Due Date: As incurred.
- This fee is only due if you request the franchisor’s assistance in the resale of your Franchised Business.
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