FDD Talk 2018: College Hunks Hauling Junk & Moving Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the College Hunks Hauling Junk & Moving franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a College Hunks Hauling Junk & Moving franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a College Hunks Hauling Junk & Moving franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned College Hunks Hauling Junk & Moving outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of College Hunks Hauling Junk & Moving’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average gross sales, royalty costs, disposal costs, truck labor costs, truck fuel costs, maintenance costs, credit card fees, moving supply cost, total cost of service, gross profit, marketing expense, office staff costs, rent and utilities expense, other expenses (insurance, etc.), total general and administrative expenses, and EBITDA for the 51 franchised and 2 affiliate-owned outlets that responded to a survey or are a part of the franchisor’s bookkeeping program, and were in operation for at least 12 full months as of December 31, 2017

• 2017 average gross revenues, junk revenues, moving revenues, other revenue (labor, scrap, supply, valuation), job size (junk removal, moving, and overall), number of completed jobs per day, number of unique leads per day, lead conversion to sale %, completion %, cost per lead, marketing expense, and number of leads for the 51 franchised outlets, 4 junk removal only franchised outlets, and 47 junk removal and moving franchised outlets that responded to a survey or are a part of the franchisor’s bookkeeping program, and were in operation for at least 12 full months as of December 31, 2017

• 2017 average gross sales for the 51 franchised outlets that responded to a survey or are a part of the franchisor’s bookkeeping program, and were in operation for at least 12 full months as of December 31, 2017, based on the number of years in operation as of December 31, 2017 (1st full calendar year, 2nd full calendar year, 3rd full calendar year, 4th full calendar year, and >4th full calendar year)

• average monthly income of franchise locations in operation for less than 24 months as of December 31, 2017 (1st month, 6th month, 12th month, and 20th month)

Section I – Background Information

13 Things You Need to Know About the College Hunks Hauling Junk & Moving Franchise

Forms New Board of Advisors

1.  In order to help College Hunks Hauling Junk & Moving pursue its goal of becoming the best franchise investment in the moving and junk hauling industries, the company announced that it had formed a new board of advisors at the beginning of 2018. The new board members hail from various industries including logistics, franchising, finance, and technology. The executives bring over 200 years of combined experience leading businesses valued over multiple billions of dollars, as well as business growth strategies to provide insight and guidance to College Hunks management throughout the development and execution of an aggressive long-range strategic plan.

2.  Nick Friedman, co-founder and president of College Hunks, said, “With this new Advisory Board, our leadership team will benefit from mentorship, guidance, and strategic input that will help us achieve our long-term vision of becoming an iconic brand.” The company appointed the following five distinguished business executives to the board:

• Bobby Harris, founder of BlueGrace Logistics, a $500 million+ 3rd-party logistics technology company;

• Amit Pamecha, founder of FranConnect, the largest software service provider of the franchise industry; partner, Premier Franchise Advisors, LLC;

• Tom Coba, president/CEO of Murphy Business Brokerage Group, LLC; former president/CEO of Franchise Services Group of ServiceMaster Brands; former COO of Subway Restaurants Worldwide; former vice president of Dunkin’ Brands; partner, Premier Franchise Advisors, LLC;

• Joe Bourdow, CFE, retired president of Valpak and executive vice president of Cox Target Media; former IFA board member; radio station owner and multi-unit franchisee; partner, Premier Franchise Advisors, LLC; and

• John Simmons, former KPMG partner; former CFO of Checkers; former CEO of Lifestyle
  Family Fitness; current board member of Kforce.

Opens New Headquarters

3.  During the fall of 2017, College Hunks Hauling Junk & Moving celebrated the grand opening of its new headquarters, which the brand has dubbed Brand Central, in Tampa, Florida. The new headquarters houses the brand’s substantial support staff, national call center, and leadership team. According to College Hunks, the headquarters is a strong symbol for how far the company has come as it enters a new period of rapid growth.

4.  At the time of the grand opening, College Hunks was getting ready to open its 100th location. The brand says that its growth is proof of the success and strength of the business opportunity for its franchise owners. College Hunks’ average sales per unit has risen more than 77% since 2013.

5.  College Hunks Hauling Junk & Moving said that one of the most important features of the new headquarters is the national call center that helps its franchisees drive sales at a lower cost.

Partners With Feeding Children Everywhere

6.  At the end of March 2017, College Hunks Hauling Junk & Moving announced that it had chosen Feeding Children Everywhere (FCE) as its national social cause and charitable partner, and will donate two meals for every moving or hauling job it completes. In a press release, College Hunks said that this partnership is expected to produce over 300,000 healthy meals for children in need over the course of the first year of the program.

7.  Additionally, College Hunks will help sponsor a number of “Hunger Projects” helping to prepare thousands of healthy meals to be distributed to communities in need. FCE will also deploy local College Hunks to set up and break down at Hunger Projects across the country, helping FCE fulfill its Pledge to Sustainability by reducing its carbon footprint.

8.  Nick Friedman, president of College Hunks Hauling Junk & Moving, said, “As a socially conscious, values-based, and purpose-driven organization, we were looking for a very noble cause that resonates with our franchise owners, team members, and clients to align with our brand as our official charitable partner. Our company purpose is to Move The World and one of our Core Values is Building Leaders, so this gives us an opportunity to live our purpose by helping end child hunger, and to help fuel tomorrow’s leaders today.”

Company History

9.  College Hunks Hauling Junk & Moving was founded in 2003 by Omar Soliman and Nick Friedman in Washington, D.C. The company started out as a way for Soliman and his best friend Friedman to earn a little money during their summer vacation away from college.

10.  Soliman noticed the opportunity to haul away old furniture after helping his mom, who owned a furniture store in the Washington, D.C. area, make deliveries to customers’ homes. These customers were often willing to pay $50 or more to have their old furniture taken away. Soliman ended up borrowing his mom’s old cargo van and asked Friedman to help him haul junk. They jokingly came up with the name College Hunks Hauling Junk and decided it was a good fit for their new business.

11.  Soliman and Friedman made more than $8,000 from their summer venture. When Soliman returned to the University of Miami after summer break, he entered his school’s Rothschild Entrepreneurship Competition, which awarded a $10,000 prize to the best business plan. Soliman won the contest but both he and Friedman initially landed office jobs after graduating from college. However, after just a few months, Friedman and Soliman decided that they would turn College Hunks Hauling Junk into a legitimate business.

12.  The friends fleshed out their business plan, created a checklist, created an LLC, opened a bank account, and took out a small business loan to buy their first real junk-hauling truck. They started franchising in 2007. College Hunks Hauling Junk & Moving has continued to grow in the U.S. and Canada.

Entrepreneur’s Franchise 500

13.  College Hunks Hauling Junk & Moving ranked No. 260 on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of College Hunks Hauling Junk franchise costs, based on Item 7 of the company’s 2018 FDD.

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

• Please click here for detailed information on College Hunks Hauling Junk’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  45
• Outlets at the End of the Year:  63
• Net Change:  +18

2016

• Outlets at the Start of the Year:  63
• Outlets at the End of the Year:  82
• Net Change:  +19

2017

• Outlets at the Start of the Year:  82
• Outlets at the End of the Year:  97
• Net Change:  +15

Company-Owned

2015

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

2016

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

2017

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  2
• Net Change:  -1

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• The following charts provide information regarding the annual gross sales, gross profit, profit margin, EBITDA, and certain expense and annual performance metrics for franchised outlets and outlets owned by the franchisor’s affiliates.

• These businesses (both franchised and affiliate-owned) provide substantially the same products and services as the Franchised Business offered in the Disclosure Document. Likewise, they receive substantially the same services as those the franchisor provides for the Franchised Business offered in the Disclosure Document, except the franchisor’s affiliates receive centralized accounting, financial, and management services.

• The charts below present information for only those outlets that responded to a survey or are a part of the franchisor’s bookkeeping program and were in operation for at least 12 full months as of the end of the applicable reporting period.

• This includes 51 franchised and 2 affiliate-owned outlets in 2017 (representing 53% (53/100) of all outlets in existence at the end of 2017). Note that 19 of these 100 locations were not surveyed because they were open less than 12 months in 2017. Therefore, the information includes 65% (53/81) of all outlets that were open a full 12 months in 2017.

• The franchisor’s affiliate CHHJ, LLC owns and operates the College Hunks Moving and College Hunks Hauling Junk business located in Rockville, Maryland (“DC Corporate Location”), which has been in operation since 2005 and currently provides junk removal and moving services in Washington, D.C. and Maryland (a total of 5 Zones).

• The franchisor’s affiliate Mansari, LLC owns and operates the College Hunks Moving and College Hunks Hauling Junk business located in Tampa, Florida (“Tampa Corporate Location”), which has been in operation since 2008 and provides junk removal and moving services in Tampa, Florida (a total of 2 Zones).

• These locations operate under a Franchise Agreement with College Hunks Hauling Junk and pay royalties, First Contact Sales & Loyalty Center fees, and Brand Development Fees on the same basis as franchisees.

• These operations are both “absentee owner” businesses, meaning they both have full-time general managers operating the business.

• Unless otherwise specified, “Gross Sales” or “Gross Revenue” means the actual gross revenues billed to clients or what would have been billed to clients if payment had been collected for products and services, plus any other revenue derived from the operation of the business.

• The Gross Sales/Gross Revenue information is based on the same Gross Sales used to calculate royalties and other fees under the Franchise Agreement.

• The franchised outlets and affiliate-owned outlets report gross receipts information to the franchisor based upon a uniform reporting system. However, none of the information supplied to the franchisor has been audited.

Part 1 – Annual Gross Sales, Gross Profit, and Gross Margin for Affiliate-Owned and Franchised Locations (2017)

• The DC Corporate Location provides both junk removal and moving services. It currently operates 5 Zones in Washington, D.C. and Maryland.

• The Tampa Corporate Location provides both junk removal and moving services. It currently operates 2 Zones in Tampa, Florida.

• The information presented for franchised locations is based on 51 franchised outlets in operation for a full 12 months as of December 31, 2017 and includes franchised outlets offering only junk removal and outlets offering junk removal and moving services.

DC Corporate Location (Actual)