FDD Talk 2020: 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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of College Hunks Hauling Junk & Moving’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 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 79 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, 2019

• 2019 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 79 franchised outlets, 9 junk removal only franchised outlets, and 70 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, 2019

• 2019 average, median, highest, and lowest gross sales for the 79 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, 2019, based on the number of years in operation as of December 31, 2019 (1st full calendar year, 2nd full calendar year, 3rd full calendar year, 4th full calendar year, and >4th full calendar year)

• average, median, highest, and lowest monthly income of franchise locations in operation for less than 24 months as of December 31, 2019 (1st month, 6th month, 12th month, and 20th month)

Section I – Background Information

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

Exceeds Goal of Donating 1 Million Meals to Children and Families in Need

1.  In mid-July 2019, College Hunks Hauling Junk & Moving reached its One Millionth Meal Donated milestone just two years after partnering with Feeding Children Everywhere. The partnership began in 2017, and for every service completed, the company donates two healthy meals to Feeding Children Everywhere. This organization is committed to forging a path towards a hunger-free world by highlighting hunger issues and helping to create self-sufficient and sustainable communities in their program areas.

2.  The team at College Hunks Hauling Junk & Moving believes that food meets a fundamental need, and meeting that need leads to restoration of families. Two meals are donated for every move that’s completed and for every junk hauling service. The company expected it to take three years to reach this milestone but actually did it in two, thanks to the loyal customer base who keeps the business growing.

3.  In addition to the meal donations, College Hunks Hauling Junk & Moving uses its fleet of nationwide trucks to transport and deliver the food supplies, tables, and equipment to many Feeding Children Everywhere Hunger Projects taking place around the country.

4.  To celebrate the momentous milestone, a special meal preparation event took place on July 10, 2019 at the College Hunks Hauling Junk & Moving corporate office in Tampa. Nick Friedman, co-founder and president of College Hunks Hauling Junk & Moving, and other notable company representatives and community leaders were on hand at the celebration. Attendees included representatives from Feeding Children Everywhere and Feeding Tampa Bay.

5.  According to Friedman, “We want to bring an end to child hunger here in America as well as around the world. Each and every one of our franchise locations are committed to doing their part in assembling and packaging healthy meals which will be distributed far and wide to children (as well as veterans and the elderly) who don’t know where or when their next meal is coming. We can change this; we are changing this!”

Provides Free Services to Domestic Violence Survivors

6.  In late April 2020, College Hunks Hauling Junk & Moving announced its commitment to providing essential, no-cost moves to victims of abusive living situations through certified shelters. This new program is just the latest way the company is working to help those in need during this unprecedented time and comes as domestic violence reports are on the rise during shelter-in-place mandates.

7.  Nick Friedman, co-founder and president of College Hunks Hauling Junk & Moving, said, “As a purpose driven, socially conscious organization, we continue to look for ways to be of help in our communities – particularly to those who feel powerless in unhealthy home situations. We want to do what we can to support anyone living in a dangerous environment, especially during these unprecedented times. We’ve made our resources available to assist those who face circumstances of domestic violence and are looking for a safe way out.”

8.  Anyone experiencing domestic violence who wants to request the no-cost move offer should first contact the police and/or the local domestic violence-prevention shelter. A certified domestic violence shelter will need to approve requests for the move to ensure that the victim is supported throughout the entire transition. The shelter would also coordinate with local law enforcement, as needed, for the safety of the victim and the assisting College Hunks team.

9.  Once qualifications for the free move are confirmed, the approving shelter should reach out via email to NationalAccounts@CHHJ.com to request the move assistance. Nick Friedman will personally monitor incoming emails in order to follow up with the local franchise owners and help coordinate logistics.

10.  Friedman added, “For many of us, COVID-19’s stay-at-home orders have presented inconveniences. But for those facing violence in their homes, staying home is unthinkable. We want to help. College Hunks is here to extend a helping hand to those affected by domestic abuse through use of our trucks and labor at no cost. I remembered reading about other moving companies doing things like this in the past, and that inspired us to leverage our 130 franchises and thousands of trucks and Hunks around the country to help. It’s our hope that once the health crisis passes, those who survived domestic crisis will have an opportunity to heal in a safe, new space.”

11.  This is just one way the company is committed to giving back during this time. Trucks are also being used to move COVID-19 testing supplies and other medical equipment, relocating beds and goods from one hospital to another, and delivering water to healthcare workers.

12.  The company’s long-standing partnership with Feeding Children Everywhere also provides for two nutritious meals for children in need for every job performed. With schools now closed, many children don’t have access to necessary nutrition, so this partnership has never been more important than it is right now.

Preparing for “The Great American Move”

13.  At the end of May 2020, College Hunks Hauling Junk & Moving announced that it foresees a significant increase in both home and business relocations in the coming months and that the company was already experiencing the shift in moving patterns first-hand. Whether it be to escape the crowded confines of the city or a need to relocate to accept a job opportunity, College Hunks Hauling Junk & Moving is making brand-wide preparations for what they predict will be the next major trend in American culture – departing congested downtown areas and moving to the suburbs to single-family homes and townhomes.

14.  Due to the COVID-19 crisis and subsequent shelter-in-place protocols, relocation plans across the country were put on hold indefinitely. As the real estate market slowly warms back up, however, steps towards progress can be made. Businesses, homebuyers, and apartment dwellers alike will have an increased need for moving and junk hauling services as their options become available again.

15.  Nick Friedman, president and co-founder of College Hunks Hauling Junk & Moving, said, “Over the past several months, a lot has changed for us collectively. As regions around the country begin to reopen, people are finally free to act towards their goals of finding a new job, getting their family into a larger home or relocating their business to a better area. Now that we see the brakes easing off, we anticipate a massive resurgence in the demand for moving.”

16.  Reopening measures have given businesses and households on a national scale an eagerness to resume their plans to relocate as soon as possible. As restrictions are gradually lifted, moving service demand is expected to make serious headway. To better serve its local communities during these unique times, College Hunks offers virtual estimates using videophone technology. These virtual appointments quickly provide estimates while putting customers at ease by avoiding contact with estimators in the home.

17.  Friedman added, “Whether it’s a move to the city to allow for new employment opportunities or a move to escape the city’s close confines for wider spaces, people are ready for positive change in their lives. We’ve paid attention to the market trends and done the research needed to prepare our brand to offer the most knowledgeable service possible.”

Company History

18.  College Hunks Hauling Junk & Moving traces its history back to 2003 when co-founder Omar Soliman spotted an opportunity to earn a little extra money to spend during his summer break from college. His mom owned a furniture store in the Washington, D.C. suburbs, and Soliman had noticed that during deliveries, customers would often ask if they could haul away old furniture. His mother’s customers were willing to pay $50 or more for the service.

19.  After borrowing his mother’s old cargo van and recruiting his best friend, Nick Friedman, Soliman set up his business and jokingly called it “College Hunks Hauling Junk.” That summer, Soliman and Friedman earned $8,000, but they weren’t thinking of making hauling old furniture a career and returned to school in the fall.

20.  As luck would have it, Soliman with help from Friedman entered and won the annual Rothschild Entrepreneurship Competition, which awarded a $10,000 prize to the best business plan. After graduating from school, Soliman and Friedman moved to Washington, D.C. and set up College Hunks Hauling Junk as a full-scale business. In its first two years, the company hauled away more than 4,000 tons of junk.

21.  A few years later, in 2008, the company moved its headquarters to Tampa, Florida and launched a franchising program. In 2016, College Hunks Hauling Junk opened its first international location in Edmonton, Alberta, Canada. Today, there are College Hunks Hauling Junk & Moving franchises all across North America.

Entrepreneur’s Franchise 500

22.  College Hunks Hauling Junk & Moving ranked No. 221 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of College Hunks Hauling Junk & Moving franchise costs, based on Item 7 of the company’s 2020 FDD.

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

• Please click here for detailed information on College Hunks Hauling Junk & Moving’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

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

2018

• Outlets at the Start of the Year:  97
• Outlets at the End of the Year:  102
• Net Change:  +5

2019

• Outlets at the Start of the Year:  102
• Outlets at the End of the Year:  113
• Net Change:  +11

Company-Owned

2017

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

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2019

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  4
• Net Change:  +2

Section V – Financial Performance Representations (Item 19, 2020 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 79 franchised and 2 affiliate-owned outlets in 2019 (representing 69% (81/118) of all outlets in existence at the end of 2019).

• Note that two outlets were transferred to affiliates of the franchisor in late 2019 but are reflected in the numbers for franchised locations given that most of the year they operated as such.

• Further, note that 21 of these 118 locations were not surveyed because they were open less than 12 months in 2019. Therefore, the information includes 84% (81/97) of all outlets that were open a full 12 months in 2019.

• 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 3 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 all 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 (2019)

• 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 3 Zones in Tampa, Florida.

• The information presented for franchised locations is based on franchised outlets in operation for a full 12 months as of December 31, 2019 and includes franchised outlets offering only junk removal and outlets offering junk removal and moving services.

DC Corporate Location (Actual)