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FDD Talk: How Much Does a Smash My Trash Franchise Make (Average Revenues and/or Profits)?

Last updated on April 28, 2022 by Franchise Chatter Leave a Comment
in FDD Talk: Miscellaneous Franchises, FDD Talk: Service Franchises, Franchise Earnings, Miscellaneous Service Franchises



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

  • Section I – Background information on the Smash My Trash franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Smash My Trash franchise, based on Item 7 of the company’s 2021 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Smash My Trash franchise, based on Items 5 and 6 of the company’s 2021 FDD
  • Section IV – Number of franchised and company-owned Smash My Trash outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
  • Section V – Presentation and analysis of Smash My Trash’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
  • full year 2019 and partial year 2020 (January 1, 2020 to April 30, 2020) gross revenue, franchise fees, cost of goods sold, gross profit, operating expenses, and net income for one affiliate-owned Smash My Trash business, which was established in Texas in 2015, has been in operation since March of 2016, and whose assets were sold to a franchisee on May 1, 2020
  • 12-month (May 2020 to April 2021) gross sales for the Houston Smash My Trash franchisee, after the Houston franchisee acquired the affiliate’s business on May 1, 2020

Section I – Background Information

18 Things You Need to Know About the Smash My Trash Franchise

Republic Services Alleges That Smash My Trash Damages Its Dumpsters


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1.  In late April 2021, Republic Services, Inc. filed a lawsuit against Smash My Trash, saying the independent trash compacting service damages Republic’s dumpsters. Smash My Trash is based in Carmel, Indiana, and has a franchise in Prairie Village, Kansas called SMT KC that operates throughout the metro area. Phoenix-based Republic is a Fortune 500 company that operates in 42 states. The lawsuit was filed in U.S. District Court in Kansas City.

2.  Smash My Trash uses 25,000-pound Kenworth T270 trucks outfitted with hydraulic booms with attached 3-ton, spiked, rotating metal drums that smash down and roll trash inside a dumpster. The goal is to create space to fit more trash and reduce haul-away costs.

3.  Republic alleges that the service damages its dumpsters – which cost about $5,000 each – pushing on the bottom and sides, leading to dents and punctures. This reduces the strength of the dumpsters, increases rusting and bulging, requires more maintenance, and reduces the useful life. It also puts the containers at risk of being overloaded, potentially causing violations of highway regulations and subjecting its drivers to fines and license suspension, the lawsuit claims.

4.  Smash My Trash’s customer contracts indemnify the company from damage to dumpsters, the lawsuit says. So when that happens, Republic has to pursue customers for recovery.

5.  “Smash is creating distrust between Republic and its business customers by falsely stating that they have the ‘right to Smash [their] trash’ while also suggesting that they are ‘trapped by a one-sided contract with [their] waste removal company’ and being ‘ripped off by endless fees and overage charges,’” Republic said in its lawsuit. “Accordingly, Smash is breeding disputes between Republic and its business customers, thereby compelling Republic to dedicate additional time and energy to managing and protecting those relationships.”


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6.  Republic accuses Smash My Trash of trespass to chattels, conversion, tortious interference, false advertising, and civil conspiracy. Republic seeks a declaratory judgment that Smash My Trash does not have the right to do business that uses Republic dumpsters. In addition, the suit seeks a temporary restraining order and preliminary and permanent injunction against Smash My Trash, along with actual and punitive damages and attorney fees.

7.  Smash My Trash declined to comment. However, it filed an opposition to the TRO and injunction. Smash My Trash argues that Republic’s contracts specifically state that waste inside the dumpsters belongs to the customers until it is removed, so the customer and its agents are allowed to manipulate or compress the waste to maximize use of the container.

8.  Smash My Trash argues that Republic’s lawsuit speaks only in generalities about purported damages to dumpsters, citing no examples, and provides no evidence of weight issues occurring. The opposition filing said evidence shows Smash My Trash purposely avoids touching dumpsters or inflicting damage. Rollers are fitted with guards to ensure they can’t contact the sides or bottom. Drivers inspect and take photographs of dumpsters before and after service and are required to note any damages; they also make video recordings using a camera attached to the truck.

Celebrates Earth Day

9.  Smash My Trash celebrated Earth Day on April 22, 2021. Earth Day is a worldwide event that raises public awareness and encourages individuals, companies, communities, and nations to show their support for the protection of the environment and the planet. Smash My Trash, its customers, and the communities in which the company operates all want to help address environmental concerns.


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10.  The theme of Earth Day 2021 was Restore Our Earth, which focuses on how natural processes, emerging green technologies, and innovative thinking can restore the world’s ecosystems. Smash My Trash is committed to identifying and implementing innovative thinking and emerging technology to positively change the way that commercial waste is managed.

11.  Smash My Trash recognizes that responsible planning and management of the environment is critically important. The old ways of doing business are simply not sustainable, and innovative thinking will be necessary. The company’s mission is to fundamentally disrupt commercial material management by redefining the business model, significantly reducing waste processing costs, and pursuing genuine environmental stewardship. Making a positive contribution to the environment is one of Smash My Trash’s key reasons for being.

12.  The Smash My Trash mobile waste compaction service reduces waste volume by as much as 70%. This allows companies to put more waste in the dumpster before hauling. The brand’s service provides two significant environmental benefits:

  • Lower Emissions. Reducing the number of dumpster hauls significantly cuts the number of garbage trucks on the road, reducing both CO2 and particulate emissions in the environment.
  • Reduced Landfill Space. By more efficiently compacting the waste, less landfill space is required to dispose of the same amount of material.

Company History

13.  Smash My Trash was founded in 2017 by Justin Haskin in Houston, Texas. The brand offers construction and demolition companies a new trash compression technology and a smartphone app that the brand says will make trash management easier and less expensive. Additionally, the company is pursuing genuine environmental stewardship through its process.

14.  Managing partner Ryan Haskin explained, “It’s a glorified backhoe on a truck. You back up, and it smashes the trash in the dumpster. On average, if you’re hauling a dumpster five times before, you’ll only have to do it one or two times.”

15.  Site managers can use the patented compaction technology on the back of the truck to compress trash within a dumpster. The clients can then continue to work. Once the dumpster is full of compressed trash, the managers can then use the app to call a driver who will be on site within 24 hours to remove the trash in the truck.

16.  Smash My Trash’s Smash Machines generate environmental conservation previously considered impossible. Carbon emissions are dramatically reduced when open-top container hauls are cut by 70-80%.

17.  After generating a lot of interest in the Smash My Trash concept, Haskin began franchising in 2018. Today, there are a few dozen Smash My Trash locations in the United States.

Entrepreneur’s Franchise 500

18.  Smash My Trash did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

  • Detailed estimates of Smash My Trash franchise costs, based on Item 7 of the company’s 2021 FDD.

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

  • Detailed information on Smash My Trash’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

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

2019

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

2020

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  67
  • Net Change:  +65

Company-Owned

2018

  • Outlets at the Start of the Year:  1
  • Outlets at the End of the Year:  4
  • Net Change:  +3

2019

  • Outlets at the Start of the Year:  4
  • Outlets at the End of the Year:  4
  • Net Change:  0

2020

  • Outlets at the Start of the Year:  4
  • Outlets at the End of the Year:  0
  • Net Change:  -4

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

  • The franchisor’s affiliate, Smash My Trash, LLC, was established in Texas in 2015 and operated a Smash My Trash business from March of 2016 through April 30, 2020. On May 1, 2020, its assets were sold to a franchisee of Smash My Trash who has continuously operated the Smash My Trash business.
  • Presented below is a Statement of Income showing the affiliate’s historical results from January 1, 2019 to December 31, 2019. This is followed by another Statement of Income showing the affiliate’s historical results from January 1, 2020 to April 30, 2020.
  • The affiliate was operating in Houston, Texas and served an area with an approximate population of 400,000 people, which is equal to two territories as offered under the disclosure document. The affiliate operated two Smash Trucks, full-time, during the measurement period. Smash My Trash’s franchisees operate one Smash Truck per territory that they purchase.
  • This Statement of Income has not been audited, reviewed, or verified by an independent accountant. Smash My Trash expects that variances between your business and that of its affiliate may exist with respect to geographic location, length of time in operation, and the number of trucks in operation, which will be determined by the number of territories you purchase.
  • Following the Statements of Income are historical Gross Sales records from Smash My Trash’s franchisee who purchased the affiliate’s Smash My Trash business in Houston, Texas. Smash My Trash had two other franchisees open for all of 2020, but both were non-compliant with the franchise model regarding billing practices, hiring practices, following systems and procedures, and following territory guidelines.
  • The franchisor’s other affiliates, Smash My Trash Austin, LLC, Smash My Trash San Antonio, LLC, and Smash My Trash DFW, LLC, began operation around March 2018, December 2018, and January 2019 respectively. However, they do not fit the model of the franchise Smash My Trash is offering under the disclosure document.
  • They operated with a heavy reliance upon Smash My Trash, LLC for facility and personnel needs and were not organized into formal territories. These other affiliates were not operated within the guidelines Smash My Trash prescribes for franchisees, which is why Smash My Trash has excluded them from inclusion in this financial performance representation.

Part 1 – Affiliate Statement of Income

2019 (January 1, 2019 to December 31, 2019)

Gross Revenue

  • Income:  $35,785 (2.6%)
  • Total Sales:  $1,352,738 (97.4%)
  • Total Gross Revenue:  $1,388,523 (100.0%)

Franchise Fees

  • Estimated Royalty Fees:  $111,082 (8.0%)
  • Estimated Brand Fund Fees:  $13,885 (1.0%)
  • Total Franchise Fees:  $124,967 (9.0%)

Cost of Goods Sold

  • Cost of Goods Sold:  $38,629 (2.8%)
  • Outsourced Hauling Expenses:  $201,154 (14.5%)
  • Total Cost of Goods Sold:  $239,783 (17.3%)

Gross Profit (Total Gross Revenue – Total Franchise Fees – Total Cost of Goods Sold):  $1,023,773 (73.7%)

Expenses

  • Bank Fees:  $5,638 (0.4%)
  • Insurance:  $15,843 (1.1%)
  • Interest Expense:  $591 (0.0%)
  • Legal and Accounting:  $6,582 (0.5%)
  • Travel and Entertainment:  $6,056 (0.4%)
  • Payroll and HR:  $234,569 (16.9%)
  • Technology and Systems:  $8,509 (0.6%)
  • Promotional:  $1,026 (0.1%)
  • Rent and Facilities:  $30,174 (2.2%)
  • Fuel:  $30,208 (2.2%)
  • Truck Payments:  $50,272 (3.6%)
  • Machine and Truck Repairs:  $18,124 (1.3%)
  • Truck Rigging and Camera Install:  $4,721 (0.3%)
  • Registration:  $169 (0.0%)
  • Tolls:  $3,016 (0.2%)
  • Utilities:  $7,235 (0.5%)
  • Total Expenses:  $422,733 (30.4%)

Net Income:  $601,039 (43.3%)

2020 (January 1, 2020 to April 30, 2020)

Gross Revenue

  • Income:  $14,101 (3.7%)
  • Total Sales:  $365,638 (96.3%)
  • Total Gross Revenue:  $379,738 (100.0%)

Franchise Fees

  • Estimated Royalty Fees:  $30,379 (8.0%)
  • Estimated Brand Fund Fees:  $3,797 (1.0%)
  • Total Franchise Fees:  $34,176 (9.0%)

Cost of Goods Sold

  • Outsourced Hauling Expenses:  $49,242 (13.0%)
  • Total Cost of Goods Sold:  $49,242 (13.0%)

Gross Profit (Total Gross Revenue – Total Franchise Fees – Total Cost of Goods Sold):  $296,319 (78.0%)

Expenses

  • Bank Fees:  $161 (0.0%)
  • Insurance:  $11,882 (3.1%)
  • Interest Expense:  $325 (0.1%)
  • Legal and Accounting:  $1,266 (0.3%)
  • Travel and Entertainment:  $697 (0.2%)
  • Payroll and HR:  $101,736 (26.8%)
  • Technology and Systems:  $390 (0.1%)
  • Promotional:  $2,075 (0.5%)
  • Rent and Facilities:  $10,815 (2.8%)
  • Fuel:  $11,002 (2.9%)
  • Truck Payments:  $21,303 (5.6%)
  • Machine and Truck Repairs:  $9,549 (2.5%)
  • Truck Rigging and Camera Install:  $0 (0.0%)
  • Registration:  $212 (0.1%)
  • Tolls:  $101 (0.0%)
  • Utilities:  $4,084 (1.1%)
  • Total Expenses:  $175,598 (46.2%)

Net Income:  $120,721 (31.8%)

Part 2 – Gross Sales for Houston Franchisee (After Houston Franchisee Acquired the Affiliate’s Business on May 1, 2020)

  • May 2020:  $101,086
  • June 2020:  $77,215
  • July 2020:  $101,035
  • August 2020:  $98,920
  • September 2020:  $103,911
  • October 2020:  $103,832
  • November 2020:  $115,692
  • December 2020:  $113,150
  • January 2021:  $127,996
  • February 2021:  $125,377
  • March 2021:  $135,221
  • April 2021:  $144,669
  • Total:  $1,348,104
  • Some outlets have sold this amount. Your individual results may differ. There is no assurance you’ll sell as much.
  • In Part 2, customers were being transitioned from the affiliate to Smash My Trash’s franchisee in May of 2020, and the Gross Sales number for that month contains a mix of sales by the affiliate and franchisee during that transition period.
  • During the COVID-19 pandemic, the affiliate’s business was deemed “essential” and continued to operate normally because it is a contactless business and the supply of trash for the affiliate’s compaction services continued at a regular pace. On May 1, 2020, the affiliate sold its business operations to existing franchisees of Smash My Trash.
  • The table does not include certain costs and expenses you will incur in the categories of occupancy expenses, depreciation and amortization, and franchise or license fees. Smash My Trash also does not account for interest or principal payments on loans to the business or income taxes owed by the business or its owners.
  • The table does not include certain costs and expenses incurred by Smash My Trash, which will not be incurred by a franchisee, including international and multi-location domestic travel, franchise development costs, franchise marketing costs, and acquisition of assets tangential to the Smash My Trash franchise business. Further, Smash My Trash does not account for depreciation and amortization, interest or principal payments on loans to the business, or income taxes owed by the business or its owners.
  • Affiliate-owned outlets do not pay Initial Franchise Fees ($49,500), Royalty Fees (8% of Gross Sales), or Other Fees listed in Item 6, including Brand Fund Contributions (1% of Gross Sales). The above table includes an estimate of the Royalty Fees and Brand Fund Contributions that the affiliate-owned Smash My Trash business would have paid.
  • The data for the affiliate-owned Smash My Trash business was obtained from the affiliate’s computer system which records all total sales it receives from operation of its Smash My Trash business.
  • “Gross Revenue” includes all consideration, whether by cash, credit, in kind or otherwise, that was derived directly or indirectly from the operation of the represented Smash My Trash business.
  • There are no material financial and operational characteristics of the affiliate-owned location that are reasonably anticipated to differ materially from future operational franchise outlets.

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