Junk King Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)
1. Initial Franchise Fee: $54,000 to $78,000
- The franchise fee is $0.12 (twelve cents) per person living in the Territory. The estimate is based on the purchase of a Territory with 450,000 to 650,000 persons.
2. Travel and Living Expenses While Training: $1,500 to $7,000
- Travel and living expenses to attend initial training will vary significantly depending upon the distance you travel to attend initial training, whether you travel at peak or off season, which day of the week you travel, the amount of advance time before booking, the grade or level of lodging that you choose, and grade of restaurants at which you predominantly choose to eat.
- Junk King requires at least one person to attend initial training, but Junk King allows you to bring up to four employees. The estimate assumes one to two people will attend training.
3. Inventory and Supplies: $500 to $1,000
- You will need uniforms and standard office supplies.
4. Fixtures, Furniture, and Equipment: $2,000 to $3,000
- Unless you have these items already, you will need a computer with internet access, anti-virus protection, printer, e-mail, telephone, scanner, desk, chairs, file cabinet, tools, trash cans, recycling bins, cell phones, GPS, and truck equipment. Further, you must maintain a dedicated telephone number for use as a franchisee.
- Further, Junk King reserves the right to specify your purchase and use of reasonable software for operation of the Franchised Business.
5. Signage: $1,000 to $2,000
- You will need to purchase signage for your office/warehouse space.
6. Vehicles: $10,000 to $20,000
- You will need to purchase a Mitsubishi or Isuzu truck cab equipped with a custom-made 18-cubic yard box on the back. The estimate includes a down payment on the customized truck.
- If you choose to pay cash, or if you are unable to obtain financing, the cash price of the truck will be approximately $80,000 to $85,000. You may not lease your truck.
7. Office and Warehouse Lease: $1,500 to $6,000
- You must secure warehouse/administrative office space and space for recycling. You must maintain sufficient space to operate computer and telephone equipment, maintain records, and provide a processing area for material that will be recycled. Junk King estimates that you will need approximately 1,200 to 2,500 square feet of space to begin operation of the Franchised Business.
- The estimate assumes you will lease the space and includes your first and last months’ rental payment.
- Your rent will depend on the site’s size, condition, accessibility and location, local market conditions, and demand for the premises among prospective lessees.
- In certain major metropolitan markets such as Boston, Chicago, New York, Los Angeles, San Francisco, Seattle, and Washington, D.C. and in certain other high demand districts, prevailing market rents could be significantly higher than the high estimate. You should consult with a local commercial real estate broker to get a more accurate estimate of costs in your market.
- You may choose to purchase, rather than rent, real estate on which a building suitable for the office and warehouse already is constructed or could be constructed. Because of the numerous variables that affect the value of a particular piece of real estate, this initial investment table does not reflect the potential purchase cost of real estate or the costs of constructing a building suitable for an office or warehouse.
8. Leasehold Improvements: $0 to $5,000
- If you build out or refurbish your office space, you may incur expenses for this work. Your costs may be significantly more, depending on the changes that you elect to make to the space.
9. Prepaid Expenses/Insurance: $1,500 to $2,400
- This estimate is for your insurance premium deposit and your first three months of insurance coverage, which may be paid prior to opening.
- This estimate covers the operation of one Vehicle.
- You will need to check with your insurance carrier for actual premium quotes and costs, as well as for the actual amount of the deposit.
- The cost of coverage will vary based upon the area in which your business will be located, your experience with the insurance carrier, the loss experience of the carrier, the amount of the deductibles and of coverage, and other factors beyond Junk King’s control.
- You should also check with your insurance agent or broker regarding any additional insurance that you may wish to carry above Junk King’s required minimums.
10. Pre-Opening Payroll: $1,000 to $5,000
- Junk King recommends a minimum of one full-time and three part-time employees to start this business, which includes a minimum of one driver and two navigators.
- Wage rates and benefits vary by geographic area and the nature of job position.
- This estimate includes payroll costs that you may incur prior to opening, including insurance. Liability and Workman’s Compensation equate to $500 to $1,500 of this estimate.
11. Additional Funds for 3 Months: $15,000 to $45,000
- This is an estimate of the amount of additional operating capital that you may need during the pre-opening period and the first three months after opening your business.
- This estimate includes additional funds you may need to pay employee salaries and wages, local license and other government fees, utilities, payroll taxes (including payroll to cover the pre-opening training period for your staff), Royalty Fees, Customer Care Center Fund fees, legal and accounting fees, your monthly advertising obligations, health and workers’ compensation/Workman’s Compensation insurance, bank charges, miscellaneous supplies and equipment, staff recruiting expenses, ongoing rent, state tax and license fees, deposits, prepaid expenses, and other miscellaneous items.
- The preceding list is by no means intended to be exhaustive of the extent of possible categories of expenses. The expenses you incur during the start-up period will depend on factors such as local economic and market conditions, your business experience, and the amount of business you generate.
12. Total: $88,000 to $174,400
- Junk King relied on its 10 years of experience in the business to compile these estimates. These figures are estimates of your initial expenses covering the pre-opening period and your initial three months of operation.
- If you are converting an existing business to a Franchised Business, your expenses may vary.
- Additional funds will be required to finance operations until a positive cash flow is produced.
- This estimate does not include the cost of providing Dumpster Services if you execute a Dumpster Addendum, because you will not be eligible to participate in the program until you achieve a certain level of market penetration and have operated your Franchised Business for at least six months of operations.
- If you offer Dumpster Services in your Territory through your Franchised Business, you must purchase at least seven dumpsters and a second Vehicle capable of hauling a dumpster (which collectively are estimated to cost between $110,000 and $125,000).