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

• Section I – Background information on the Junk King franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Junk King 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 Junk King franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Junk King 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 Junk King’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, highest, and lowest gross hauling revenues for the 94 franchised Junk King businesses that had been open and continuously operated during the entire 12-month period ending on December 31, 2020, by quartile

• 2020 average, median, highest, and lowest gross hauling revenues for the 94 franchised Junk King businesses that had been open and continuously operated during the entire 12-month period ending on December 31, 2020, based on year in which such franchise business opened (2010-2019)

• 2020 average, median, highest, and lowest gasoline, dumping fees, labor expenses, royalty fees, customer care center fees, cost of services sold, and gross profit as a percentage of gross revenue for the 81 franchised Junk King businesses that had been open and continuously operated during the entire 12-month period ending on December 31, 2020 and responded to the franchisor’s survey

Section I – Background Information

17 Things You Need to Know About the Junk King Franchise

Named a Top Recession-Proof Business by Franchise Business Review

1.  At the beginning of May 2021, Junk King was named a Top Franchise by Franchise Business Review in its report on the Top Recession-Proof Franchises for 2021. This is the 17th annual ranking of the 200 best franchise opportunities as rated by franchise owners.

2.  Franchise Business Review (FBR) provides the only rankings of franchises based solely on actual franchisee satisfaction and performance. FBR publishes its rankings of top franchises in its annual Guide to Today’s Top Franchises, as well as in quarterly reports throughout the year that rank the top franchises in specific sectors.

3.  Michael Andreacchi, CEO of Junk King, said, “Our franchisees are the heart of our company, and without their support we wouldn’t have been able to grow in the way we have over the past 15 years. It has been especially important to our team that they have our full support in growing their business and providing incomparable customer service to their communities this past year. We’re thrilled to be among many other leaders in the franchise industry on this list, and one of the few that are helping to minimize our environmental footprint on this world.”

4.  Junk King was among over 300 franchise brands, representing more than 31,000 franchise owners, that participated in Franchise Business Review’s research. Junk King’s franchisees were surveyed on 33 benchmark questions about their experience and satisfaction regarding critical areas of their franchise systems, including training & support, operations, franchisor/franchisee relations, and financial opportunity.

5.  Eric Stites, CEO of Franchise Business Review, said, “From our perspective, franchisee satisfaction is one of the most important factors to consider before investing in any franchise opportunity. Franchising has historically performed well in a recession, and for people seeking to be their own boss, the recession-proof businesses we identified this year not only have outstanding satisfaction among their owners, but we feel they hold a strong advantage to outperform their competitors in the years ahead.”

Records $100M+ in Revenue in 2021

6.  At the end of January 2022, Junk King entered the new year on the heels of an unprecedented year of growth, and Q1 is heating up to be another big win for the franchise. According to Michael Andreacchi, co-founder and CEO of Junk King Systems, LLC, “Junk King wrapped 2021 with just over $100 million in revenue. What does that mean? Broken down, it’s a 25% YOY increase and 40% system-wide growth across the U.S. That’s a lot of junk and a significant impact on the environment and local communities.”

7.  The customer-centric franchise prides itself on its unparalleled service and its goal to keep 60% of all materials it collects out of landfills, repurposing materials, and recycling as much as it can. Junk King’s extra-large trucks – which are 20% bigger than their competitors’ – also work to decrease the company’s carbon footprint while saving customers money at the same time.

8.  The past year’s growth was due to Junk King’s superior teamwork and logistics infrastructure. Junk King is a franchise system and is focused on giving back and building up partners (that’s how Andreacchi likes to refer to franchise owners). For its innovative processes, Junk King was just awarded a coveted Franchise Innovation Award for the “Most Innovative Consumer Self-Service Tools.”

9.  Andreacchi added, “In 2021, we added 20 new locations and 72 new trucks to our lineup, putting today’s total at 501 in our fleet. We have a stellar and committed team, and we plan to do even more for the environment and the economy this year.”

10.  Junk King was granted 13 new industry awards in addition to earning repeat honors on top franchise and business lists. In addition to its innovation recognition, Junk King has been named to Franchise Times’ Fast & Serious list, recognizing the smartest-growing companies out there.

Appoints New Chief Sales Officer

11.  At the beginning of February 2022, Junk King promoted Darlene Viering as its new chief sales officer. Viering previously served as the senior vice president of development for the brand. Viering has more than two decades of experience leading national call centers and managing franchise development teams.

12.  Since Viering’s addition to the corporate team in June 2020, she has played a vital role in continuing the brand’s momentum. In her new role, Viering will oversee all initiatives set by the franchise development, national accounts, and call center teams.

13.  Viering said, “As Junk King continues to grow, I am ecstatic that I can play a vital role in numerous aspects of the brand. Not only do I now have the opportunity to streamline Junk King’s operations, but I can also still aid in sustained brand development. When I joined Junk King almost two years ago, the brand already had many systems and processes enhanced by the partnership with Norwest Venture Partners in 2019. Being able to bring my experience and continue to develop these systems is extremely exciting. There is certainly no slowing down in sight for us!”

14.  Michael Andreacchi, co-founder and CEO of Junk King, added, “With our rapid growth, expanding the sales organization and adding the Chief Sales Officer position was an ideal route – from her prior success at Junk King, we are confident Darlene is the right person to spearhead the changes needed. Our team is excited for this evolution for Junk King, and we know that Darlene will guide her team to success.”

Company History

15.  Junk King was founded in 2005 by childhood friends Mike Andreacchi and Brian Reardon in San Carlos, California. Andreacchi had experience in the junk removal industry after working for 1-800-GOT-JUNK?. After seeing how many people needed junk removal services, Andreacchi decided to start his own junk removal company.

16.  Junk King was a success in California and Andreacchi and Reardon began franchising the concept in 2010. Around the same time, Junk King began franchising in Canada under the name Junk Works. Today, there are Junk King locations across the United States and Canada.

Entrepreneur’s Franchise 500

17.  Junk King did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Junk King 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 Junk King’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:  82
• Outlets at the End of the Year:  89
• Net Change:  +7

2019

• Outlets at the Start of the Year:  89
• Outlets at the End of the Year:  92
• Net Change:  +3

2020

• Outlets at the Start of the Year:  92
• Outlets at the End of the Year:  103
• Net Change:  +11

Company-Owned

2018

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

2019

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  5
• Net Change:  +2

2020

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  6
• Net Change:  +1

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

• The following financial performance representations include data from the 52-week period beginning on January 1, 2020 and ending on December 31, 2020 (“Calendar Year 2020”) for Franchised Businesses that had been open and continuously operated during the entire 12-month period ending on December 31, 2020 (the “Continually Operated Businesses”).

• Franchised Businesses that were in operation for less than 12 full months during 2020 (including affiliate-owned units acquired by a franchisee) (the “Excluded Businesses”) and affiliate-owned outlets are not included in this financial performance representation.

• As of December 31, 2020, there were 103 Franchised Businesses in operation and 94 of them had been open and continuously operated as Franchised Businesses for more than 12 months and have been included in this Item 19 as Continually Operated Businesses. Nine Franchised Businesses are Excluded Businesses that have not been included in this Item 19, because they were opened during 2020 and did not operate for the full 12 months.

• Parts 1 and 2 describe Gross Hauling Revenues, as reported by franchisees to Junk King. In this Item 19, “Gross Hauling Revenues” mean overall revenue generated from hauling and dumpster sales only. Franchisees are not required to offer Dumpster Services.

• Gross Hauling Revenues are not adjusted for cost of goods sold, operating expenses, royalties, or other costs or expenses that must be deducted from the gross sales to obtain net income or profit. Gross Hauling Revenues are not the same as Gross Revenues, which includes all products and services sold by you.

Part 1 – Gross Hauling Revenues in Calendar Year 2020 for Continually Operated Businesses

Top Quartile

• Number of Franchised Businesses in Subset:  24
• Average Gross Hauling Revenue:  $1,533,912
• Number and Percentage of Businesses Attaining or Exceeding Average:  10/42%
• Median Gross Hauling Revenue:  $1,313,337
• Lowest Gross Hauling Revenue:  $986,914
• Highest Gross Hauling Revenue:  $3,388,130

3rd Quartile

• Number of Franchised Businesses in Subset:  23
• Average Gross Hauling Revenue:  $786,503
• Number and Percentage of Businesses Attaining or Exceeding Average:  13/57%
• Median Gross Hauling Revenue:  $802,094
• Lowest Gross Hauling Revenue:  $630,314
• Highest Gross Hauling Revenue:  $950,621

2nd Quartile

• Number of Franchised Businesses in Subset:  23
• Average Gross Hauling Revenue:  $501,201
• Number and Percentage of Businesses Attaining or Exceeding Average:  8/35%
• Median Gross Hauling Revenue:  $491,778
• Lowest Gross Hauling Revenue:  $406,980
• Highest Gross Hauling Revenue:  $629,484

Bottom Quartile

• Number of Franchised Businesses in Subset:  24
• Average Gross Hauling Revenue:  $311,734
• Number and Percentage of Businesses Attaining or Exceeding Average:  13/54%
• Median Gross Hauling Revenue:  $315,111
• Lowest Gross Hauling Revenue:  $156,046
• Highest Gross Hauling Revenue:  $399,570

All Franchised Outlets

• Number of Franchised Businesses in Subset:  94
• Average Gross Hauling Revenue:  $786,305
• Number and Percentage of Businesses Attaining or Exceeding Average:  37/39%
• Median Gross Hauling Revenue:  $629,899
• Lowest Gross Hauling Revenue:  $156,046
• Highest Gross Hauling Revenue:  $3,388,130

Part 2 – Gross Hauling Revenues in Calendar Year 2020 for Continually Operated Businesses Based on Year in Which Such Franchised Business Opened

• Part 2 presents Gross Hauling Revenue in Calendar Year 2020 based on the number of years each franchised outlet had been open and operating as of December 31, 2020.

1 to 2 (Opened in 2019)

• Number of Franchised Businesses in Category:  5
• Average Gross Hauling Revenue:  $259,467
• Number and Percentage of Businesses Attaining or Exceeding Average:  2/40%
• Median Gross Hauling Revenue:  $224,332
• Lowest Gross Hauling Revenue:  $156,046
• Highest Gross Hauling Revenue:  $395,394

2 to 3 (Opened in 2018)

• Number of Franchised Businesses in Category:  8
• Average Gross Hauling Revenue:  $501,416
• Number and Percentage of Businesses Attaining or Exceeding Average:  2/25%
• Median Gross Hauling Revenue:  $463,501
• Lowest Gross Hauling Revenue:  $251,745
• Highest Gross Hauling Revenue:  $802,094

3 to 4 (Opened in 2017)

• Number of Franchised Businesses in Category:  15
• Average Gross Hauling Revenue:  $503,601
• Number and Percentage of Businesses Attaining or Exceeding Average:  3/20%
• Median Gross Hauling Revenue:  $394,187
• Lowest Gross Hauling Revenue:  $243,096
• Highest Gross Hauling Revenue:  $1,642,245

4 to 5 (Opened in 2016)

• Number of Franchised Businesses in Category:  9
• Average Gross Hauling Revenue:  $744,013
• Number and Percentage of Businesses Attaining or Exceeding Average:  4/44%
• Median Gross Hauling Revenue:  $667,763
• Lowest Gross Hauling Revenue:  $313,354
• Highest Gross Hauling Revenue:  $1,589,384

5 to 6 (Opened in 2015)

• Number of Franchised Businesses in Category:  10
• Average Gross Hauling Revenue:  $673,846
• Number and Percentage of Businesses Attaining or Exceeding Average:  4/40%
• Median Gross Hauling Revenue:  $582,090
• Lowest Gross Hauling Revenue:  $225,113
• Highest Gross Hauling Revenue:  $1,192,291

6 to 7 (Opened in 2014)

• Number of Franchised Businesses in Category:  5
• Average Gross Hauling Revenue:  $795,906
• Number and Percentage of Businesses Attaining or Exceeding Average:  3/60%
• Median Gross Hauling Revenue:  $823,352
• Lowest Gross Hauling Revenue:  $555,772
• Highest Gross Hauling Revenue:  $1,117,425

7 to 8 (Opened in 2013)

• Number of Franchised Businesses in Category:  6
• Average Gross Hauling Revenue:  $711,885
• Number and Percentage of Businesses Attaining or Exceeding Average:  3/50%
• Median Gross Hauling Revenue:  $721,700
• Lowest Gross Hauling Revenue:  $340,511
• Highest Gross Hauling Revenue:  $1,098,817

8 to 9 (Opened in 2012)

• Number of Franchised Businesses in Category:  12
• Average Gross Hauling Revenue:  $1,023,737
• Number and Percentage of Businesses Attaining or Exceeding Average:  5/42%
• Median Gross Hauling Revenue:  $924,825
• Lowest Gross Hauling Revenue:  $309,295
• Highest Gross Hauling Revenue:  $2,458,902

9 to 10 (Opened in 2011)

• Number of Franchised Businesses in Category:  14
• Average Gross Hauling Revenue:  $1,096,737
• Number and Percentage of Businesses Attaining or Exceeding Average:  3/21%
• Median Gross Hauling Revenue:  $775,259
• Lowest Gross Hauling Revenue:  $399,570
• Highest Gross Hauling Revenue:  $3,388,130

10 to 11 (Opened in 2010)

• Number of Franchised Businesses in Category:  10
• Average Gross Hauling Revenue:  $1,172,544
• Number and Percentage of Businesses Attaining or Exceeding Average:  4/40%
• Median Gross Hauling Revenue:  $1,069,568
• Lowest Gross Hauling Revenue:  $508,703
• Highest Gross Hauling Revenue:  $1,920,856

All Franchised Outlets

• Number of Franchised Businesses in Category:  94
• Average Gross Hauling Revenue:  $786,305
• Number and Percentage of Businesses Attaining or Exceeding Average:  37/39%
• Median Gross Hauling Revenue:  $629,899
• Lowest Gross Hauling Revenue:  $156,046
• Highest Gross Hauling Revenue:  $3,388,130

Part 3 – Cost of Services Sold as a Percentage of Gross Revenue in Calendar Year 2020 for Reporting Businesses

• Part 3 includes certain cost data for Calendar Year 2020 that Junk King has collected from Continually Operated Businesses that responded to a survey that Junk King circulated (“Reporting Businesses”).

• 81 out of the 94 Continually Operated Businesses responded to the survey. This Part 3 does not include data from 24 Franchised Businesses, including 13 Continually Operated Businesses that did not respond to the survey and the Excluded Businesses.

Gasoline

• Average Percentage of Gross Revenue:  3.5%
• Number and Percentage of Businesses Attaining or Exceeding Average:  45/55.6%
• Median Percentage of Gross Revenue:  3.4%
• Lowest Percentage of Gross Revenue:  1.2%
• Highest Percentage of Gross Revenue:  6.6%

Dumping Fees

• Average Percentage of Gross Revenue:  10.3%
• Number and Percentage of Businesses Attaining or Exceeding Average:  48/59.3%
• Median Percentage of Gross Revenue:  9.7%
• Lowest Percentage of Gross Revenue:  4.0%
• Highest Percentage of Gross Revenue:  20.7%

Labor Expenses

• Average Percentage of Gross Revenue:  23.4%
• Number and Percentage of Businesses Attaining or Exceeding Average:  38/46.9%
• Median Percentage of Gross Revenue:  23.6%
• Lowest Percentage of Gross Revenue:  10.6%
• Highest Percentage of Gross Revenue:  39.3%

Royalty Fees

• Average Percentage of Gross Revenue:  8.0%
• Number and Percentage of Businesses Attaining or Exceeding Average:  81/100.0%
• Median Percentage of Gross Revenue:  8.0%
• Lowest Percentage of Gross Revenue:  8.0%
• Highest Percentage of Gross Revenue:  8.0%

Customer Care Fees

• Average Percentage of Gross Revenue:  5.0%
• Number and Percentage of Businesses Attaining or Exceeding Average:  81/100.0%
• Median Percentage of Gross Revenue:  5.0%
• Lowest Percentage of Gross Revenue:  5.0%
• Highest Percentage of Gross Revenue:  5.0%

Cost of Services Sold

• Average Percentage of Gross Revenue:  49.4% (Note: The sum of the disclosed operating expenses is actually 50.2%, not 49.4%.)
• Number and Percentage of Businesses Attaining or Exceeding Average:  42/51.9%
• Median Percentage of Gross Revenue:  48.7%
• Lowest Percentage of Gross Revenue:  36.2%
• Highest Percentage of Gross Revenue:  62.5%

Gross Profit Margin

• Average Percentage of Gross Revenue:  50.6% (Note: Since the correct cost of services sold percentage is 50.2%, the correct gross profit margin is 49.8%.)
• Number and Percentage of Businesses Attaining or Exceeding Average:  42/51.9%
• Median Percentage of Gross Revenue:  51.3%
• Lowest Percentage of Gross Revenue:  37.5%
• Highest Percentage of Gross Revenue:  63.8%

• The percentages of Gross Revenue for each Franchised Business are calculated by taking the total expenses for such category, dividing the expenses by Gross Revenue, and multiplying the resulting figure by 100.

• “Dumping Fees” include the payments that a Franchised Business makes to garbage dumps or recycling centers to dispose of the junk that has been collected. These fees vary by municipality.

• “Labor Expenses” include all wages, benefits, and worker’s compensation expenses related to a Franchised Business’ employees.

• Please note that Junk King has adjusted the “Customer Care Center Fees” from the previous amount paid under the Franchise Agreement (4%) to the amount currently being paid by franchisees (5%).

• “Gross Profit Margin” is calculated for each Franchised Business using this formula: ((Gross Revenue – Cost of Services Sold) / Gross Revenue) * 100.

• “Cost of Services Sold” equals Gasoline + Dumping Fees + Labor Expenses + Customer Care Center Fees (which is 5% of Gross Revenue) + Royalty Fees (which is 8% of Gross Revenue).

• In addition to the categories of expenses described in Part 3, Franchised Businesses incur additional expenses, such as (among others) rent, vehicle loan payments, Advertising Fund Fees and advertising expenses, auto and liability insurance premiums, and utility fees. These overhead expenses should also be considered when developing your business plan and any projections of net profitability.

• Some outlets have sold this much. Your individual results may differ. There is no assurance you will sell as much.

• The data is based on the historical results from existing Franchised Businesses as reported to Junk King by its franchisees. Neither Junk King nor an independent accountant has independently audited or verified the information.

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