If I purchase my vehicles, what percentage of my total expenses in connection with the ongoing operation of the 1-800-GOT-JUNK? Franchised Business is represented by purchases from approved suppliers?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
If you lease your vehicle(s), the purchase and lease of items from approved suppliers or that meet our specifications represent approximately 10% to 30% of your total expenses in connection with the establishment of the Franchised Business, and approximately 40% to 50% of your total expenses in connection with the ongoing operation of the Franchised Business. If you purchase your vehicle(s), the purchase and lease of items from approved suppliers or that meet our specifications represent approximately 70% to 90% of your total expenses in connection with the establishment of the Franchised Business, and approximately 50% to 60% of your total expenses in connection with the ongoing operation of the Franchised Business.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–23)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, if a franchisee purchases their vehicles, the purchase and lease of items from approved suppliers or that meet 1-800-GOT-JUNK?'s specifications represents approximately 50% to 60% of the franchisee's total expenses in connection with the ongoing operation of the franchised business. This percentage reflects the cost of items that a franchisee is required to purchase or lease from 1-800-GOT-JUNK?'s approved suppliers to maintain brand standards and operational consistency. These items include trucks, truck dump bodies, signage, uniforms, marketing materials, tools, equipment, credit and debit card processing services, communications equipment, computers, and software.
This means that a significant portion of a 1-800-GOT-JUNK? franchisee's ongoing expenses will be directed towards approved suppliers. While this ensures quality control and standardization across the franchise system, it also limits the franchisee's flexibility in sourcing cheaper alternatives. Franchisees should carefully consider this factor when projecting their operating costs and profitability. Understanding the specific items that must be sourced from approved suppliers and their associated costs is crucial for accurate financial planning.
It is important to note that 1-800-GOT-JUNK? may receive rebates, promotional allowances, discounts, or other payments or benefits from designated suppliers as a result of the purchases made by franchisees. In the fiscal year ended December 31, 2024, certain suppliers made payments to 1-800-GOT-JUNK? in the amount of $130,692 for sponsorships. While these arrangements may benefit 1-800-GOT-JUNK?, it's essential for franchisees to assess whether these arrangements impact the pricing or quality of the goods and services they are required to purchase.