How does the initial franchise fee for 1-800-GOT-JUNK? in Item 5 compare to the initial marketing expense provided in Item 7?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 5. Initial Fees
The initial franchise fee is $8,125 per subterritory. We require a minimum purchase of eight subterritories, for a total minimum initial franchise fee of $65,000. If your Franchised Business has twelve subterritories, the initial franchise fee will be $97,500. The initial franchise fee is payable to us in a lump sum when you sign the Franchise Agreement. We will only refund the entire initial franchise 4899-8658-3815.1
fee paid to date (without interest) if we do not approve your application. Except as described in this disclosure document, each portion of the initial franchise fee is fully earned upon receipt.
In the year ended December 31, 2024, we sold one franchise to an existing franchisee for an initial franchise fee of $56,875, which amount was deferred until the end of one year of operations to allow the franchisee time to develop the new market. Existing franchisees paid fees to expand their territories ranging from $2,000 to $25,000.
We reserve the right to charge higher or lower initial fees than those disclosed above for a particular territory.
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, the initial franchise fee and the initial marketing expense are separate costs outlined in Items 5 and 7, respectively. The initial franchise fee is $8,125 per subterritory, with a minimum purchase of eight subterritories required, totaling a minimum initial franchise fee of $65,000. If a franchisee purchases twelve subterritories, the initial franchise fee will be $97,500. This fee is payable in a lump sum when the Franchise Agreement is signed.
In contrast, the initial marketing expense is a fixed amount of $25,000, also due upon signing the Franchise Agreement. This expense is earmarked for marketing and promoting the franchisee's business prior to and during the first six months of operation. While 1-800-GOT-JUNK? has sole discretion over the timing, type, and amount of marketing, the funds will be spent in the franchisee's local area.
Therefore, the initial franchise fee varies based on the number of subterritories purchased, ranging from $65,000 to $97,500, while the initial marketing expense is a fixed $25,000. Both are non-refundable unless the application is not approved. A prospective franchisee should consider the number of subterritories they intend to purchase, as this will significantly impact the initial franchise fee, which is a substantially larger investment than the initial marketing expense.