How does the initial franchise fee for 1-800-GOT-JUNK? in Item 5 relate to the financing options described in Item 10?
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 will only refund the initial franchise fee and Initial Marketing Expense (without interest) if we do not approve your application. Otherwise, all fees payable to us are nonrefundable under any circumstances. Refundability of fees paid to third parties, however, will depend on your negotiation with each party. Neither 1-800-GOT-JUNK? nor its affiliate offers financing of all or part of the initial investment, except we may, at our sole discretion, permit up to half of the initial franchise fee for multiple subterritories to be paid in equal monthly installments for up to 24 months, with no down payment (except the portion of the initial franchise fee not financed must be paid at the time you sign the franchise agreement), and without interest if payments are made timely. The amount of your monthly payment will vary depending on the number of subterritory fees financed. For example, if you purchase 8 subterritories and finance the initial franchise fee for 4 subterritories for 24 months, your monthly installments would be $1,354.17 [4 x $8,125 = $32,500 ÷ 24 = $1,354.17]. Late payments will incur interest from and after their respective due dates until paid in full at the rate of 24% per annum or such other rate as we may specify in writing from time to time or the maximum rate permitted by law if lower. (See Item 5 for additional details regarding the initial franchise fee, and Item 10 for additional details regarding financing of subterritory initial fees.)
ITEM 10. Financing
We do not generally offer financing. However, we may, in our sole discretion, allow the initial franchise fee with respect to some of the subterritories to be made in equal monthly installments without interest if payments are timely made. Installment arrangements will be described in Schedule B of the Franchise Agreement. Outstanding amounts may be pre-paid at any time without penalty. Late payments will incur interest from and after their respective due dates until paid in full at the rate of 24% per annum or at such other rate as we may specify in writing from time to time or the maximum rate permitted by law if lower. All owners of an entity franchisee must personally guarantee payment of initial franchise fees made through installment arrangements.
We may allow you to operate or service customers in subterritories for which you are paying the initial fee in installments, as long as payments are timely made. However, we reserve the right to not allow you to operate or service customers in any subterritories until you pay the initial fees for those subterritories in full.
Upon material default of installment payments we may, at our option and in our sole discretion, revise your Territory to remove any subterritories for which installment payments are in default, or terminate the Franchise Agreement. Your potential liabilities upon default also include acceleration of amounts due, and payment of collection costs. You are not required to waive defenses or other legal rights, and are not barred from asserting any defenses.
We do not intend to sell, assign, or discount to a third party all or any part of the financial arrangement.
We do not guarantee any debts, leases or other obligations for you. While not obligated to do so, we may, in our discretion, introduce you to third party financing sources that may, if you meet their qualifications, supply financing options for items required as part of the initial investment.
What This Means (2025 FDD)
According to the 2025 FDD, 1-800-GOT-JUNK?'s initial franchise fee is $8,125 per subterritory, as detailed in Item 5. Item 10 clarifies that 1-800-GOT-JUNK? generally does not offer financing. However, they may, at their discretion, allow the initial franchise fee for some subterritories to be paid in equal monthly installments without interest, provided payments are made on time. The specifics of these installment arrangements are outlined in Schedule B of the Franchise Agreement.
For a prospective 1-800-GOT-JUNK? franchisee, this means that while standard financing is not provided, there's a potential opportunity to finance a portion of the initial franchise fee through monthly installments. This option could make it easier to manage the initial investment, especially when purchasing multiple subterritories. However, this financing is not guaranteed and is subject to 1-800-GOT-JUNK?'s approval.
The FDD provides an example: if a franchisee purchases 8 subterritories and finances the initial franchise fee for 4 subterritories over 24 months, the monthly installments would be $1,354.17. This is calculated as [4 x $8,125 = $32,500 ÷ 24 = $1,354.17]. It's important to note that any portion of the initial franchise fee not financed must be paid when signing the franchise agreement. Late payments incur interest at a rate of 24% per annum, or the maximum rate permitted by law if lower.
1-800-GOT-JUNK? may allow franchisees to operate in subterritories while paying the initial fee in installments, as long as payments are current. However, they reserve the right to restrict operation in any subterritory until the initial fees are paid in full. Defaulting on installment payments can lead to the removal of subterritories from the franchise agreement or even termination of the agreement, along with potential liabilities such as accelerated payments and collection costs. While 1-800-GOT-JUNK? does not guarantee any debts, leases, or obligations, they may introduce franchisees to third-party financing sources.