How does the initial franchise fee for 1-800-GOT-JUNK? in Item 5 relate to the possibility of financing as 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 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. Some of the factors that may lead us to charge more are if a subterritory had been previously serviced and has a developed market, or if the demographics of the particular subterritory are such that it would be particularly suited for a 1-800-GOT-JUNK? franchise. Some of the factors that may lead us to charge less are if a subterritory has been difficult to develop in the past or as an incentive to encourage a franchisee to purchase additional subterritories.
If you are granted multiple subterritories within which to operate the Franchised Business, we may (in our sole discretion) allow you to pay the initial franchise fee with respect to some of the subterritories in equal monthly installments for a specified period. If we do, we may also allow you to operate or service customers in subterritories for which you are paying the initial fee in installments. However, we may not allow you to operate or service customers in any subterritories until you pay the initial fees for those subterritories in full.
If a current 1-800-GOT-JUNK? franchisee refers a prospective franchisee to either WOW 1 DAY PAINTING LLC or Shack Shine Home Services LLC and that referral results in the launch of either a WOW 1 DAY PAINTING or Shack Shine franchise, the referring 1-800-GOT-JUNK? franchisee may receive a referral bonus of up to $5,000, in addition to having their annual conference fee paid. The referred franchisee may also receive a discount on their initial franchise fees. Additional terms and conditions of the referral program are in our Operations Manual. This referral program may change or cease at any time in our sole discretion. This is a referral program only. The existing franchisee does not represent us and is not authorized to make any sales or representations on our behalf.
You will also pay an Initial Marketing Expense of $25,000 when you sign the Franchise Agreement. We will use this money to market and promote your Franchised Business prior to and during the first six months of operation. The timing, type and amount of marketing made with the Initial Marketing Expenses are at our sole discretion, but the monies will be spent in your local area (as we define it). The Initial Marketing Expense is non-refundable, unless we do not approve your application.
Unless otherwise disclosed above in this Item 5, fees are uniformly imposed and collected. 4899-8658-3815.1
ITEM 6. Other Fees
Name of Fee Amount Due Date Remarks Royalty 8% of Gross Revenue. See Note 1. Semi-monthly within three business days of the 15th day and the last day of each month Paid by electronic transfer. Minimum Royalty Depending upon your year of operation, the Minimum Royalty will range from $1,200, pro-rated as necessary to account for operations for a partial calendar year in the first year of operation, to $4,000 for each Subterritory per calendar year. The amount payable is the amount the Minimum Royalty exceeds the amount of Royalties actually paid by you in any year of operations in the specific Subterritory being measured. See Note 2. On or before March 31st each year This is payable only if the Royalties actually paid by you in a year of operations for each Subterritory are less than the total Minimum Royalty. The Minimum Royalty is evaluated for each Subterritory independent of the Royalties paid with respect to other Subterritories. The Minimum Royalty will increase no less than 10% if the Franchise Agreement is renewed. Sales, Marketing and Technology Fee 8% of Gross Revenue. Same as Royalty We currently use and expend these amounts to cover costs associated with the Sales Center and CRM System and related current or new technology and systems; advertising and promotion and related activities, public relations, website and social media brand account message management; loyalty programs; gift card programs; marketing, recruiting and managing National Account Customers and local commercial services; and administrative costs related to these expenditures 4899-8658-3815.1
Name of Fee Amount Due Date Remarks Branding Cooperative Up to 5% of Gross Revenue in aggregate As determined by us Only imposed if we authorize franchisees in a particular area to establish a branding cooperative and 65% of the involved franchisees (calculated on a gross revenue basis) subject to the branding cooperative consent to paying fees. See Section 10.5 of the Franchise Agreement. This is paid as directed by the Franchisor. These amounts may be credited towards Local Marketing obligations. Any franchisor-owned outlets in an area subject to a branding cooperative will pay into and vote in the same manner as franchised outlets. You will not be required to contribute more than 5% of your Gross Revenue in the aggregate for all branding cooperatives to which you belong. Optional Local Marketing Services and Assistance To be agreed upon by you and us As agreed between you and us We may charge a fee if we provide local marketing services or assistance to you.
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, the initial franchise fee is $8,125 per subterritory, with a minimum purchase of eight subterritories required, totaling $65,000. For a business with twelve subterritories, the initial fee is $97,500. This fee is generally payable in a lump sum when signing the Franchise Agreement. However, 1-800-GOT-JUNK? may offer financing under certain conditions. Specifically, if a franchisee is granted multiple subterritories, 1-800-GOT-JUNK? has the discretion to allow the initial franchise fee for some subterritories to be paid in equal monthly installments for a specified period.
Item 10 clarifies that 1-800-GOT-JUNK? does not generally offer financing but may, at its sole discretion, allow the initial franchise fee for some subterritories to be paid in equal monthly installments without interest, provided payments are made on time. These installment arrangements are detailed in Schedule B of the Franchise Agreement. Franchisees can prepay outstanding amounts without penalty. Late payments, however, incur interest from the due date until paid in full, at a rate of 24% per annum, or another rate specified in writing, or the maximum rate permitted by law if lower. All owners of an entity franchisee must personally guarantee payments made through installment arrangements.
1-800-GOT-JUNK? may allow franchisees to operate in subterritories for which they are paying the initial fee in installments, as long as payments are current. However, they reserve the right to restrict operation in any subterritories until the initial fees are paid in full. Defaulting on installment payments can lead to 1-800-GOT-JUNK? revising the territory to remove subterritories in default or terminating the Franchise Agreement. Potential liabilities upon default include acceleration of amounts due and payment of collection costs. While 1-800-GOT-JUNK? does not guarantee any debts, leases, or other obligations, they may introduce franchisees to third-party financing sources.
Item 7 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 (calculated as 4 x $8,125 = $32,500 รท 24 = $1,354.17). This financing option is not a standard offering but is subject to 1-800-GOT-JUNK?'s discretion and the franchisee's eligibility. This arrangement can significantly lower the initial financial barrier for franchisees acquiring multiple territories, but it also introduces the risk of high interest rates on late payments and potential loss of territories due to default.