What were the management and administration fees for 1-800-GOT-JUNK? for the period ended May 31, 2025?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
May 31 May 31
Sales Centre $ 13,515,783 $ 10,244,752 Licensing fees 10,400,913 8,365,599 Management and administration fees 6,039,630 5,687,420 Ad Fund 4,504,472 3,440,748 Interest on outstanding balance due to RBDS 303,956 176,377
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, the management and administration fees for the period ended May 31, 2025, were $6,039,630. For comparative purposes, the fees for the same period in 2024 were $5,687,420. These fees are part of the expenses listed in the Consolidated Statements of Net Income and Comprehensive Income.
These fees are charged to 1-800-GOT-JUNK? by RBDS Rubbish Boys Disposal Service Inc., a related party. The fees are determined based on a transfer pricing agreement between RBDS and 1-800-GOT-JUNK?, which aims to approximate fees that would be charged by third-party service providers or licensors in similar situations. This suggests that 1-800-GOT-JUNK? relies on RBDS for management and administrative services, and the cost is a significant component of its overall expenses.
For a prospective franchisee, understanding the nature and basis of these fees is crucial. Since these fees are paid to a related party, it would be prudent to inquire about the specifics of the services provided and the transfer pricing agreement to ensure transparency and fairness. Additionally, comparing these fees to industry benchmarks for similar services could provide further insight into their reasonableness. The consistent increase in these fees from 2024 to 2025 also warrants attention, as it could indicate a trend of rising operational costs.