Is the minimum royalty fee for 1-800-GOT-JUNK? calculated across all subterritories or individually?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
The Minimum Royalty is the following amount for each subterritory in your Territory: (i) $1,200 in the calendar year which the Franchised Business commences operations, pro-rated as necessary to account for operations for a partial calendar year only; (ii) $1,900 in the second calendar year of operations; (iii) $2,500 in the third calendar year of operations; (iv) $3,200 in the fourth calendar year of operations; (v) $4,000 in the fifth calendar year of operations; and (vi) in the event of a renewal, no less than the Minimum Royalty payable during the last calendar year of the term or previous renewal term (as the case may be) plus an increase of no less than 10% (except as otherwise specified in any renewal agreement). The Minimum Royalty must be achieved in each subterritory in your Territory, regardless of the performance in other subterritories.
Source: Item 6 — Other Fees (FDD pages 11–17)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, the minimum royalty fee is calculated individually for each subterritory within a franchisee's territory. The FDD specifies that the minimum royalty must be achieved in each subterritory, irrespective of the performance in other subterritories. This means that each subterritory is evaluated independently for the minimum royalty requirement.
The minimum royalty amount varies depending on the year of operation, starting from $1,200 in the first year (pro-rated for partial years) and increasing to $4,000 per subterritory per calendar year by the fifth year. If a franchisee renews their agreement, the minimum royalty will increase by no less than 10% of the amount payable during the last calendar year of the term or previous renewal term.
This individual calculation has significant implications for franchisees. If one subterritory performs poorly, the franchisee is still obligated to meet the minimum royalty for that specific subterritory, regardless of how well other subterritories are performing. This could create financial pressure on franchisees if they have underperforming areas within their territory. It is important for prospective franchisees to carefully evaluate the potential of each subterritory and develop strategies to ensure they can meet the minimum royalty requirements for each one.