How is the minimum royalty fee determined for a 1-800-GOT-JUNK? franchise renewal?
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.
3) At this time, we impose continuing fees in a uniform manner for all new franchisees. Franchisees that were awarded franchises in prior years, franchisees that have prototyped new formats, and franchisees in which we or our affiliates have an ownership interest, may pay different continuing fees than new franchisees.
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 for a franchise renewal will be no less than the minimum royalty payable during the last calendar year of the original term or previous renewal term, with a minimum increase of 10%. This increase may be subject to change as specified in any renewal agreement.
For a prospective 1-800-GOT-JUNK? franchisee, this means that upon renewal, the minimum royalty fee they pay will definitely increase. The exact amount will depend on what they were paying in the final year of their previous term, but it will go up by at least 10%. This is an important factor to consider when projecting long-term costs and profitability.
It's also important to note that specified dollar amounts, including the minimum royalty fee, are subject to an annual inflation adjustment based on the Consumer Price Index (CPI). This means that the actual minimum royalty fee could be higher than the base amount, depending on inflation rates. Franchisees should factor in potential CPI increases when forecasting their expenses. The minimum royalty must be achieved in each subterritory, regardless of the performance in other subterritories.