What is the minimum royalty fee for the first calendar year of operation for a 1-800-GOT-JUNK? franchise if operations commence mid-year?
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 the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, the minimum royalty for the first calendar year of operation is $1,200. However, this amount is pro-rated if the franchise commences operations mid-year, meaning the franchisee will only pay a portion of the $1,200 based on the number of months they were in operation during that first calendar year.
This pro-rating provides a financial benefit to new 1-800-GOT-JUNK? franchisees, as it reduces their initial financial burden during the start-up phase. It acknowledges that a business starting mid-year may not generate the same revenue as one operating for the entire year, and adjusts the minimum royalty accordingly. This pro-rated minimum royalty only applies to the first year of operation.
It's important to note that while the minimum royalty is $1,200 in the first year (pro-rated if applicable), it increases in subsequent years. The FDD states that this minimum royalty is applicable for each subterritory in the territory. Also, the specified dollar amounts are subject to an inflation adjustment annually in proportion to the change in the Consumer Price Index, U.S. Average, all items, maintained by the U.S. Department of Labor (or any replacement index selected by 1-800-GOT-JUNK?).