Junk King | Top Franchise in Waste Removal & Hauling (2023)
Written by: Parth Parth
Last Updated by
María Fernández Amato: May 17, 2023
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Junk King franchise is a company in the Waste Removal and Hauling industry. The company was founded in 2005 by two friends and business partners, Mike Rovner and Brian Reardon. They started the company in San Carlos, California, with the goal of providing an eco-friendly and efficient junk removal service to homeowners and businesses.
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The company’s services include removing and hauling away unwanted items such as furniture, appliances, construction debris, and yard waste. The company also makes an effort to recycle and donate as much of the collected materials as possible, reducing the amount of waste that goes to landfills.
In 2011, Junk King began offering franchises and has since grown to over 40 locations across the United States and Canada. The company prides itself on its commitment to providing excellent customer service, responsible disposal practices, and a low-cost, high-value business model. In the next five years, Junk King plans to add an additional 125 franchisees and 400 units in key markets throughout North America.
As a Junk King franchise owner, you would be responsible for providing waste removal services to your local community, while also receiving support and guidance from the corporate team on marketing, operations, and compliance with environmental regulations.
How Is Junk King Franchise Positioned in the Waste Removal Industry?
The Waste Removal and Hauling industry includes companies that collect, transport, and dispose of waste materials, including garbage, recyclable materials, and hazardous waste. This industry is essential to maintaining public health and the environment by ensuring that waste is collected and disposed of in a safe and responsible manner.
The Waste Removal and Hauling industry is a large and growing market, with revenues in the U.S. alone projected to reach around $73 billion by 2027, growing at a CAGR of 2.6% during the forecast period. Rising population, urbanization, and increasing consumer spending on goods and services are some of the factors that drive the growth of this industry.
The industry can be divided into several subsegments, including non-hazardous waste collection, hazardous waste collection, and recycling services. Non-hazardous waste collection is the largest segment and comprises regular household waste, construction debris, and other non-hazardous materials, representing around 60% of the total industry revenue.
Additionally, the industry has been evolving in recent years as it has seen an increase in recycling efforts to reduce the pressure on landfills and conserve resources. Today, many companies are focusing on providing specialized services like e-waste and hazardous waste management, which requires special handling and disposal techniques. This is expected to drive the industry further in the near future.
Overall, the Waste Removal and Hauling industry plays a vital role in maintaining public health and the environment by ensuring that waste is collected and disposed of in a safe and responsible manner.
How Much Is a Junk King Franchise?
The initial Junk King Franchise Fee ranges from $54,000 to $78,000. You have to pay this upfront fee when opening a Junk King franchise.
Junk King Franchise Cost
The estimated total investment necessary to begin the operation of a Junk King Franchise ranges from $54,000 to $78,000. The following costs are part of the upfront costs included in the initial investment for a Junk King. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Junk King franchise in 2023.
Estimated Initial Investment
| Type of Expenditure | Amount | To Whom Payment Is to Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $54,000 | $78,000 | Us |
| Travel and Living Expenses While Training | $1,500 | $7,000 | Third-party vendors |
| Inventory and Supplies | $500 | $1,000 | Third-party vendors |
| Fixtures, Furniture, and Equipment | $2,000 | $3,000 | Third-party vendors |
| Signage | $1,000 | $2,000 | Third-party vendors |
| Vehicles | $10,000 | $15,000 | Third-party vendors |
| Office and Warehouse Lease | $1,500 | $6,000 | Landlord |
| Leasehold Improvements | $0 | $5,000 | Third-party vendors |
| Prepaid expenses/Insurance | $1,500 | $2,400 | Insurance Agent/Company |
| Pre-Opening Payroll | $1,000 | $5,000 | Employees |
| Additional Funds – 3 months | $15,000 | $50,000 | Suppliers, Utilities, etc. |
| TOTAL | $88,000 | $174,400 | |
Requirements
Junk King’s minimum financial requirements are $50,000 in liquid assets and a $150,000 net worth.
Ongoing Fees
Royalty: (a) 8% of Gross Revenue for the first 18 months immediately following the opening of the Franchised Business, and (b) beginning in the 19th month of operation of the Franchised Business, the greater of (a) 8% of Franchisee’s Gross Revenue or (b) $2,000.
National Account Fee: Varies, typically a fee equal to 1% to 20% of the invoice amount
Customer Care Center Fee: 5% of Gross Revenue
Outgoing Customer Care Center Fee: $250 per month
How Much Do Junk King Franchise Owners Make?
| Franchised Businesses Quartiles | Number of Franchised Businesses in Subset | Average Total Revenue | Number and % of Outlets Attaining or Exceeding Average Total Revenue | Median Total Revenue | Lowest Total Revenuw | Highest Total Revenue |
|---|---|---|---|---|---|---|
| Top Quartile | 26 | $1,558,045 | 12 / 46% | $1,361,409 | $1,010,492 | $2,707,714 |
| 3rd Quartile | 26 | $869,816 | 13 / 50% | $876,409 | $699,594 | $1,005,545 |
| 2nd Quartile | 26 | $590,126 | 13 / 50% | $589,077 | $503,673 | $693,529 |
| Bottom Quartile | 26 | $391,155 | 15 / 50% | $402,200 | $219,420 | $496,970 |
| All Franchised Outlets | 104 | $852,285 | 41 / 39% | $696,562 | $219,420 | $2,707,714 |
2021 Junk King Median Franchise Sales: $696,562
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $131,200 | 15% | $104,484 | 2.75 years |
| 20% | $139,312 | 2.5 years | |
| 25% | $174,140 | 2.25 years |
Based on the median sales provided by Junk King’s franchise locations, at an average of a 15% profit margin,margin, it will take around 2.5 years to recoup your investment. This is shorter than other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Waste Removal stores; and the extent of market penetration and brand awareness that Junk King stores have attained in your market. Also, the quality of management and service at your Franchised store are major factors.
Is the Junk King Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Junk King franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.58
When you go to sell a Junk King franchise based on the median multiple of .58 and net sales of $696,562, it would sell for $404,005. This is significantly higher than the midpoint investment of $131,200.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
How Many Junk King Units Have Opened and Closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 89 | 92 | +3 |
| 2020 | 92 | 103 | +11 | |
| 2021 | 103 | 132 | +29 | |
| Company-Owned | 2019 | 3 | 5 | +2 |
| 2020 | 5 | 6 | +1 | |
| 2021 | 6 | 3 | -3 | |
| Total Outlets (United States) | 2019 | 92 | 97 | +5 |
| 2020 | 97 | 109 | +12 | |
| 2021 | 109 | 135 | +26 |
Over the last three years, the company has expanded at an average rate of 14 franchises per year between 2019 and 2021, growing from 92 to 165 locations.
Statement of Income
| (in thousands) | September 1, 2021 through December 31, 2021 (Successor) | March 26, 2021 through August 31, 2021 (Predecessor) |
|---|---|---|
| Revenues and income | ||
| Franchise service fees | $46,350 | $64,679 |
| Synthetic royalties and master license fees | 4,482 | 8,958 |
| Franchise sales fees | 3,705 | 6,580 |
| Sales of products and services | 7,157 | 21,133 |
| Advertising and promotional fund revenue | 12,045 | 13,431 |
| Interest and other | 10,473 | 11,095 |
| Total revenues and income | 84,212 | 125,876 |
| Cost of products and services | 4,934 | 11,372 |
| Gross Profit | 79,278 | 114,504 |
| Selling expense | 1,676 | 2,522 |
| Advertising and promotional fund expense | 12,045 | 13,431 |
| Amortization | 25,454 | 5,637 |
| Management expneses | 10,206 | 13,123 |
| Bad debt expense | 413 | 157 |
| Net income | $29,484 | $79,634 |
Junk King is a very profitable business for the franchisor with retained earnings of $29.4 million in 2021. Compared to $79.63 million in 2020, they saw a decrease of around 40% from 2020 to 2021.
Junk King Franchise Sold to Neighborly
Junk King has been sold to Neighborly, the world’s largest home services company, according to a press release from Boxwood Partners. The transaction, led by Boxwood Partners, will see Junk King join the Neighborly family of brands, which already has over 30 different brands and 5,000 franchises, collectively serving more than 12 million customers in six countries.
Junk King’s co-founder, Mike Andreacchi, said in the press release that Boxwood’s expertise in franchising and residential and commercial services made for a “curated and efficient process” in finding the perfect partner in Neighborly. He added that the merger of Junk King’s established system with Neighborly’s resources will be beneficial for both franchisees and customers in the future.
Mike Bidwell, President and CEO of Neighborly, also commented on the acquisition, saying that Junk King’s eco-friendly junk removal services provide Neighborly with an opportunity to expand into a new vertical and that the growth potential in the $10 billion junk removal market is exciting.
Conclusion
Junk King is a well-established and reputable franchise opportunity in the waste removal and hauling industry. Founded in 2005, the company has a strong commitment to providing excellent customer service, responsible disposal practices, and a low-cost, high-value business model. With plans to expand to over 165 locations in the next five years, the company presents a promising opportunity for those interested in entering the Waste Removal and Hauling industry.
It is important to note that the initial investment for a Junk King franchise ranges from $54,000 to $78,000, and the company has specific financial requirements for franchisees. It is always a good idea to thoroughly research any franchise opportunity and carefully consider the costs and responsibilities involved before making a decision.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Waste Removal and Hauling industry.
