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Financial Disclosure Footnotes

Item 7 Notes

(1) In general, none of the expenses listed in the above chart are refundable, except any security deposits you must make may be refundable. Our estimate assumes that you are purchasing one Zone only. If you open multiple Zones, the initial investment would be higher. The high end of the estimated initial investment assumes that you are purchasing both the College Hunks Hauling Junk® and College Hunks Moving® concepts. The above table also applies to the “small market” franchise for Zones and a conversion franchise for business operators in a similar business.

(2) All fees are payable to us, unless otherwise stated.

(3) Franchise Fee. The initial franchise fee is discussed in detail in Item 5. If you are purchasing a standard Zone, the initial franchise fee is $40,000 to $50,000. This does not reflect the potential investment for a small market fee which is less than the standard Zone fee. If you are purchasing a small market franchise, the initial franchise fee will be calculated as 15¢ per person in the Zone you are purchasing and the Initial Franchise Fee will range from $750 to $49,999.90. If you are purchasing a conversion franchise, you will pay us an initial franchise fee that is equal to our then-current initial franchise fee reduced by an amount equal to 10% of the total sales for the previous year for your existing business, but in no event will you pay less than $5,000.

(4) Rent; Lease, Utility and Security Deposits. You will need an office space of approximately 200 to 300 square feet for the Franchised Business. The costs for your rental and security deposits will depend on, among other things, the size of the space you choose to rent and your creditworthiness. We do not permit that you operate the Franchised Business from your home. However, you may operate from your home while you are searching for an office but you must be operating your franchise from an office within 90 days of opening. If you purchase a conversion franchise and your existing office is from your home, you must operate your franchise from an office.

(5) Signage. Your truck will need to be painted the color that we specify. You will also need to letter your vehicles in accordance with local ordinances, our guidelines and the Operations Manual. Our estimate represents the painting and signage costs for one truck. If you purchase both concepts, you will need painting and signage for at least two trucks. If you are a conversion franchise, you must paint your existing trucks to our specifications. (6) Service Vehicle. Our estimate represents the down payment on a service vehicle. If you purchase your truck outright instead of leasing or financing it, you will pay between $45,000 and$63,000. Our current service vehicle specifications are included in our Operations Manual and are subject to change. The truck you must use in the College Hunks Hauling Junk® concept must have our custom designed dump bed. Our custom dump body manufacturer and specifications are separate from the truck manufacturer’s specifications and design. The estimated cost of the dump body is approximately $16,000 to $22,000, and the estimated costs for the truck is between $30,000 and $45,000. The estimate includes the cost to lease or finance the truck and have the dump body built and installed, but does not include any amounts if you have an older truck that needs to be retrofitted to meet the new clean diesel rules that took effect in 2010. We anticipate that diesel truck prices are expected to continue to increase as a result of the new diesel standards, and we reserve the right to approve alternative vehicle options if they meet our performance standards and brand consistency. See Item 12 for requirements for you to purchase or lease additional trucks for your Franchised Business. The estimated lease amount for the first 3 months of operation is between $3,000 and $4,000. We reserve the right to modify the required vehicle and introduce new vehicle specifications and retrofit requirements such as roll-off containers. If you wish to purchase a used truck for your Franchised Business, the truck must be approved by us before you purchase it. If you purchase a conversion franchise, you may still be required to purchase new vehicles or truck equipment to match our current specifications.

(6) Service Vehicle. Our estimate represents the down payment on a service vehicle. If you purchase your truck outright instead of leasing or financing it, you will pay between $45,000 and$63,000. Our current service vehicle specifications are included in our Operations Manual and are subject to change. The truck you must use in the College Hunks Hauling Junk® concept must have our custom designed dump bed. Our custom dump body manufacturer and specifications are separate from the truck manufacturer’s specifications and design. The estimated cost of the dump body is approximately $16,000 to $22,000, and the estimated costs for the truck is between $30,000 and $45,000. The estimate includes the cost to lease or finance the truck and have the dump body built and installed, but does not include any amounts if you have an older truck that needs to be retrofitted to meet the new clean diesel rules that took effect in 2010. We anticipate that diesel truck prices are expected to continue to increase as a result of the new diesel standards, and we reserve the right to approve alternative vehicle options if they meet our performance standards and brand consistency. See Item 12 for requirements for you to purchase or lease additional trucks for your Franchised Business. The estimated lease amount for the first 3 months of operation is between $3,000 and $4,000. We reserve the right to modify the required vehicle and introduce new vehicle specifications and retrofit requirements such as roll-off containers. If you wish to purchase a used truck for your Franchised Business, the truck must be approved by us before you purchase it. If you purchase a conversion franchise, you may still be required to purchase new vehicles or truck equipment to match our current specifications.

If you purchase the College Hunks Moving® concept, you will need a different style truck.  If you will offer moving services, you will incur an additional $5,000 to $40,000 for a used truck, depending on the age and condition of the truck, or from $45,000 to $80,000 for a new truck.  Any moving truck you purchase or lease must meet our specifications for size, appearance, and performance.  If you wish to purchase a used moving truck, the truck must be approved by us before you purchase it.  These estimates are based on the assumption that these vehicles are financed.  If you purchase the vehicles for cash, your initial investment costs would be higher.

(7) Equipment and Hand Tools.  Our list of required equipment is provided in the Operations Manual. The required tools include hand tools, global positioning system (GPS) for navigation purposes, credit card processor, cleaning tools and other materials. The cost of uniforms is also included in this estimate. If you purchase a conversion franchise, you must purchase our required uniforms. If you purchase the College Hunks Moving® concept, you must also purchase appliance dollies, 4-wheel dollies, piano boards, rubber bands, moving pads (72” x 80”), and other miscellaneous inventory such as marketing inventory, wall map, packing supplies, and boxes. We estimate that the initial cost of these items will be between $2,000 and $5,000.

(8) Office Equipment and Supplies. The office equipment you must purchase and maintain includes a computer, printer/fax/copier, initial marketing materials, truck supplies, and miscellaneous office supplies, and may include office furniture. (9) Business Licenses & Permits. The costs estimated above include an estimate for the required dump permits, in addition to other business licenses and permits you may be required to have by your local government. If you purchase the College Hunks Moving® concept, you will have separate license and permit requirements. If you purchase a conversion franchise, you will not incur this additional expense unless you add the College Hunks Moving® concept. Moving license requirements vary significantly state by state with some states having very rigorous and expensive licensing requirements. You are encouraged to investigate your state’s moving license requirements. (10) Professional Fees. You will need to have an attorney and an accountant and possibly other

(9) Business Licenses & Permits. The costs estimated above include an estimate for the required dump permits, in addition to other business licenses and permits you may be required to have by your local government. If you purchase the College Hunks Moving® concept, you will have separate license and permit requirements. If you purchase a conversion franchise, you will not incur this additional expense unless you add the College Hunks Moving® concept. Moving license requirements vary significantly state by state with some states having very rigorous and expensive licensing requirements. You are encouraged to investigate your state’s moving license requirements. (10) Professional Fees. You will need to have an attorney and an accountant and possibly other

(10) Professional Fees. You will need to have an attorney and an accountant and possibly other professionals.

(11) Insurance. The figures in the chart are your monthly premiums. The low end of our estimate assumes that you are purchasing one concept and your Franchised Business will have one truck; the high end of our estimate assumes that you are purchasing both concepts and your Franchised Business will have two trucks and the additional insurance required to provide moving services, such as cargo insurance and employee dishonesty insurance. In rare cases, you will have to pay the entire annual premium in a lump sum, or you may pay your premiums quarterly or semi-annually. You must obtain the amounts and types of coverage which meet our minimum specifications.

(12) Training. The figures in the chart are your expenses during initial training. You will have salary, travel and lodging expenses. For this training program, we provide instructors and instructional materials, but you will need to arrange for transportation, lodging and food for yourself and one other trainee. The cost will depend on the distance you must travel and the type of accommodations you choose.

(13) Business Ramp-Up Advertising. You must conduct a business ramp-up (grand opening) advertising campaign to promote your Franchised Business within the first 180 days of commencing each service (moving and junk removal), and the advertising you need may include media buys and promotional items including point-of-sale items and merchandise. The required amount you must spend for business ramp-up is $10,000 per service per Zone (i.e. $10,000 for moving and $10,000 for junk removal). We must approve your business ramp-up advertising campaign before you use it, and the programs/materials must be spread over each 180-day period from the date you begin providing each service. We may require you to pay this money to us and we will spend it on your behalf using the marketing methods that we have identified as being most effective.

(14) Additional Funds. You will need capital to support ongoing expenses, such as payroll, utilities, vehicle fuel and maintenance, and local advertising if these costs are not covered by sales revenue during the start-up phase, which we estimate to be 6 months. New businesses often generate a negative cash flow. We estimate that the amount given will be sufficient to cover ongoing expenses for the start-up phase of the business, which we estimate to be 3 months. This is only an estimate and there is no guarantee that additional working capital will not be necessary during the start-up phase or after.

(15) The estimates provided above assume that you will have one Service Vehicle and own one Zone. If you choose to purchase both concepts and/or multiple Zones, your initial investment will be significantly higher.  We relied upon our principals’ and affiliates’ experience in providing junk removal since 2005 and moving services since 2011 when preparing these figures.  However, these figures are merely estimates and there is no assurance that additional working capital will not be necessary during this initial 3-month phase or at any time after the initial 3 months.  The costs outlined in this Item 7 are not intended to be a forecast of the actual cost to you or to any particular franchisee.

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