🍟 1/13/2022 – Turning Trash Into Cash
David Perell: Hugging the X-Axis:
“A life without commitment is a life where you can’t take advantage of compounding curves”
This essay was a great reminder of the benefits of having a singular focus. It reminded me of two things:
- The person who always switches career paths never gains expertise in a particular area
- In franchises, the owners who stay committed to building locations are the ones that end up as success stories (example: Tom Cook of Pacific Bells).
Think long-term, and take advantage of compounding efforts!
Jack Butcher: An Example of Compounding Efforts
In 2021 Jack Butcher surpassed over $1M in personal revenue, because he stayed committed and reaped the benefits of his compounded efforts.
One Franchise Breakdown:
College Hunks Hauling Junk
- Founded in 2003, franchising since 2007
- Based in Tampa Bay, Florida; 156 territories operating
- Offers junk removal, moving, and labor services
Fees + Investment
- Franchise Fee: $40,000 – $60,000 (depends on market size)
- Royalty: 7%
- Brand Fund: 2%
- Initial Investment: $108,700 – $273,200
- The below information is based on 90 franchised outlets in the full year 2020
The Wolf’s Take 🍟
Average EBITDA of $214k off of at most a $273k initial investment…for a sample size of 90 franchisees, that is a super impressive system-wide performance .
At 156 territories operating, there is likely still a couple hundred available markets for this franchise. My biggest questions in general would be:
- Is this industry over-saturated?
- How many territories do the top performing franchisees own?
The latter question is best answered by talking to existing franchisees, while the former requires a deep-dive on the junk removal industry.
Competition is of course not a bad thing, if anything it’s typically a good sign that there is a market to support a business. However there are many competitors that saw plenty of growth over the last decade i.e. Two Men & a Truck (314 territories), Junk King (136 territories), 1-800-Got-Junk? (160 territories), etc.
This doesn’t mean the market’s full though – there’s plenty of folks who passed on Five Guys just because McDonald’s, Burger King, Wendy’s, In-N-Out, Sonic, etc. already existed.
But for me it is the question worth digging into on a macro level if you want to pursue this franchise opportunity!
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