Junk King Franchise

Financing Details

Junk King SPV LLC does not offer direct or indirect financing in general, but it may finance a portion of the initial franchise fee for qualified prospective franchisees under specific terms. The amount financed is typically up to 70% of the initial franchise fee, and in some cases up to 80% if franchisees meet certain requirements. The decision to provide financing depends on the franchisee's creditworthiness, available collateral, and Junk King's current financing policies. Interest rates for financed initial franchise fees are tiered based on credit scores: 12% for scores under 600, 11% for 600-649, 10% for 650-699, and 9% for scores of 700 or more. Franchisees must sign a promissory note and pay the balance in monthly installments, starting approximately two months after completing Phase I Training. Repayment terms generally range from 5 to 9 years, depending on the loan amount. Junk King requires a security interest in the franchise and may require a spouse's personal guarantee. Franchisees can prepay the note without penalty. Junk King may also, in limited circumstances, finance a portion of any renewal fee for qualified franchisees at a 12% interest rate. While Junk King may refer franchisees to third-party lenders, it does not currently earn income from these referrals and does not guarantee obligations to third parties.

Litigation Summary

Junk King SPV LLC is currently involved in one active litigation case. This case, filed in November 2023, involves a former franchisee who sued Junk King for tortious interference, civil conspiracy, and fraudulent misrepresentation after their buyer's franchise rights were terminated. The plaintiff is seeking damages and a permanent injunction to transfer the franchise rights back to them. Junk King denies all allegations and intends to vigorously defend the claims. The case is currently awaiting a court order regarding dismissal for lack of prosecution. Prior litigation involving Junk King's predecessors includes three resolved cases: 1. An arbitration filed in October 2015 by former franchisees against Junk King Franchise Systems, Inc., alleging fraud, negligent misrepresentation, and breach of contract. This was settled in February 2020 with a mutual release of claims. 2. An arbitration filed in April 2019 by an area representative against Junk King Franchise Systems, Inc., alleging breach of agreement related to fees and territorial options. This was settled in February 2020, resulting in Junk King repurchasing the area representative's territorial rights for $2,721,380.43. 3. A lawsuit filed in October 2017 by former franchisees against Junk King Franchise Systems, Inc., alleging breach of contract, violations of California's Franchise Investment Law, negligent misrepresentation, and fraud. This was dismissed with prejudice in March 2018 following a settlement where Junk King paid $110,000, assumed truck loans, and repurchased territory and assets. Additionally, there are two administrative orders involving affiliates (not directly Junk King SPV LLC): 1. A November 2017 consent order with the California Department of Business Oversight involving a predecessor to the Window Genie brand (an affiliate), which resulted in a $5,000 administrative penalty for failing to submit advertisements. 2. A November 2010 consent judgment with the State of Kansas involving a predecessor to the Molly Maid brand (an affiliate), which resulted in a $25,000 civil penalty and $25,175 reimbursement for investigation costs related to a franchisee's inability to document employee background checks and gift certificate sales.

Renewal Conditions

To renew their Junk King franchise agreement, franchisees must meet several conditions. They must not be in default of their current Franchise Agreement or any related agreements, must have timely satisfied all monetary and other material obligations, and be in good standing, having received no more than two written notices of default during the term. Additionally, franchisees must not have failed to meet the Minimum Performance Standards for any two calendar years (or two measurement periods) during the term. Franchisees are required to provide written notice of their intent to renew between 180 and 240 days before the expiring term ends. They must also sign a general release of claims, complete Junk King's then-current training requirements, and sign the then-current version of the franchise agreement, which may include materially different terms, conditions, and fees. A renewal fee of $5,000 is also required.

Staffing Notes

Junk King SPV LLC recommends a minimum of one full-time and three part-time employees to start the business, including at least one driver and two navigators. The franchisor emphasizes that franchisees are solely responsible for all employment decisions and actions, including hiring, discharging, tax withholdings, and setting wages and benefits. Junk King explicitly states that none of the franchisee's employees are considered employees of the franchisor. Any training provided by Junk King to franchisee workers is limited to guidance on delivering approved services in accordance with the System's customer service standards. Franchisees are solely responsible for ensuring their workers receive adequate training. Wage rates and benefits for employees will vary based on the geographic area and specific job positions.