Junk King Logo

Junk King

Junk King SPV LLC
https://www.junk-king.com
1-888-888-5865

Initial Investment Range

$125,400 to $300,000

Franchise Fee

$56,250 to $78,250

As a franchisee you will operate a retail junk removal, dumpster, and recycling business under the name Junk King® and provide related services and products pursuant to certain standards and specifications.

Enjoy our complimentary free risk analysis below

Unlock the full risk analysis to access 9 more categories covering 100+ risks.

Junk King April 1, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor, Junk King SPV LLC (Junk King), is part of a complex structure. While its parent's (Neighborly Assetco LLC) financials appear stable, the separate financial statements for the “Manager” (Neighborly Company), which provides all support services, show a net loss of $39.1M in 2024 and a staggering $439M in 2023. These significant losses at the manager level may impact the quality and consistency of support provided to you, despite ongoing fee payments.

Potential Mitigations

  • A franchise accountant should carefully analyze the financial statements of the franchisor, parent, and manager entities to assess the overall financial health and risk.
  • Discuss the operational impact of the Manager’s financial performance with your business advisor and current franchisees.
  • Your attorney should clarify which entity is ultimately responsible for providing franchisee support if the Manager entity faces financial difficulties.
Citations: Item 1, Item 21, Exhibit C

High Franchisee Turnover

Medium Risk

Explanation

Item 20 data for 2024 shows 9 new outlets opened, but also 3 terminations and 3 units that 'ceased operations'. This represents a total of 6 outlets exiting the system (excluding transfers to new owners) from a base of 169, an approximate 3.5% churn rate. While not alarmingly high, it suggests some level of franchisee distress or dissatisfaction within the system that warrants further investigation, especially given the litigation history.

Potential Mitigations

  • It is crucial to contact former franchisees listed in Exhibit F to understand their reasons for leaving the system.
  • Your accountant can help you analyze the three-year trend in terminations, cessations, and transfers to identify if there is a persistent pattern.
  • A business advisor can help compare these turnover rates against any available industry benchmarks for similar service franchises.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD Package. Rapid system growth can sometimes strain a franchisor's ability to provide adequate support to all franchisees. It is a positive sign of demand but requires careful management of resources to ensure quality control and support infrastructure keep pace. The system has shown moderate, not excessively rapid, growth in the most recent year.

Potential Mitigations

  • Your business advisor can help you analyze the growth trajectory in Item 20 and question the franchisor about their plans for scaling support services.
  • Speaking with franchisees who joined at different times can provide insight into how support levels have evolved with system growth.
  • An accountant's review of the franchisor’s financials can help assess if they are investing sufficiently in support infrastructure to match growth.
Citations: Item 1, Item 20

New/Unproven Franchise System

Medium Risk

Explanation

The current franchisor entity, Junk King SPV LLC, was organized in late 2022 and is part of a complex private equity-backed structure. While the Junk King brand itself has a longer history through its predecessors, you are contracting with a relatively new legal entity. The financial statements provided are for the parent company, Neighborly Assetco LLC, not the specific franchisor entity you are contracting with, which presents a layer of structural risk.

Potential Mitigations

  • An experienced franchise attorney should review the corporate structure and the Parent Guarantee in Exhibit D to clarify the parent's obligations.
  • Discuss the practical implications of the recent change in franchisor entity with current franchisees.
  • Your accountant should analyze the financial stability of the entire group, including the parent and manager entities, not just the brand's history.
Citations: Item 1, Item 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. The junk removal business model appears to be based on a consistent consumer and commercial need for services beyond regular municipal trash pickup. While market demand can fluctuate, the core service does not seem to be tied to a short-term trend or fad. The business has been operating since 2005, indicating long-term viability.

Potential Mitigations

  • A business advisor can help you research the long-term demand for junk removal services in your specific local market.
  • Discussing the stability and evolution of customer demand over the years with long-term franchisees can provide valuable insight.
  • Your accountant can help you model the business's resilience to various economic conditions.
Citations: Item 1

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 2 lists the key management personnel for Junk King and its parent/manager, Neighborly. The executives listed generally appear to have significant experience in franchising and managing large service-based companies, either within the broader Neighborly system or at other large corporations. This suggests the leadership team has relevant operational and franchise management experience.

Potential Mitigations

  • Your business advisor should still review the backgrounds of the key personnel listed in Item 2 to confirm their experience is relevant to your success.
  • When speaking with current franchisees, you can ask about their direct experiences with the management team's competence and support.
  • Your attorney can help you understand the roles and responsibilities of the key executives as they relate to the franchisor's obligations.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

Junk King is part of the Neighborly portfolio, which is controlled by private equity firm Kohlberg Kravis Roberts & Co. L.P. (KKR). This ownership structure may introduce a focus on maximizing short-term returns, which could potentially lead to decisions that benefit investors over the long-term health of franchisees. The Franchise Agreement also permits the franchisor to sell the entire system without your consent, adding a layer of uncertainty about future ownership and strategic direction.

Potential Mitigations

  • Engage a business advisor to research KKR's reputation and track record with other franchise systems in its portfolio.
  • It is crucial to ask current franchisees about any changes in culture, fees, or support since the acquisition by the current ownership group.
  • Your attorney should explain the implications of the 'Assignment by Franchisor' clause in the Franchise Agreement.
Citations: Item 1, Item 17, Item 21

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD Package. The franchisor appropriately discloses its parent companies in Item 1, tracing ownership up to entities affiliated with KKR. Further, the direct parent, Neighborly Assetco LLC, provides a Parent Guarantee for the franchisor's performance, and its audited financial statements are included in Exhibit C. This level of disclosure appears to meet regulatory requirements.

Potential Mitigations

  • Your attorney should review the Parent Guarantee in Exhibit D to confirm the scope of the obligations it covers.
  • An accountant should still review the parent's financial statements to assess its capacity to back the franchisor's obligations.
  • A business advisor can help you understand the complex corporate structure and the roles of the different entities.
Citations: Item 1, Item 21, Exhibit D

Predecessor History Issues

High Risk

Explanation

Item 1 discloses a history of predecessors, including Junk King Franchise Systems, Inc. (JKFSI). Item 3 reveals that these predecessors were defendants in multiple lawsuits brought by former franchisees and an area representative, with allegations including fraud, misrepresentation, and breach of contract. Several of these cases resulted in settlements, including a significant payout of over $2.7 million in one instance. This history suggests there have been significant disputes regarding the system's representations and practices.

Potential Mitigations

  • Your attorney must carefully review the details of the litigation involving the franchisor's predecessors in Item 3.
  • Discussing the system's history with long-tenured franchisees who operated under the predecessors can provide critical context.
  • Your accountant can help you assess if the issues raised in prior litigation appear to have been resolved or if they may persist.
Citations: Item 1, Item 3

Pattern of Litigation

High Risk

Explanation

Item 3 reveals a concerning pattern of litigation. There is a recent (2023) case against the current franchisor alleging fraudulent misrepresentation. Furthermore, the franchisor's predecessors have a history of multiple legal actions brought by former franchisees alleging fraud, misrepresentation, and breach of contract, which resulted in settlements. This pattern suggests a potential for significant disputes between the franchisor and its franchisees regarding representations and contractual obligations.

Potential Mitigations

  • An experienced franchise attorney must conduct a detailed review of all litigation disclosed in Item 3.
  • Treat this history as a significant red flag and conduct exceptionally thorough due diligence by speaking with a wide range of current and former franchisees.
  • Your attorney should help you understand if the issues leading to past litigation appear to have been addressed in the current FDD and Franchise Agreement.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
4
3
8

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

3

Financial & Fee Risks

Total: 10
4
5
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

4

Legal & Contract Risks

Total: 16
7
4
5

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
3
1
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
5
2
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
2
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
3
6
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
5
5
8

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
2
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.