Start a College Hunks Hauling Junk Franchise Business

Taken from Tom Heath's column on greater Washington's entrepreneur set in washingtonpost.com on 3 October 2008.

Nick Friedman and Omar Soliman, two buddies who attended the District's Sidwell Friends School with Chelsea Clinton, will gross more than $2.5 million this year running a trash-hauling business that started as college summer jobs.

They own a fleet of eight trucks in Washington, employ 20 part- and full-time employees, and have franchises in 13 cities, including Baltimore, Richmond, Chicago and Los Angeles.

The business has gone from a room in Friedman's parents' home in Northwest Washington to a warehouse in Rockville and a national call center in Tampa. These are the guys you call to clear out the garage or get rid of the old computers and printout machines in the basement.

What the name says. When the two entrepreneurs were heading into their senior years at college, Friedman at Pomona College in California and Soliman at the University of Miami, they used a van owned by Soliman's mom to sell themselves as furniture movers. After dinging up too much furniture, one customer suggested they stick with trash. They became garbage haulers, distributing fliers and relying on word of mouth. They split $5,000 for the summer and went back for their senior years.

Soliman took the idea and turned it into a business plan that won him a $10,000 award and first place in an entrepreneurial competition at Miami. The two were working as consultants in Washington a year later, Friedman at Marsh & McLennan and Soliman at the Advisory Board, when they decided to revive the company.

"We were both getting antsy crunching numbers for somebody else and making $50,000. I sent Omar an e-mail asking, 'When are we going to start College Hunks Hauling Junk'?" Soliman responded in all capital letters. "MY TIMELINE IS RIGHT NOW."

So they just did it. They made a check list. Brand, logo, website, truck. Initial financing from parents. Soliman's business plan had them eventually going national. They stole their orange and green company colors from Soliman's University of Miami Hurricanes.

"Getting business was a combination of guerrilla marketing, using the truck as a billboard, giving presentations at networking functions like a Chamber of Commerce happy hour in Chevy Chase. We would go and bring our business cards and wear our orange-and-green suits," Friedman said.

I estimate that Hunks Hauling Junk throws off around $500,000 in profit, although Friedman would not confirm that. He and Soliman, who are president and chief executive respectively, earn six-figure incomes and roll the rest back into the company.

Friedman owns four homes in Washington, including a residence on Nebraska Avenue and three remodeled rental townhomes elsewhere in the city. He also owns stock in Apple, Google, Research in Motion and Wells Fargo bank. I caught up with him on his cellphone while he was helping to set up the Tampa call center. Soliman was in Los Angeles working with a franchisee.

"Our primary goal is go get into the top 100 metropolitan markets around the country, to scale up and become a household name," said Friedman. They advertise on the Internet and expand the brand through direct mail. They also troll for business at industry trade shows for groups like property managers and remodelers, both of which are industries that need stuff hauled away.

Of the $2.5 million in gross revenue, $1.2 million comes from the D.C. business and the rest from a 12 percent cost levied on gross revenue from the 13 franchisees. Franchisees can buy a territory for $25,000, adding $12,500 for every additional territory. The fees help cover the cost of the call center.

In return, the founders teach franchisees how to run the business. They also help them find clients and provide coaching and support on how to haul trash. The call center - at 1-800-JUNK-USA - sends franchisees business.

That 1-800 phone number comes from a medical company in Michigan. Friedman and Soliman found it by cold-calling 800 numbers with "junk" in the name and bought the number for $13,000. Almost immediately, they got a big job cleaning out a warehouse for US Airways in Fairfax. It was 50 truckloads worth and paid thousands. They were still operating out of Friedman's parents' house in Northwest.

They learned how to price jobs by trial and error. When they lost money hauling away concrete, they decided to charge extra for heavy items like dirt and concrete. They pay dumps $60 a ton to get rid of the trash.

Another headache was knowing how many employees they needed on a given day and getting them to show up. Hunks pays $10 an hour to their part-timers, but they started adding bonuses of up to $50 a shift based on customer feedback. It became easier to find help.

They also had trouble getting taken seriously. One property manager in downtown Washington didn't like the image of college kids hauling stuff from a law firm in Class A space. Hunks put together reference material from customers like US Airways. They got the job.

Friedman and Soliman couldn't get a bank loan without a credit history, so their parents co-signed the $50,000 loan for their first Isuzu truck. The only current debt is $240,000 on the eight dump trucks in their fleet.

The single homeowner is still their biggest customer, constituting 60 percent of their business. But the housing slowdown has reduced demand. Friedman said that customers used to sell their house at a big profit and not care about what it cost to get rid of the trash left behind. But that has changed, with houses selling for less and sellers keeping a close eye on what they are paying. As a result, the company is targeting commercial office buildings, currently 20 percent of revenue and growing, for more business. The rest comes from real estate agents and remodeling businesses.

The biggest cost is $400,000 for labor annually. The next biggest cost is $75,000 for insurance. Gasoline, dumping fees and $3,000 a month for the warehouse round out the rest of the costs.

The company was only a year old in 2005 when Freidman and Soliman paid $250,000 for a franchise consultant to tell them how to set up a national franchise network. They plan to have 100 franchisees within the next two years, putting them at their goal of being in the top 100 markets. And they recently founded a new company called College Foxes Packing Boxes. The name of the spinoff is a display of the same tongue-in-cheek marketing employed by its anything-but-hunky founders.

"We started out with the idea that clean-cut college guys doing the work, operating an unglamorous business with shirts tucked in and doing manual labor, had some allure to it," Friedman said.

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