related diversification in a franchised service business

USASBE_2012_Proceedings-Page0188 

RELATED DIVERSIFICATION IN A FRANCHISED SERVICE BUSINESS: CASE STUDY 

OF COLLEGE HUNKS HAULING JUNK 

George H. (Jody) Tompson 

The University of Tampa 

Sykes College of Business 

Tampa, FL 33606 

jtompson@ut.edu 

813-257-3284 

Holly B. Tompson 

Florida Southern College 

Barnett School of Business 

Lakeland, FL 33801


Related Diversification in a Franchised Service Business: 

Case Study of College Hunks Hauling Junk 

Academic Abstract 

College Hunks Hauling Junk (CHHJ) was founded in 2005 by two friends from Washington, 

D.C. By 2009 the company had moved its headquarters to Tampa, FL, and had appeared on the 

Inc 500 list of fastest growing companies in America. Its founders had appeared on TV as guests 

of Oprah, Shark Tank, and Millionaire Matchmaker. However, by the end of 2009, CHHJ had 

lower revenue than 2008 and many franchisees were not earning the income that they expected. 

This case presents the decision about whether CHHJ should consider diversifying its range of 

services to continue growing its revenue.


Related Diversification in a Franchised Service Business: 

Case Study of College Hunks Hauling Junk 

Executive Summary 

College Hunks Hauling Junk (CHHJ) was founded in 2005 by two friends from Washington, 

D.C. By 2009 the company had moved its headquarters to Tampa, FL, and had appeared on the 

Inc 500 list of fastest growing companies in America. During its first three years, the company’s 

revenue had grown about 65% per year. During the Great Recession the growth ceased and 

system wide revenue in 2009 was 19% less than 2008. But even before the slowdown, many 

franchisees were becoming disillusioned that they were not earning as much money as they had 

hoped. By early 2010 the founders of the company, Nick Friedman and Omar Soliman, knew 

they needed to reassure the franchisees that the company would return to its growth trajectory 

that had looked so promising in the early years. 

The sole service of CHHJ has junk removal. Franchisees contracted with customers to clean out 

their attics, basements, garages, or offices. After the junk was removed, it was sorted according 

to its worth. Useful items were donated to non-profit organizations, plastics and metals were 

recycled, and the rest was delivered to the municipal refuse collection system. For franchisees, 

the weakness in CHHJ’s business model was that most customers did not need frequent junk 

removal services. Even when a customer was completely satisfied with the company’s service, 

he or she was not likely to become a repeat customer within the same year. 

During 2010 the founders of CHHJ acknowledged that they needed to help the franchisees earn 

higher revenue. The case provides a description of the CHHJ business model and asks students 

to devise a plan for the company to diversify into at least one other service that will provide the 

franchisees with a more consistent source of revenue. The case is targeted for use in 

undergraduate courses in strategic management and entrepreneurship. 

INTRODUCTION 

Nick Friedman, co-founder of College Hunks Hauling Junk hung up the phone. “Omar, I just 

got off a conference call with several franchisees. The frustration among them is growing. If we 

don’t help them raise their revenue, I think we might be facing a revolt early next year.” Omar 

Soliman was Nick’s business partner and co-founder. He expected this kind of news. During 

2009 system-wide revenues for the company were 19% lower than 2008. Even before the Great 

Recession impacted the company, only a few of the franchisees were generating the revenue that 

they expected. Even if the recession ended tomorrow, Omar and Nick needed a plan to restore 

the franchisees’ confidence and grow the revenue of their young company. 

Background 

In 2003 Omar Soliman was a business management major at the University of Miami. During 

the summer after his junior year he started a business to make money for school. The concept 

was simple: identifying customers who would pay for junk to be hauled away from their homes


or businesses. That summer, he borrowed the moving van that his mother used for her furniture 

business in Washington, D.C. She needed the van only occasionally, and allowed him to use it 

when she did not need it. The business was more lucrative than he expected, so he began 

dreaming of bigger things. When he returned to the University of Miami for his senior year, he 

heard about the business plan competition hosted by the college of business. He wrote a 

business plan describing College Hunks Hauling Junk (CHHJ) and won the top prize in the 

competition, which was a check for $10,000. Soon after graduating, Omar reconnected with an 

old high school friend, Nick Friedman. Both had accepted corporate jobs after college, but 

neither was happy with their roles. They both had the urge to become entrepreneurs instead. 

They decided to resign from their corporate jobs and found their company - Friedman and 

Soliman Enterprises, LLC - as the sole owner of College Hunks Hauling Junk. Hauling junk 

would no longer be merely a summer job, but would become a year-round business. In 2005 the 

company was founded in Washington, D.C. They were both 25 years old at the time. Friedman 

and Soliman spent three years refining the business model, the brand, and building revenue. In 

those years, they were the only employees. They answered the phones, scheduled appointments, 

drove the truck, and hauled all the junk themselves. Omar recalled those early years. 

“Somehow we did a good job of looking like a bigger, more sophisticated company. 

Most people did not seem to notice that the whole company was just Nick and me 

doing all the work. One day we were driving down the road in our only truck when 

the cell phone rang. It was our only company phone and all customer calls came to 

it. Nick answered. A woman was calling to say that one of the company trucks was 

driving erratically. Of course it was us she was reporting! Nick politely told her 

the driver would be reprimanded when he returned to headquarters!” 

In its early days, the service was very simple. CHHJ advertised locally via billboards, yard 

signs, and its website. Customers paid for junk removal by the cubic foot and could request 

removal of almost any household junk (anything except hazardous waste). 

By 2008 Friedman and Soliman believed they had discovered a promising opportunity in a 

market that was underserved in many cities. They believed College Hunks could become a 

national company. They made the decision to move the company to Tampa, FL and begin 

aggressively selling franchises. See Table 1 for an overview of the company’s growth. 

Table 1: Growth of College Hunks Hauling Junk 

Year Sales Franchises 

2005 $550,000 0 

2006 $1,100,000 0 

2007 $2,500,000 4 

2008 $3,000,000 14 

2009 $2,425,000 23 

Source: CHHJ interviews 

STRATEGY & BUSINESS MODEL 

Since launching the company, Soliman and Friedman dreamed of creating a nationwide franchise 

system that provided junk removal services to businesses and homeowners. Before CHHJ was


launched, the junk-hauling profession was not occupied by clean-cut college men wearing 

uniforms. Soliman and Friedman developed a differentiation strategy based on 1) a creative 

brand and memorable color schemes, 2) service that was courteous, punctual, and tidy, and 3) a 

franchised system that allowed franchisees to own exclusive rights to use the brand throughout a 

geographical region. See Appendix 1 for the CHHJ logo. 

Franchisees needed to invest between $100,000 and $150,000 to finance the start-up of their own 

franchise. Franchisees received one week of training at “Junk University” in Tampa and ongoing 

support and marketing assistance via the toll free phone number and website. And each 

year, all the franchisees were invited to Tampa for a long weekend at the Franchisees’ 

Convention. There were opportunities for networking, training, celebrating, and peer coaching. 

Since the beginning, the founders of CHHJ have shown a knack for effective promotion and 

public relations. In 2008, Inc. named the founders among the “Top 30 Under 30,” which is the 

magazine’s award to cool young entrepreneurs (inc.com/30under30/2008/index.html). In the 

2009 version of the Inc 500 list, College Hunks Hauling Junk was named as the 156 th fastest 

growing company in America and the second-fasted in Tampa Bay. The company is now the 

largest US-based company specializing in the business of junk and trash removal 

(http://www.inc.com/inc5000/2009/the-full-list.html). The founders have appeared on national 

television shows such as Oprah, SharkTank, and Millionaire Matchmaker. They have also been 

the subject of numerous local TV and newspaper stories. 

CHHJ operated a small corporate headquarters in Tampa (known as the “Client Loyalty 

Center”). The Center included a call center to handle all the incoming calls and email requests 

for junk hauling services. The requests were scheduled with the appropriate franchisee, and 

follow-up calls were made to every customer to assess the quality of the franchisee’s service. As 

of January 2010, CHHJ had franchises in 26 regions throughout the US. See Table 2 for a list of 

the franchise locations. 

Table 2: Franchise Locations in January 2010 

AR - Little Rock MD – Baltimore 

AZ - Phoenix MD- Howard County 

CA - Orange County MD- Washington DC 

CA- Los Angeles MI - Oakland County 

CA- San Francisco NC- Raleigh/Durham 

CO- Denver NJ - Jersey 

FL-Ft. Meyers NJ-Hillsborough 

FL- Orlando OH- Cincinnati 

FL- Tampa OH- Columbus 

GA – Atlanta PA - Central PA 

IL- Chicago TX – Houston 

IN – Indianapolis TX- Dallas North 

KY- Louisville VA- Richmond


Franchising usually takes one of two forms. A product distribution franchise occurs when a 

franchisee buys the right to distribute a product or service however he wants. According to 

Shane, Shankar, and Aravindakshan (2006:774) a business format franchise is a “network of 

legally independent organizations that jointly exploit a common asset--the franchisor's plan for 

the provision of a product or service to end customers. Under a business format franchise 

arrangement, the franchisee obtains the right to use the franchisor's brand name and business 

plan in return for paying a royalty and franchise fees and agreeing to oversight by the 

franchisor.” 

To buy a CHHJ franchise, a person must pay $35,000 for exclusive rights to a geographic zone 

of operations. Any additional zones are discounted to a price of $15,000. In addition to the 

franchise fee, there are other start-up costs that a franchisee incurs, totaling between $100,000 

and $150,000. See Table 3 for a list of start-up expenses for a typical CHHJ franchisee. 

Table 3: Start-up Expenses for a CHHJ Franchisee 

Type of Expense Amount Explanation 

Initial franchise fee $35,000 Buy exclusive rights to a geographic region. 

Vehicle signage $900 - $1500 Logo signage and paint on the CHHL truck. 

Deposit / Down pymt $4500 - $12,000 Initial lease pymnt or down payment to 

on vehicle 

acquire a truck. 

Equipment & tools $600 - $2,000 Equipment for loading junk into truck. 

Office equip & 

supplies 

$1,400 - $2,000 Supplies for managing the franchise. 

Business license & 

permits 

$1000 - $3000 Fees vary by city and state 

Professional fees $1500 - $3500 Attorney and CPA fees for start-up. 

Insurance deposit $900 - $2000 Deposit on liability and workers comp policy. 

Training expenses $2,200 - $4,000 Training to learn how to manage the 

franchise. 

Grand Opening $15,000 Advertising efforts to promote opening of the 

advertising expenses 

franchise in the local community. 

Working capital $37k - $70k Estimated 3 months until break-even. 

After acquiring a franchise, the franchisee must also pay ongoing fees to the franchisor. See 

Table 4 for a list of those fees.


Table 4: CHHJ Franchise Fee Schedule 

Fee Name Amount Purpose 

Continuing Royalty Fee 7% of Gross Payment to franchisor for the privilege of 

Sales using the business system. 

Client Loyalty Center Admin. 6% of Gross Pays for administration of the Client 

Fee 

Sales Loyalty Center on behalf of all franchisees. 

Also covers all software maintenance, 

supports licensing fees for the proprietary 

software, and maintenance fees for the 

intranet. 

Regional Advertising Fee 1% of Gross Fees used for creating and buying 

Sales advertising for a region, to benefit all the 

franchisees in the region. 

Local Advertising Fee 6% of Gross We may require our franchisees to form 

Sales regional advertising cooperatives in their 

local markets 

Selected Financial Information 

Based on historical information from existing franchisees, CHHJ has created a profile of the 

financial results that a new franchisee can expect. See Table 5 for a pro forma P&L for a typical 

franchisee of CHHJ. During 2008 the average price per job was $304 but fell to $301 during 

2009. Pricing a job was estimated when the customer contacted the Customer Loyalty Center. 

But the price was not guaranteed until the franchisee arrived at the customer’s location. The 

final price of a job was based on the volume of junk that was to be loaded into the CHHJ truck. 

- - - Insert Table 5 Here - - - 

JUNK REMOVAL INDUSTRY 

For centuries, junk removal was a do-it-yourself industry. Even today, most people remove the 

junk from their attics, garages, and storage units with the help of friends and family. Or maybe 

they hire a neighborhood high school boy. In recent years, however, there has been a trend 

toward national branding in industries that have historically been very fragmented and occupied 

by hundreds of sole proprietors or regional providers. For example, H&R Block in income tax 

preparation, Merry Maids in home cleaning, TruGreen in lawn service, and Stanley Steamer in 

carpet cleaning are all national brands that are leaders in fragmented industries. 

The world’s largest junk removal company is 1-800-GOT-JUNK? Like CHHJ, it was also 

started by a college student who was searching for a way to earn extra money during his summer 

vacation. The company was founded in 1989 in Vancouver, British Columbia by Brian


Scudamore when he was 18 years old. By 2009 it had more than 250 franchisees in Canada, the 

US, and Australia. Nick Friedman estimated that 1-800-GOT-JUNK earned annual revenue of 

around $80 million. The business models of the two companies were similar. Both were 

business format franchises that operate a centralized call center, national and regional 

advertising, unified branding and public relations, training for franchisees, and similar capital 

requirements. According to its website, 1-800-GOT-JUNK required prospective franchisees to 

have about $95,000 in liquid capital to start a franchise. The franchise fee was $18,000 per 

region with additional regions costing $9,000 each. In many US markets, College Hunks 

Hauling Junk and 1-800-GOT-JUNK were competing head-to-head. 

While 1-800-GOT-JUNK is the most visible competitor in the industry, CHHJ also faced 

competition from legions of regional and local companies. In every city, there were local junk 

hauling services that could be found by searching the Yellow Pages, Yahoo Local, or Google. 

These competitors had a lower cost structure and could usually offer prices that undercut CHHJ. 

For example, the CHHJ franchisee in Orlando, FL faced competition from Orlando Lawn Patrol, 

LLC and Haul Away Harry’s. These companies appeared to have some marketing budget and 

some presence on the internet. Another tier of competitors existed at even a lower cost position. 

These were the casual or part-time service providers that might work only in their own 

neighborhoods. They were referred to as “a teenager with a pick-up truck” and typically had no 

insurance, no website, and no marketing efforts besides posting signs on telephone poles. Entry 

barriers for these companies could hardly have been any lower, and they did provide a service 

that was valuable to some customers. CHHJ was certainly aware of these providers and had 

intentionally refused to cut prices to match them. 

STRATEGIC ISSUE 

When they moved their company to Tampa in 2008 Friedman and Soliman saw their roles as 

building an effective system so that their franchisees could become successful. The Tampa and 

Washington locations were company-owned (instead of franchises) but Friedman and Soliman 

removed themselves from running the local businesses and hired managers instead. The main 

issue confronting franchisees was finding the optimal balance between pursuing customer 

retention and customer acquisition (Peifer, 2005). Customer retention involved building 

relationships with existing customers so that they maintained loyalty, became repeat buyers, and 

spread positive word-of-mouth advertising about the company. Customer acquisition included 

all the activities to encourage non-customers to abandon competing brands, or to enter the 

market for the first time. 

In the junk removal business, most customers were infrequent buyers. They might require junk 

removal services once or twice per year, or maybe even less. Infrequent purchase was not 

usually due to poor service from CHHJ. Instead, people usually accumulate junk slowly and do 

not regularly need to pay for it to be removed. Consequently, CHHJ franchisees spent almost all 

their marketing resources on customer acquisition instead of retention.


The Opportunity for Diversification 

When considering how to grow the business via new customer acquisition, a recurring question 

for Nick and Omar was whether to create a whole new service (or services) that the franchisees 

could offer. Because junk removal was such an infrequent need for most people, franchisees 

struggled to earn a consistent stream of revenue. If they were able to offer other services, they 

might acquire new customers more easily, and upsell more services to existing customers too. 

The idea of providing an additional service (or services) was appealing as a source of more 

consistent revenue, but the owners could foresee a difficulty in rolling out a new service to all the 

existing franchisees. The franchisees had bought into the system with the understanding that 

they would be in the junk removal business. Some of them might be reluctant to provide new 

services because it would require new training, new equipment, and new marketing efforts. 

What would Nick and Omar do if the franchisees refused to expand? Nick and Omar wanted to 

offer new services at their company-owned franchises (Tampa and Washington, DC) but 

wondered how the expansion would be accepted by franchisees across the country. 

A typical franchisee had the following resources at his disposal: employees who were 

accustomed to carrying and loading heavy objects, a small dump truck with enclosed sides (see 

Appendix 2), a call center that handled incoming calls and booked reservations for franchisees, a 

brand that was well-recognized in some cities, and a network of like-minded franchisees who 

were expected to share new ideas. Most of the franchisees in the system were generating annual 

revenue of just under $100,000. According to the proforma statements (see Table 5), they were 

below the “average case” scenario that they were expecting when the bought into the franchise, 

so maybe most franchisees would be amenable to diversifying into another service or two. 

Nick and Omar knew their leadership and creativity would be tested in the upcoming months. 

They were sure they needed to add a new service (or services) to the junk hauling service the 

CHHJ already provided. But what should it be? It needed to fit with the skills and resources the 

franchisees already owned, it needed to be affordable for the franchisee to invest into, and it 

needed to be something that would generate more consistent revenue for the franchisees.


APPENDICES 

Appendix 1: College Hunks logo 

Appendix 2: CHHJ Truck


Table 5: Financial Scenarios for a CHHJ Franchisee 

Assumptions: 

Avg. job price $250 $300 $350 

Jobs per day 1 1.25 2.25 

Operating Days Per month 26 26 26 

Franchisee Annual Sales 

Cost of Sales 

Worst 

Case 

$78,000 

LABOR (assume 20%) 15,600 

Disposal (assume 9%) 7,020 

Total Cost of Sales 

Gross Profit 

Operating Costs 

Truck Payment (1 truck) 

22,620 

55,380 

10,200 

Office supplies 6,000 

Insurance (assume 1 truck) 4,200 

Royalty fees (7%) 5,460 

Call center fees (6%) 

Local Advertising fees 

4,680 

($1.5k/month) 

18,000 

National Ad fees (1%) 780 

Fuel (assume 6%) 4,680 

Bank Charges (assume 1.5%) 1,170 

Other 6,000 

Total Operating Costs 

NET PROFIT 

61,170 

(5,790) 

Average 

Case 

$117,000 

23,400 

10,530 

33,930 

83,070 

10,200 

6,000 

4,200 

8,190 

7,020 

18,000 

1,170 

7,020 

1,755 

6,000 

69,555 

13,515 

Best 

Case 

$245,700 

49,140 

22,113 

71,253 

174,447 

10,200 

6,000 

4,200 

17,199 

14,742 

18,000 

2,457 

14,742 

3,686 

6,000 

97,226 

77,222


REFERENCES 

Pfeifer, P. E. (2005). The optimal ratio of acquisition and retention costs. Journal of 

Targeting, Measurement and Analysis for Marketing, 13 (2), 179-188. 

Shane, Shankar, & Aravindakshan. (2006). The effects of new franchisor partnering strategies 

on franchise system size. Management Science, v52 i5 p773. 

Introduction 

TEACHING NOTE 

This case describes a real company facing a real dilemma during the fourth year of its existence. 

The names of the company and its founders have not been changed. College Hunks Hauling 

Junk, LLC is a franchised company that provides one service: hauling away unwanted junk from 

homes and businesses. Throughout the system, franchisees have not usually been able to earn the 

revenue that they hoped when the bought into the franchise. The primary reason is that they 

have discovered that almost none of their customers are repeat buyers. In most cases, people 

require junk removal services only once every few years. The dilemma facing the founders 

(Nick Friedman and Omar Soliman) is whether to roll out additional services for their 

franchisees to provide. 

Courses 

Previous versions of the case have been class-tested in undergraduate strategy and undergraduate 

entrepreneurship courses. It appeals to these students because 1) they can relate to two guys who 

started a business during college and 2) CHHJ is a pretty simple business that has been 

successful so far. While moving junk from an attic to a truck is a simple job, designing a 

strategy for related diversification is not simple. In our experience, a common weakness in the 

recommendations that undergraduates devise relates to feasibility. Their ideas are often creative 

and ambitious, but they are often unrealistic too. We have not tested the case with MBA 

students, but believe they might create a better balance of feasibility with their ideas for related 

diversification. 

Role of the Authors 

One of the authors is on the company’s board of advisors and has invited the founders to speak in 

class on several occasions. The case study has developed over two years as the founders have 

made presentations to the students at the university.


Discussion and Analysis 

The decision issue is pretty clear in this case: how can the franchisor (CHHJ) help its franchisees 

increase their revenue? 

1. What are the options for College Hunks Hauling Junk to generate more revenue? 

In layman’s terms, CHHJ could 1) sell more services to its existing customers & markets 2) sell 

its services to new customers & markets 3) create new services for its existing customers and 

markets, and 4) create new services for new customers and markets. 

We recommend lingering on this part of the question so that students can come up with the four 

options. Ideally, some students will see that CHHJ has been emphasizing options 1 and 2 

exclusively. But because of the nature of the service, recurring revenue has been very difficult to 

establish. This is a good time to emphasize to students that CHHJ is at a real inflection point in 

its strategy. There almost certainly must be a big strategic change or the franchisees will not 

ever earn the returns that they were hoping for. 

If the students remember their Principles of Marketing course, they might be familiar with the 

Ansoff Matrix shown below in Figure 1. 

Figure 1: The Ansoff Matrix 

This is a good tool for illustrating four distinct methods of growth. For the first several years, 

CHHJ pursued only the strategies in the left column of the matrix. Market Penetration offers 

only limited growth potential because most customers will need junk removal services only once 

every few years. Market Penetration is effective, especially when a franchisee is able to get sales 

leads and referrals from satisfied customers. However, there is intense competition from 1-800- 

GOT-JUNK in most markets. Furthermore, there are very powerful substitute products in most 

cities also. Depending on how much time you have for this case, there is an important diversion 

that you might want to take during the discussion. You can start with a question such as “Why is 

the threat of substitute services such a powerful force in this industry?” The answer, of course, is


that the barriers to entry are almost negligible for this industry. Any high school boy in a pickup 

truck can provide junk removal services for people in his neighborhood. CHHJ has decided 

not to compete on price, so local substitute services are almost always a lower-priced substitute 

than CHHJ. 

The right column is where Nick and Omar (the founders of CHHJ) are now working. They 

believe that only providing junk removal service has nearly reached its full potential. They do 

not want to discontinue it, but believe that they should develop some additional services to 

bolster the revenue and the image of the franchisees. 

2. What new services should CHHJ develop? 

This question deserves a lot of analysis and thinking. If students have not prepared in advance to 

answer this question, then the discussion probably will be wide-ranging and full of dead end 

ideas such as lawn mowing, pool cleaning, dog-walking, and car washing. Consequently, we 

think this question should be explicitly assigned to the students before the day of the class 

discussion. It can also be the main question for a take home exam or a graded homework 

assignment. 

The first step in this process must be to determine how to make this decision. Specifically, the 

decision maker must develop criteria to which all solutions must be compared. NOTE: The 

instructor should decide whether to give the class this hint about developing a list of criteria. 

Advanced students will already know that this is an important step but beginner students will 

need to be told to develop their list of criteria. The last sentence of the case vaguely describes 

the criteria that student should consider when devising a plan of new services. The table below 

shows a list of criteria for guiding the decision on what services could be developed for the 

franchisees of College Hunks Hauling Junk. Of course this list is not exhaustive – professors are 

encouraged to devise their own list using their understanding of the case and of the concept of 

related diversification. 

Table 1: Suggested Criteria for Evaluating Options for New Services 

Criterion for New Service Rationale 

Financially feasible for franchisees. 

Goal of new investment < $10k per 

franchisee. 

Feasible for existing skill sets of 

employees. 

Franchisees have already invested $100k - 

$150k to buy into the business. Most of them 

have not been very successful so far, and 

probably don’t have the willingness or 

resources to invest heavily again. 

The franchisor will provide some training for 

the new service. But the new service must be 

within the realm of skills similar to the ones 

already in use. Currently, the “Hunks” are 

clean-cut, punctual, and courteous. Their first 

job is to verify that the cost estimate (given 

over the phone) is accurate. They either 

confirm the price estimate, or adjust it 

according to the size of the job. Then they load 

junk into the truck and haul it away.


Generates new source of revenue Junk hauling industry has strong competitors, 

strong substitutes, and it provides inconsistent 

revenue. For franchisees to earn annual 

revenue above $100k consistently, they must 

have another revenue stream to compliment 

junk hauling. 

Fits with CHHJ resources The culture, the assets, the strategy, and the 

leadership of CHHJ is all designed to provide a 

differentiated service. The key physical 

resources are the trucks that the franchisees 

own and the reservation system that schedules 

appointments with customers (owned and 

managed by the franchisor). 

In a nutshell, the new service should make use of the CHHJ truck and the manual labor that is 

currently underutilized in most of the franchisees. Possible suggestions are: 

Lawn / yard maintenance – trucks can be used to carry equipment; the business provides 

recurring and regular revenue 

Swimming pool maintenance – same benefits of lawn and yard maintenance 

Snow plowing – in northern states the truck can be outfitted with a removable snow plow 

Delivery service – truck can be used to deliver equipment or other bulky items 

On-site shredding – carry a commercial shredder to companies that need secure 

documents shredded. 

Local moving services – good use of truck and labor. But inside of trucks tend to get 

dirty when they haul junk. 

The objective of this part of the case analysis should be to create defensible criteria, then choose 

the new service that best meets the criteria. In our experience, this can lead to a good discussion 

about “fit” if the students have spent some time evaluating the many options that are available to 

CHHJ. 

3. Should CHHJ consider any new services that are not related to junk hauling? 

This question can be used if time permits, or if the instructor wants to expand the discussion to 

include related vs. unrelated diversification strategies. All strategy textbooks will have a chapter 

or two on corporate-level strategy. One of the main topics is diversification into related 

products/services (concentric) or diversification into unrelated products/services (conglomerate). 

This topic might be especially useful if students decide that CHHJ should diversify into an 

unrelated service such as babysitting or pizza delivery. 

Epilogue 

During 2010 CHHJ launched “College Hunk Moving” as a test market in Tampa, FL. Results 

were stronger than expected during the first half of the year, so a few other franchisees were 

approved to try it also. The results in Washington DC and Atlanta were also positive so Nick 

and Omar began to plan how they could roll out the service nationwide. While one-way moving 

is similar to junk removal, there are costs and complications. In Tampa, the business purchased


a moving truck instead of using the junk hauling dump truck for two reasons. First, the dump 

truck is usually dirty on the inside and there was concern that customers would not appreciate 

their furniture being carried inside a filthy truck. Second, the moving truck has a capacity that is 

almost 100% larger than the dump truck. Of course the insurance coverage is more expensive, 

there are separate licenses to obtain, and the employees must be trained to handle customer’s 

belongings much more carefully than the junk that they normally carry. Overall, 2010 has been a 

promising year and it looks like the College Hunks will begin growing again.

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