related diversification in a franchised service business

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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