What is a Franchise Waste Collection Area?

Here is a compare and contrast I excerpted from Los Angeles:

Current Open-Market System
Solid waste collection services are provided through an open-market system in which each resident directly arranges for services with the hauler.  Although many waste haulers are doing a good job, this system has been unable to meet demands created by changes in Federal and State laws, public attitudes toward protecting the environment, and consumers’ demands for better services and protection against excessive rate increases.

Proposed Franchise System
The new franchise system will provide residents with ways to dispose of solid waste in an environmentally-friendly way.  Haulers selected to provide solid waste collection services are required to enter into a franchise agreement with the County based on specific terms and conditions.  The agreements are based on services expressed by the community and are designed to improve customer service, increase accountability, promote cleaner neighborhoods, and regulate rates charged by haulers.

Benefits of Franchise System
The franchise system is designed to provide uniform service standards for haulers operating in each franchise area.  The system provides each community with the flexibility needed to create services that will benefit area residents.  These features are modified to reflect feedback received through survey cards, community meetings, and telephone calls.  This interactive process allows the County to tailor each agreement to meet the needs voiced by each community.  The franchise system also benefits the community by limiting the wear and tear on County streets, assists the County in meeting the State’s waste reduction mandate, and reduces the need for new landfills.

To me this definition is vague. Essentially franchise waste collection areas serve to reduce the number of garbage trucks driving around town and ensure a greater amount of compliance for the community.

What this means for an organization is that they have a difficult time negotiating rates because there is no competition. The rates have been determined by the local government. This is widely true, but not always. You have to make a few calls to double check.

Since most people’s idea of waste cost reduction is simply rate negotiations, you can see why they give up when confronted with a franchised market. However, waste reduction and recycling is still wide open and can provide a a big cost reduction.

Keep in mind that recycling rates are most often lower than waste disposal rates and recyling more can net you a win. Then there are other methods of reducing the frequency of pick ups that will drive down costs.

To be honest, these projects take some elbow grease and often busy managers never find the time to do their best. In short franchise markets are a great place to get a third party involved. OK, that’s a plug, but it’s the reality.

To help offset the budget shortfall, and for a host of other reasons, the landfill tipping fee is set to rise from $5.90 per ton to $13.00 per ton. Yikes!

Critics say the out of state haulers will look elsewhere for landfills, and that the plan won’t work to generate extra revenue for the state.

The risk to trash generators is that since this is a state tax, you’ll have to eat the cost increase should the State legislature pass the bill.

We examine your contracts, visit your facilities, and peer in your dumpsters. Then we make best-practice recommendations tailored for your operation. Typically, we find that businesses treat their waste disposal solution as a low priority or a fixed expense, which may result in over payments and needless cost overruns. These fall into roughly four categories, all of which ultimately result in higher costs for you…

(1) Conflict of Interest Relationships

Businesses typically rely on the waste haulers to set up their disposal solution. But haulers have no economic incentive to save you money because they get paid for every truck they drive on site, and every dumpster they haul – whether full or not.

This is like the fox guarding the hen house – a true conflict of interest.

If the relationship between hauler and client has been abused, we’ll find over-service, overcharges and fee increases – it happens to companies of all sizes.

(2) Incompatible Business Strategies

Haulers follow an operational efficiency model. If they help you save money, they lose money. And most haulers simply will not swap short-term revenue gains in exchange for long term customer loyalty.

(3) Withholding Technology Improvements

New technology and equipment improvements can save a customer’s cash, but customers rely on their waste hauler to provide them with the latest news and information. And, not surprisingly,  many haulers consider it counterproductive to provide information, advice and technology that will reduce a customer’s costs. After all, the hauler’s revenue and profitability is closely tied to their customer volume.

(4) Automatically Renewed Contracts

Many businesses are operating under their original (and outdated) waste disposal agreement. Often, the hauler’s contracts will have automatically renewed several times since inception – with no attempt at new price negotiations.

You’re probably thinking  you did the smart thing by bidding out your waste management hauler contract to get the best price. And under ordinary circumstances that would be true, but…

When it comes to waste disposal and recycling, the haulers set the market price, not the consumers. Waste haulers have no economic incentive to help their clients optimize costs! Because the hauler makes money every time they bring a truck on site, and for every dumpster they haul.

What that means is that most firms are paying more for their waste services and equipment than they should – or need to! And they don’t know that they’re being taken to the cleaners!

Wouldn’t you like to know whether your company is throwing good cash away on your solid waste management program?

If you’d like to discover the hidden savings and potential revenue in your trash, let Midas Management Consulting help you now.

Download our free report, or simply contact us for your free, no-obligation consultation today.