Lots of businesses that we consult with don’t fully understand how their local trash market works. They start to find out what’s really going on when they attempt to shop around for a better rate, but learn there’s no other option because the city already picked the hauler.
Now what?
While your waste market is something rarely thought about, it plays a significant role in how you can negotiate your trash bill and what kind of leverage you have with your hauler.
I’ll explain the differences between open markets and franchised markets below.
Two Ways Commercial Trash is Offered: Open Market & Franchise
In an open market, your business has the freedom to choose its own hauler. There are multiple companies competing for the work, which pushes prices down. And you’re free to negotiate your contract or move to a different provider when it expires.
Most of the country operates as an open market.
With franchised markets, the local government decides which hauler is allowed to collect commercial waste in specific areas. A city or country runs a bidding process, awarding the work to one or a few haulers. The rate is often set at this time, too.
Businesses operating in an area with a franchise market don’t get to shop around for haulers. They use whoever the government picked during the city’s bidding.
Not All Franchised Markets Work the Same Way
Within the franchise waste market model, there are two variations that are actually very different from each other:
- Exclusive franchise — One hauler gets the sole right to service an area, and the city or county sets the rate.
- Non-exclusive franchise — The city/county approves a short list of haulers (usually with caps on how much they can charge), and you have the freedom to choose your hauler within that group.
In both cases, you can’t bring in an outside hauler for commercial waste. But with non-exclusive franchises, you do have more options and more negotiation leverage.
How Your Market Affects Your Waste Hauling Costs
Whichever market you sit in, it’s important to understand that the structure only sets your starting leverage position. It’s not a final number set in stone, and two businesses in the same market can pay drastically different rates depending on who’s actually watching the contract.
Open Markets
- Competition keeps base prices honest because haulers can lose your business.
- Your ability to walk at renewal and shop around gives you leverage.
- Nothing caps a hauler from overcharging you, padding bills with extra fees, or having steep annual rate hikes.
- Prices tend to creep up over multi-year terms, especially under auto-renewal policies.
Exclusive Franchise
- There’s no price competition at all because the city sets the rate.
- The deal is only as good as the city’s negotiations (but most cities aren’t waste experts)
- Rates often land at or above open-market levels.
- Similar add-on fees can still stack on the base rate.
- Service quality can slip because the hauler knows you can’t take your business elsewhere.
Non-exclusive Franchise
- Partial competition with a short list of approved haulers.
- Sometimes rates are still capped, but they’re typically higher than exclusive agreements.
- Budgeting gets a bit more predictable since rate structures tend to be published.
- You still have room to play approved haulers against each other, giving you more leverage compared to exclusive franchises.
The biggest callout here is that you typically negotiate rates on exclusive franchises (because the city has already done this on your behalf), you can still lower your costs by auditing your waste streams, changing service levels, and improving efficiency.
So anyone who tells you that “there’s nothing you can do about your costs in an exclusive franchise market” is dead wrong. You can absolutely save money. There’s just a different way to approach it.
It’s also worth knowing that no market structure erases the underlying factors that drive costs: distance to landfill, tipping fees, local recycling laws, contamination fees, fuel, labor, and so on.
How to Figure Out What Type of Market You’re In
Most businesses have no idea what type of market they’re in. Here’s how to find out:
- Look at the dumpsters around your area. If every business has the same logo on the dumpster, you’re probably in an exclusive franchise. Whereas a mix of logos points to an open market.
- Call your hauler. Ask them directly whether your address falls inside of a franchise agreement with the city.
- Check your city or county public works department. Most have a web page covering solid waste collection, recycling, and disposal laws. If there’s a franchise agreement, the exclusive hauler or list of approved haulers should be on there too.
- Read your contract. Any language referencing a city franchise, “rate schedule” set by the municipality, or fixed term tied to a government agreement are all strong signals that you’re not in an open market.
To be clear, you can’t change what type of market you’re in. But it’s still crucial that you know this information, as it’s the starting point for how you can cut costs.
Examples of Different Waste Markets
Let’s look at a few real-world examples of how different waste markets play out nationwide.
Open Market — Chicago
Chicago is a prime example of an open waste market. Commercial trash and multi-family buildings are serviced by private haulers, and you have the freedom to choose whoever you want. You negotiate your own rate, and you’re free to move on whenever your contract is up.
Some businesses use national names like Waste Management, while others use local independent haulers.
The city does layer on some rules, like mandatory commercial recycling. But they don’t decide who picks up your trash or set caps on what that hauler can charge.
Exclusive Franchise — Los Angeles
Los Angeles launched its RecycLA program in 2017, which gave seven haulers the exclusive right to collect commercial trash across 11 zones and roughly 66,000 accounts at rates set by the city.
I chose this example because at first glance it sounds like a non-exclusive agreement because there are multiple haulers. But it’s not. Each zone has a designated hauler. And that’s the only option.
You can see a service map here, showing different parts of the city served by WM, Republic, Athens, Ware, NASA, and UWS.
Non-Exclusive Franchise — Pasadena
Pasadena has been running a lighter version of a non-exclusive franchise for years.
They currently have 21 different providers on their commercial franchise hauler list for solid waste, and seven haulers for organic waste. Nobody outside of these names can service your business. But you have the full freedom to choose your provider within the list.
It’s a good example to show that even franchised markets aren’t necessarily strict “closed doors.” And in this case, Pasadena has more options than some open markets in certain parts of the country.
Laws Changing Markets — New York City
New York was previously an open market until Local Law 199 of 2019 split waste collection into 20 zones, assigning three authorized haulers per zone with rates capped by the city’s Business Integrity Commission.
The rollout has been happening in phases, and full citywide coverage is targeted for the end of 2027. But if you miss your zone’s sign-up window the city can assign you a hauler at the maximum allowable rate.
This goes to show you how new regulations can change your existing market, which can directly impact your costs on waste hauling.
What to Do About It
Don’t fall into the trap that your hands are tied based on your market. You still have plenty of options to get control over your trash and recycling costs. But the approach varies slightly depending on your city’s local policies.
If you’re in an open market:
- Get competitive quotes from a few other haulers before your contract expires.
- Negotiate the entire contract (not just the headline rate).
- Audit each invoice against the agreed rates in your contract.
- Look for extra fees and questionable line items that are likely padded rates from your hauler.
- Make sure you have the right container size and pickup frequency to ensure you’re not overpaying for half-empty dumpsters or being charged overage fees.
- Don’t lose sight of the renewal date, as auto-renewal contract clauses can quickly turn a fair contract into an expensive one with pre-set increases.
If you’re in a franchised market:
- Figure out whether you’re in an exclusive or non-exclusive service area.
- Confirm exactly what’s regulated (just trash, just recycling, organic waste, some combination, etc.)
- Seek open market haulers for anything that’s not regulated under your local laws (ex: trash from city but recycling from an open market hauler).
- Audit the bill against your franchise agreement to ensure the hauler isn’t tacking on extra fees that were never authorized.
- Look for ways to optimize your waste stream for things you can control (container size, pickup frequency, avoiding contamination fees, etc.)
- For non-exclusive zones, make sure you deliberately negotiate inside of the rate cap and choose a carrier that isn’t just charging the max rate.
- Play bids from authorized carriers against each other to get leverage.
Final Thoughts and Key Takeaways
Don’t assume that “franchised” means you’re stuck, and don’t assume that “open” means you’re already getting a fair price. Both of these assumptions cost businesses a ton of money every month.
Since open markets are unregulated by local governments, it means there’s no cap on how much your hauler can charge. So these invoices deserve even more scrutiny, despite your ability to choose any provider you want.
Exclusive franchise agreements can still be padded with fees that violate the underlying agreement. And even if your city sets caps on how much the exclusive hauler can charge, you can still save money by auditing and improving your own internal efficiencies.
If you need help navigating any of this, just reach out to our team here at The Cost Guards for a free audit. We’ll take a look at your specific market, audit your invoices, and ensure you’re getting the best possible rate on commercial waste hauling.