About Closets By Design Franchise
Closets By Design is a home organization franchise offering custom closets, garage cabinets, and a variety of other home organizer systems.
The business model encompasses retail sales, manufacturing, and professional installation, providing a complete solution for homeowners seeking tailored storage improvements.
The franchise fee is $20,000, and the brand has been franchising since 2001.
Closets By Design Franchise Cost & Fees
Minimum Investment
$152K
Average Investment
$328K
Maximum Investment
$503K
| Fee Type | Amount | Notes |
|---|---|---|
| Initial Franchise Fee | $20,000 | One-time payment upon signing |
| Royalty Fee | The greater of (i) 6.75% of your previous month’s Gross Revenues, or (ii) the “Minimum Royalty” of $3,000 per month. of gross sales | Ongoing; paid monthly |
| Marketing/Ad Fund | National Promotion and Protection Fund Contribution of 2.25% of monthly Gross Revenues. | National brand fund |
| Total Investment Range | $152,000 – $503,000 | Includes build-out, inventory, working capital |
The investment range of $152K–$503K reflects variability in build-out costs, store size, lease terms, and market. The combined royalty (The greater of (i) 6.75% of your previous month’s Gross Revenues, or (ii) the “Minimum Royalty” of $3,000 per month.) and marketing fee (National Promotion and Protection Fund Contribution of 2.25% of monthly Gross Revenues.) are ongoing costs paid as a percentage of gross sales.
Investment Breakdown (Item 7)
| Item | Low | High |
|---|---|---|
| Initial Franchise Fee | $20,000 | $20,000 |
| Territory Fee | $18,000 | $35,000 |
| Travel/Living Expenses for Initial Training | $2,500 | $3,500 |
| Furniture, Fixtures and Equipment (including computer) | $35,000 | $250,000 |
| Grand Opening Advertising - 1st 3 months | $30,000 | $45,000 |
| Inventory and Supplies | $10,000 | $25,000 |
| Deposits for Vehicles | $1,000 | $4,000 |
| Interior/Exterior Signs | $500 | $1,000 |
| Licenses and Permits | $500 | $1,500 |
| Rent/Rental Security Deposits | $2,000 | $8,000 |
| Retail Shop Build-Outs and Improvements | $5,000 | $30,000 |
| Business Insurance | $1,500 | $2,000 |
| Legal/Accounting | $1,000 | $3,000 |
| Additional Funds – 1st 3 months | $25,000 | $75,000 |
Additional Fees (Item 6)
| Fee Type | Amount |
|---|---|
| Transfer Fee | The greater of: 2% of the sales price or $8,500 (if transferee identified by third-party broker); or $8,500, plus the greater of: $40,000 or 10% of the sales price (if transferee identified by CBDF). |
| Renewal Fee | $5,000 |
| Technology Fee | Software License Fee: $300 annual lease payment; Software Maintenance Fee: $225 each month; AIM Sales Management Portal Fee: Our then-current fee which shall not exceed $25 per user per month (currently not charged). |
| Audit Fee | 10% interest on under payment (plus cost of audit if understatement by 5% or more or takes 8+ hours to organize records). |
| Late Payment Charge | 5% of the delinquent amount plus interest |
| AIM Sales Management Portal Fee | Our then-current fee which shall not exceed $25 per user per month |
| Late Reporting Charge | $250 |
| Late Quarterly Financial Statement Charge | $500 |
| Transfer Notification Fee | 1% of the sales price |
| Additional Training | $1,000 per person per day, plus CBDF’s travel, lodging and living expenses |
| Additional On-Site Training and Assistance | $750 for the 1st day and $500 for each additional day, plus costs of transportation, food and lodging |
| Annual Conference, Regional Meetings | Up to $750 per attendee |
| Leads | Up to 120% of the then-current system average cost per lead |
| Market Development Fee | 25% of the Gross Revenue you obtain from the extra territorial transaction |
| Replacement Manual | $5,000 |
| Taxes | Promptly when due |
| Late Fee | 5% of amount due |
| Interest | Lesser of: (i) 18% or (ii) the maximum APR permitted by law |
Training Program (Item 11)
| Detail | Information |
|---|---|
| Total Duration | Initial Franchise Training includes 64 hours of classroom training and 56 hours of on-the-job training. Additionally, 1 to 2 weeks of on-site training is provided around the business opening date. |
| Classroom Training | 64 hours (Administration: 8, Marketing: 8, Basic Operations: 16, Sales and Sales Management: 16, Design: 16) |
| On-the-Job Training | 56 hours (Basic Operations: 16, Production and Shop Training: 40) |
| Training Location | Garden Grove, California, other designated training center or virtually (if we deem necessary) |
| Additional Training | Additional attendees or replacement General Managers pay $1,000 per person per day for training. Additional on-site training costs $750 for the first day and $500 for each additional day, plus travel, lodging, and food expenses. Mandatory annual conferences or regional meetings may incur a fee of up to $750 per attendee, plus travel and living expenses. |
Territory Rights (Item 12)
| Detail | Information |
|---|---|
| Territory Type | Protected |
| Exclusive Territory | No |
| Territory Size | typically contain from 300,000 to 350,000 households |
| Description | The Territory is determined by population and typically contains 300,000 to 350,000 households, as specified in Exhibit 1. While the Franchise Agreement is in effect, CBDF will not locate another Closets By Design franchise in your Territory unless you are not in material compliance. However, CBDF and CBDI reserve the right to provide products and services in your Territory directly or through subcontractors if you refuse or are unable to provide them. CBDF can also solicit 'Leads' in your Territory through various means. The franchisor and its affiliates can own, operate, and situate Closets By Design Businesses outside your Territory near or adjacent to its boundary, but no public-access location of any such business can be *within* your Territory. The franchisor also reserves the right to sell 'off the shelf' products through other channels within your territory. |
Renewal, Termination & Transfer (Item 17)
| Detail | Information |
|---|---|
| Initial Term | 5 years |
| Renewal Term | 5 years |
| Renewal Fee | $5,000 |
| Renewal Conditions | To renew, franchisees must sign the then-current form of Renewal Franchise Agreement, pay a $5,000 renewal fee, sign a general release, and refurbish/remodel their location and update equipment/supplies to current standards. The Renewal Agreement may have materially different terms. If advertising obligations were breached, CBDF may redefine and reduce the territory as an alternative to non-renewal. |
| Transfer Fee | The greater of: 2% of the sales price or $8,500 (if transferee identified by third-party broker); or $8,500, plus the greater of: $40,000 or 10% of the sales price (if transferee identified by CBDF). |
| Transfer Conditions | Transfer requires CBDF's prior written consent, which will not be unreasonably withheld if conditions are met. Conditions include: proposed assignee not being an existing franchisee, assignee applying for acceptance and undergoing qualification, assignee's principals attending a personal interview, assignee demonstrating necessary skills and financial resources, assignee's General Manager completing initial training, lessor consent to lease assignment (or new acceptable location), assignor curing all existing defaults and satisfying monetary obligations, assignee executing a new Franchise Agreement (if applicable), assignee executing a Confidentiality/Non-Competition Agreement, assignee agreeing to serve as General Manager, the business possessing required working capital post-transfer, assignor executing a general release, and assignor providing a copy of the proposed contract of assignment. Assignor remains liable for pre-transfer obligations and must comply with the post-term non-compete. |
| Termination for Cause | CBDF can terminate for various defaults. Automatic termination occurs for bankruptcy or insolvency. Immediate termination without cure opportunity applies to abandonment, material misrepresentation, loss of location, felony conviction, unauthorized transfer, trademark misuse, failure to complete training, knowing concealment of revenues, false records, audit revealing 8% or more understatement, refusal to allow inspection, misappropriation of funds, repeated defaults, willful misrepresentation to government, interference with contractual relations, incurable impairment of goodwill, non-compliance with laws, failure to maintain insurance, public ridicule, unauthorized use of proprietary products/information, or operating in a manner jeopardizing public safety. For other defaults, franchisees have 30 days to cure (or up to 60 days if cure is not reasonably possible within 30 days). As an alternative to termination for curable breaches, CBDF may redefine and reduce the territory. |
| Non-Compete Period | 2 years |
| Non-Compete Details | During the term of the franchise and for two years following its expiration or termination, franchisees are prohibited from directly or indirectly engaging in any competitive business. This restriction applies within the franchisee's former Territory, within 75 miles of its perimeter, or within 75 miles of any other Closets By Design Business Territory (whether company-owned or franchised). It also prohibits soliciting for employment or hiring CBDF's or its affiliates' personnel (or former personnel within 12 months) for two years after termination/expiration. |
Operations & Supply (Items 8 & 15)
| Detail | Information |
|---|---|
| Owner-Operator Required | Yes |
| Participation Details | Franchisee Principals are required to personally participate in the direct operation of the Franchise, devoting the necessary time, attention, and best efforts. Additionally, the franchisee must either serve as (if an individual) or designate at least one full-time General Manager for the Location. This General Manager must receive prior written approval, devote their entire business time to management, and successfully complete initial training. Engaging a General Manager does not relieve Principals of their obligation to personally participate on a full-time basis. |
| Required Suppliers | Any materials containing the Closets By Design marks must be obtained only from designated vendors or from suppliers we have approved. Proprietary products, including metal extrusions for custom organizers, legs for garage organizers, and other proprietary components, must be purchased from CBDF, its affiliates, or designees. |
| Supply Restrictions | If CBDF enters into or arranges for any system-wide supply contract, franchisees must purchase specified products/services only from the designated vendor, unless they can reasonably demonstrate prices are more than 10% higher than the market average for equal or greater quality. Franchisees may also be required to participate in specified consumer financing programs. |
| Franchisor Revenue from Suppliers | In the fiscal year ended December 31, 2021, CBDF generated $358,791.75 in revenue from required purchases made by franchisees (0.523% of total revenues) and received $301,031.91 in rebates as a result of franchisee purchases (0.439% of total revenues). |
Financing (Item 10)
| Detail | Information |
|---|---|
| Financing Available | Yes |
| Description | CBDF may offer financing for the Territory Fee in certain situations. If a franchisee is granted a Territory with 300,000 to 350,000 households and meets CBDF’s credit standards, CBDF will finance up to the amount by which the Territory Fee exceeds $40,000. The financing term is 12 months, with a 10% down payment and an interest rate of 9.50% compounded monthly. Security required includes a Promissory Note or Personal Guaranty by franchisee’s owners and their spouses. Failure to pay on time can lead to termination of the franchise and immediate demand for the full outstanding balance. |
Closets By Design Franchise Earnings — Item 19
Average Revenue
$7.9M
Median Revenue
$5.6M
Revenue Range
$1.4M – $26.0M
Sample Size
53 units
Past financial performance does not guarantee future results. Individual results will vary.
Closets By Design Litigation & Risk Flags
2 Pending Actions ListedReview the full FDD for details on pending litigation.
Litigation and bankruptcy data is sourced from Items 3 and 4 of the FDD. Always verify current status directly from the most recent FDD.
Closets By Design System Growth
Total Units
72
Franchised
65
Company-Owned
7
Closets By Design currently operates 65 franchised locations and 7 company-owned units. Unit count data is sourced from Item 20 of the FDD.
Unit History (Item 20)
| Year | Opened | Closed | Total |
|---|---|---|---|
| 2019 | 7 | 1 | 57 |
| 2020 | 6 | 3 | 60 |
| 2021 | 6 | 1 | 65 |
Transfers: 2 | Closures: 1
Franchisor Financials (Item 21)
Revenue
$68.6M
Closets By Design Franchise — FAQ
The total investment to open a Closets By Design franchise ranges from $152,000 to $503,000, per their Franchise Disclosure Document. This includes the initial franchise fee of $20,000. The investment covers build-out, inventory, equipment, signage, working capital, and other startup costs.
Closets By Design charges a royalty fee of The greater of (i) 6.75% of your previous month’s Gross Revenues, or (ii) the “Minimum Royalty” of $3,000 per month. of gross sales, plus a National Promotion and Protection Fund Contribution of 2.25% of monthly Gross Revenues. contribution to the marketing/advertising fund. These fees are paid on an ongoing basis.
You can download the Closets By Design Franchise Disclosure Document free on this page. The FDD is a public document filed with state franchise registries. Always also request the current FDD directly from Closets By Design to ensure you have the most up-to-date version.
According to the Item 19 financial performance representation in their FDD, Closets By Design franchise owners report average revenue of $7.9M and median revenue of $5.6M. This is based on a sample of 53 units. Past performance does not guarantee future results.
Closets By Design has been franchising since 2001. The FDD shows an investment range of $152,000-$503,000, a The greater of (i) 6.75% of your previous month’s Gross Revenues, or (ii) the “Minimum Royalty” of $3,000 per month. royalty, and includes an Item 19 earnings disclosure. There are 2 pending litigation action(s). Review the full FDD and contact current franchisees listed in Item 20 before making any investment decision.
The franchise fee is $20,000 and the total investment ranges from $152,000 to $503,000 depending on location size and market. Contact the franchisor directly for current net worth and liquid capital requirements, territory availability, and application details.
Similar Home Services Franchises
Interested in Closets By Design?
Get free info on this franchise. We will send you a detailed FDD report by email.
Data Source & Disclaimer: This website is for informational purposes only. It is not an offer to sell or buy a franchise. This profile is based on publicly available FDD data sourced from state franchise registry filings. All information is for research purposes only and does not constitute legal, financial, or investment advice. Data may be outdated or contain errors. Always obtain the current FDD directly from Closets By Design and consult a qualified franchise attorney before making any investment decision. FranchiseOverview.com is operated by Franchising Compliance, LLC and is not affiliated with Closets By Design or any of its subsidiaries. To report an inaccuracy: info@franchiseoverview.com