Closet Factory Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Closet Factory is a home-services franchise designing and installing custom closets, home offices, garages, and storage systems. Franchisees run a design-and-install operation with a showroom, handling consultations, orders, and installations in a territory.
FranchiseVerdict summary · 2026
A Closet Factory franchise requires a total initial investment of $393K – $664K, including a $59K franchise fee. Per the 2025 FDD, average unit revenue was $6.1M[2]. SBA 7(a) loans show a 29.3% charge-off rate across 41 loans[1]. FranchiseVerdict grade: C (Average), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $393K – $664K
- 85th pct Home Services
- Avg gross sales
- $6.1M
- 35th pct Home Services
- Royalty
- N/A
- Units
- 92
- 57th pct Home Services
- SBA charge-off
- 29.3%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Home Services · color = vs category peers
Green = favorable by >10% vs Home Services avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $393K – $664K including a $59K franchise fee.
- RETURNSAverage unit revenue of $6.1M/year (median $4.6M).
- RISKVerdict C (Average), verdict score 40/100 (higher is better). SBA loan charge-off rate of 29.3% across 41 loans (well above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHSystem growing at 16.2% CAGR over 3 years with 92 total units. Strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- The Closet Factory Franchise Corporation
- Predecessor
- The Closet Factory, Inc.
- Prior franchisor entity
- CEO title
- Co-Chief Executive Officer and Chief Financial Officer
- John F. La Barbera
- Incorporated in
- CA
- HQ
- 12800 South Broadway, Los Angeles, California 90061
- Auditor
- Jonathon P. Reuben, CPA
- Audited financials
- Franchisor revenue
- $18.2M
- vs $18.7M prior year
Overview
About
- CEO
- John F. La Barbera
- Headquarters
- CA
- Founded
- 1985
- FDD year
- 2025
- States available
- 33
Can you afford it, and what does the money buy?
Entry cost runs 135% above the typical home services franchise.
Source: FDD 2025 · Items 5–7
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $59K | $59K |
| Working capital (3–6 mo) | $60K | $100K |
| Equipment, build-out, other | $274K | $505K |
| Total initial investment | $393K | $664K |
Source: Closet Factory 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $393K – $664K
- Bottom third — review vs category
- Liquid capital req'd
- $60K – $100K
- Bottom third — review vs category
- Franchise fee
- $59K – $59K
- Middle of category vs category
- Royalty
- Greater of 6.75% of Gross Receipts or $975 per week (mini…
- Ad fund
- 15.0%
- typical 3–5%
- Total fee load
- 21.8%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Marketing / ad fund | 15.0% of gross sales |
| Technology fee | $94 |
| Transfer fee | $19K |
| Renewal fee | $7K |
| Inventory (initial) | $14K – $25K |
| Total fee load | 21.8% of rev |
At 21.8% total fee load, roughly $1326K per year goes to the franchisor before you pay a single operating expense.
What do units actually make?
Average unit sales run 392% above the home services norm.
Source: FDD 2025 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$-122K
-2.0% margin
Unlevered ROIC
-20%
EBITDA / total invested capital
Payback
—
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one Closet Factory unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
-20%
Negative returns. Costs exceed revenue at these inputs
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Avg gross sales
- $6.1M
- Per unit, per year
- Median gross sales
- $4.6M
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross sales
- Sample size
- 47 franchisees
- vs category median 32
- Range (low → high)
- $351K→$39.1M
- Cohort dispersion (min → max)
- Quartile band
- $1.2M→$13.6M
- Bottom 25% → top 25%
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 4 / 10
- vs category median 4 / 10 · typical
Compared against 321 Home Services brands
Revenue is 11.5x the investment midpoint. At typical franchise margins, this suggests a payback under 3 years.
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $6.1M/year in gross sales. Median is $4.6M — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 11.5x.
Fee burden
Total ongoing fee load of 21.8% — above the Home Services average of 8.9%.
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System expanding at 16.2% CAGR over 3 years across 92 units — operators are staying and new ones are joining.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Home Services averages
How Closet Factory Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 92
- Opened
- 9
- Last reporting year
- Closed
- 0
- Terminated
- 1
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 3.5%
- Company-owned
- 6
- Corporate units in the system
- % franchised
- 94%
- vs corporate-owned
- Net growth (3-yr)
- +16.2%
- Net unit change over 3 years
- 3-yr CAGR
- +16.2%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 20
- Closed (3yr)
- 0
- Terminated (3yr)
- 2
- Non-renewed (3yr)
- 1
- Transfers (3yr)
- 18
- Reacquired (3yr)
- 0
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 12 · 33 states reported
The Territory Map
FDD Item 12 reports the state count, but the specific list isn't in our current data. The map will appear once we re-extract from the FDD or enough franchisee contacts are available.
33
states with franchisees (per FDD Item 12)
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 41
- Loan volume
- $8.2M
- Median loan
- $142K
- 50th percentile
- Charge-off rate
- 29.3%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 70.7%
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 10
- Defaults
- 12
- Typical loan rate
- 7.0%
- avg rate to borrowers
- Franchised industry avg
- 11.9%
- brand above franchise avg ↑
- Jobs supported
- 564
- 3.0 per loan
- Lender concentration
- 16%
- top lender's share
Borrower mix: 44% went to startups / new businesses, 56% to established operators
Franchise vs independent — in other building finishing contractors, franchised businesses charge off at 11.9% vs 16.3% for independents — franchising is associated with 27% lower SBA default risk in this category.
Top lenders financing Closet Factory franchisees
Showing 3 of 10 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Closet Factory's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 14 states
- Startup risk premium and job creation velocity
- 7-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
A 29.3% charge-off rate means roughly 1 in 3 franchisees failed to repay their SBA loan. Investigate what changed.
What could kill this investment?
SBA loans charge off at 29.3% — 83% above the 16.0% national norm, i.e. higher lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Closet Factory presents moderate-to-cautionary risk due to undisclosed profitability metrics, high capital requirements, modest unit growth, and franchisor financial concerns despite strong gross revenue figures.
Litigation (Item 3)
No litigation disclosed in Item 3.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Jonathon P. Reuben, CPA
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 40 / 100 verdict
- 01MINORHigh minimum investment ($392.5k) with dual royalty structure (6.75% or $975/week minimum) creates fixed cost burden
- 02MINORModest unit growth (10.3% YoY) with only 92 locations suggests slower expansion and market saturation concerns
- 03MINOR5-year term is shorter than industry standard (10 years), requiring earlier renewal negotiation and uncertainty
- 04HIGHGoing Concern status is 'False' — potential financial instability or accounting irregularities at franchisor level
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 21.8% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 5 years |
|---|---|
| Renewal term | 5 years |
| Territory type | protected |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Arbitration location | Los Angeles, California (county where headquarters is located) |
| Jury trial waiver | Yes |
| Governing law | state where franchise business is located |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation disclosed in Item 3.
Items 10, 11
Training & Operations
- Classroom training
- 49 hrs
- On-the-job training
- 41 hrs
- Training location
- Los Angeles, CA or Virtual Communication Platform
- Ongoing training
- Required
- Time to open
- 4 mo
- From signing to launch
- Site selection
- franchisee with franchisor approval
- Franchisor financing
- Not offered
- Item 10
- POS system
- ClosetWare
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: ClosetWare
Item 20 · call current owners
Franchisee Contacts
23 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Closet Factory · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Closet Factory franchise?
The total investment to open a Closet Factory franchise ranges from $393K – $664K, with an initial franchise fee of $59K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Closet Factory franchise owners earn?
According to Item 19 of the Closet Factory FDD, the average gross sales per unit is $6.1M. The median is $4.6M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the Closet Factory FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Closet Factory FDD and qualifies whose outlets they describe.
What is Closet Factory's franchise failure rate?
Based on SBA 7(a) loan data, Closet Factory has a charge-off rate of 29.3% across 41 loans, meaning 29.3% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Closet Factory franchise locations are there?
As of their most recent FDD filing, Closet Factory has 92 total units in the United States, including 86 franchised units and 6 company-owned units. 9 new units were opened in the latest reporting year.
Is Closet Factory a good franchise to buy?
FranchiseVerdict rates Closet Factory as a C-grade franchise with a verdict score of 40 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.