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 and an ongoing 6.8% royalty[2]. Per the 2025 FDD, average revenue per franchisee was $6.1M — this franchisor reports Item 19 per franchisee rather than per outlet, so the figure is not comparable with per-outlet averages[2]. FranchiseVerdict grade: A (Strongest tier), 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
- Per franchisee, not per outlet
- Royalty
- 6.8%
- 47th pct Home Services
- Units
- 92
- 57th pct Home Services
- SBA charge-off
- N/A
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, 6.8% ongoing royalty.
- RETURNSAverage revenue per franchisee of $6.1M/year (median $4.6M). Averaged per franchisee, not per outlet - not comparable with per-outlet figures.
- RISKVerdict A (Strongest tier), verdict score 86/100 (higher is better).
- 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
- $18.7M
- vs $18.2M 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 132% 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
- 6.8%
- Set by a formula · typical 6–8%
- Ad fund
- 15.0%
- typical 3–5%
- Total fee load
- 21.8%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 6.8% of gross sales |
| Marketing / ad fund | 15.0% |
| 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 per franchisee goes to the franchisor before you pay a single operating expense.
What do units actually make?
Average unit sales run 386% above the home services norm.
Averaged per franchisee, not per outlet - not comparable with per-outlet figures
Source: FDD 2025 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Closet Factory until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$608K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
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, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own 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?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
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%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
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
Averaged per franchisee, not per outlet - not comparable with per-outlet figures
- Avg gross sales
- $6.1M
- Per franchisee, per year — not per outlet
- Median gross sales
- $4.6M
- Per franchisee, not per outlet
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%, per franchisee
- 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 319 Home Services brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
The average franchisee generates $6.1M/year in gross sales. Median is $4.6M — top performers pull the average up, so a typical unit earns less.
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
Per franchisee, not per outlet - the category average is per-outlet only, so no comparison is shown
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
- 1
- Terminated
- 1
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 1.1%
- 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
- N/A
- no resolved loans yet — rate needs a terminal outcome
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- N/A
- 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%
- n=174 loans
- 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.
What could kill this investment?
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)
FY2024 franchisor total revenue ($18,691,201) disclosed in Item 8; audited financial statements in Exhibit A were not present/extractable in the document text, so balance-sheet and income-statement detail is unavailable.
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 86 / 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. Important context: Averaged per franchisee, not per outlet - not comparable with per-outlet figures. 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?
SBA 7(a) loan charge-off data is not available for Closet Factory (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
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 A-grade franchise with a verdict score of 86 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. 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.