Closets By DesignFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A Closets By Design franchise requires a total initial investment of $154K – $511K, including a $20K franchise fee. Per the 2025 FDD, average unit revenue was $9.9M[2]. SBA 7(a) loans show a 17.1% charge-off rate across 45 loans[1]. Verdict grade: B. Run a live ROI scan →
Data last verified June 21, 2026 · figures per the 2025 FDD issuance
Overview
- Investment
- $154K – $511K
- 57th pct Home Services
- Avg gross sales
- $9.9M
- 53rd pct Home Services
- Royalty
- N/A
- Units
- 85
- 50th pct Home Services
- SBA default
- 17.1%
- system-wide median varies by category
Quick verdict · Home Services · color = vs category peers
Green = >15% above Home Services avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Each dollar invested generates 29.9x in gross revenue, well above the typical 1.5-2.5x range.
Franchising since 2001. Systems this mature have refined operations and brand recognition.
Bottom line
- Total investment $154K – $511K including a $20K franchise fee.
- Average unit revenue of $9.9M/year (median $7.2M).
- Verdict B (Above Average) with a risk score of 60/100. SBA loan charge-off rate of 17.1% across 45 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2024).
- System growing at 19.7% CAGR over 3 years with 85 total units. Strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
- Legal entity
- CBD Franchising, Inc.
- Parent company
- Home Organizers, Inc.
- Incorporated in
- CA
- HQ
- 13272 Garden Grove Boulevard, Garden Grove, California 92843-2205
- Auditor
- Windes
- Audited financials
- Franchisor revenue
- $104.6M
- vs $124.1M prior year
Overview
About
Franchisees operate custom closet design and installation businesses, managing in-home consultations, design work, product ordering, and installation services. Daily operations include client meetings, CAD design work, vendor coordination, and installation team management within a protected territory.
- CEO
- Frank Melkonian
- Headquarters
- CA
- Founded
- 2001
- FDD year
- 2025
- States available
- 32
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $20K | $20K |
| Working capital (3–6 mo) | $25K | $75K |
| Equipment, build-out, other | $109K | $416K |
| Total initial investment | $154K | $511K |
Source: Closets By Design 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
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
$1.1M
10.8% margin
Unlevered ROIC
279%
EBITDA / total invested capital
Payback
4 mo
cash-on-cash, unlevered
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $154K – $511K
- Near category avg vs category
- Liquid capital req'd
- $25K – $75K
- Near category avg vs category
- Franchise fee
- $20K – $20K
- Better than avg vs category
- Royalty
- Greater of (i) 7.25% of Gross Revenues, or (ii) Minimum R…
- Ad fund
- 2.3%
- typical 3–5%
- Total fee load
- 9.5%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Marketing / ad fund | 2.3% of gross sales |
| Technology fee | $3K |
| Transfer fee | $9K |
| Renewal fee | $5K |
| Total fee load | 9.5% of rev |
Financial Performance
- Avg gross sales
- $9.9M
- Per unit, per year
- Median gross sales
- $7.2M
- Item 19 type
- Mature Franchised Businesses
- Sample size
- 60 units
- vs category median 25 · large
- Range (low → high)
- $1.5M→$36.2M
- Cohort dispersion (min → max)
- Transparency
- 4 / 5
- vs category median 4 / 5 · typical
Compared against 349 Home Services brands
Revenue is 29.9x the investment midpoint. At typical franchise margins, this suggests a payback under 3 years.
vs Home Services averages
How Closets By Design Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 85
- Opened
- 3
- Last reporting year
- Closed
- 0
- Turnover rate
- 0.0%
- Company-owned
- 6
- Corporate units in the system
- % franchised
- 93%
- vs corporate-owned
- Net growth (yr3)
- +3.9%
- Net unit change last year
- 3-yr CAGR
- +19.7%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 1
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 32 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 45
- Loan volume
- $16.6M
- Median loan
- $238K
- 50th percentile
- Charge-off rate
- 17.1%
- 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)
- 82.9%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 26
- Defaults
- 6
Vintage analysis
Closets By Design charge-off rate by loan vintage
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Closets By Design'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 15 states
- Startup risk premium and job creation velocity
- 21-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Closets By Design presents high risk due to franchisor going concern status, multiple active lawsuits including class action and RICO allegations, anemic unit growth, and lack of Item 19 financial disclosure.
Audited financials (Item 21)
Yes · Windes
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Score breakdown · what drove the 60 / 100 rating
- 01HIGHGoing Concern designation indicates franchisor financial distress and potential inability to support franchisees
- 02HIGHMultiple active litigations including consumer class action, RICO allegations, and non-compete disputes signal systemic operational/compliance issues
- 03MINORStagnant unit growth (3.9% YoY) with only 85 units suggests market saturation or franchisee dissatisfaction
- 04MEDNo disclosed net income data prevents ROI validation; high royalty floor ($3,000/month = $36,000/year minimum) on undisclosed profitability is concerning
- 05HIGHHistory of concluded litigation over unpaid royalties and abandonment indicates franchisor-franchisee relationship breakdown
- 06MEDInvestment range ($154K–$511K) is substantial relative to disclosed unit economics and franchisor stability
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 5 years |
|---|---|
| Renewal term | 5 years |
| Territory type | Specific geographic area defined by map or description |
| Protected territory | Yes |
| Online sales rights | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | California |
| Litigation count | 5 |
Items 10, 11
Training & Operations
- Classroom training
- 64 hrs
- On-the-job training
- 56 hrs
- POS system
- CBD Manager
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: CBD Manager
Item 20 · call current owners
Franchisee Contacts
62 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Closets By Design · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Closets By Design franchise?
The total investment to open a Closets By Design franchise ranges from $154K – $511K, with an initial franchise fee of $20K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Closets By Design franchise owners earn?
According to Item 19 of the Closets By Design FDD, the average gross sales per unit is $9.9M. The median is $7.2M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Closets By Design's franchise failure rate?
Based on SBA 7(a) loan data, Closets By Design has a charge-off rate of 17.1% across 45 loans, meaning 17.1% 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 Closets By Design franchise locations are there?
As of their most recent FDD filing, Closets By Design has 85 total units in the United States, including 66 franchised units and 6 company-owned units. 3 new units were opened in the latest reporting year.
Is Closets By Design a good franchise to buy?
FranchiseVerdict rates Closets By Design as a B-grade franchise with a risk score of 60 out of 100, 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.
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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.