Closets By Design Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Closets By Design is a home-services franchise designing and installing custom closets, garage, and home-office storage systems. Franchisees run a design-and-install operation with in-home consultations, manufacturing, and installation in a territory.
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]. FranchiseVerdict grade: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $154K – $511K
- 62nd pct Home Services
- Avg gross sales
- $9.9M
- 36th pct Home Services
- Royalty
- N/A
- Units
- 85
- 55th pct Home Services
- SBA charge-off
- 17.1%
- % 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 $154K – $511K including a $20K franchise fee.
- RETURNSAverage unit revenue of $9.9M/year (median $7.2M).
- RISKVerdict B (Above average), verdict score 56/100 (higher is better). SBA loan charge-off rate of 17.1% across 45 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHSystem growing at 19.7% CAGR over 3 years with 85 total units. Strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- CBD Franchising, Inc.
- Parent company
- Home Organizers, Inc. (HOI)
- Predecessor
- Closets By Design Franchising, LLC (CBD-LLC)
- Prior franchisor entity
- CEO title
- Chairman and CEO
- Frank Melkonian
- Incorporated in
- CA
- HQ
- 13272 Garden Grove Boulevard, Garden Grove, California 92843
- Auditor
- Windes, Inc.
- Audited financials
- Franchisor revenue
- $124.1M
- vs $104.6M prior year
Overview
About
- CEO
- Frank Melkonian
- Headquarters
- CA
- Founded
- 2001
- FDD year
- 2025
- States available
- 32
Can you afford it, and what does the money buy?
Entry cost runs 48% 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 | $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.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $154K – $511K
- Middle of category vs category
- Liquid capital req'd
- $25K – $75K
- Middle of category vs category
- Franchise fee
- $20K – $20K
- Top 40% of category vs category
- Royalty
- Greater of (i) 7.25% of previous month's Gross Revenues o…
- 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 | $300 |
| Transfer fee | $9K |
| Renewal fee | $5K |
| Inventory (initial) | $10K – $25K |
| Total fee load | 9.5% of rev |
What do units actually make?
Average unit sales run 702% 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
$1.1M
10.8% margin
Unlevered ROIC
279%
EBITDA / total invested capital
Payback
4 mo
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 Closets By Design unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
279%
Above the 30–60% band. Verify revenue is per-unit average
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%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 Closets By Design units return on equity?
Equity IRR · 5-yr
24.6%
3.00× MOIC
Year-1 DSCR
3.46×
EBITDA ÷ debt service
Equity required
$21.1M
on $37.3M purchase
Total debt
$16.2M
SBA $5.0M + senior + seller note
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
- $9.9M
- Per unit, per year
- Median gross sales
- $7.2M
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
- 60 franchisees
- vs category median 32
- Range (low → high)
- $1.5M→$36.2M
- Cohort dispersion (min → max)
- Quartile band
- $3.3M→$21.1M
- 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 29.9x 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 $9.9M/year in gross sales. Median is $7.2M — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 29.9x.
Fee burden
Total ongoing fee load of 9.5% (near the Home Services average).
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 19.7% CAGR over 3 years across 85 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 Closets By Design Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 85
- Opened
- 3
- Last reporting year
- Closed
- 0
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 0.0%
- Company-owned
- 6
- Corporate units in the system
- % franchised
- 93%
- vs corporate-owned
- Net growth (3-yr)
- +19.7%
- Net unit change over 3 years
- 3-yr CAGR
- +19.7%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 3
- Closed (3yr)
- 0
- Terminated (3yr)
- 0
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 1
- Reacquired (3yr)
- 0
- Franchisor bought back
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
- Typical loan rate
- 6.9%
- avg rate to borrowers
- Franchised industry avg
- 17.1%
- brand above franchise avg ↑
- Jobs supported
- 578
- 3.5 per loan
- Lender concentration
- 11%
- top lender's share
Borrower mix: 78% went to startups / new businesses, 22% to established operators
Franchise vs independent — in residential remodelers, franchised businesses charge off at 17.1% vs 22.4% for independents — franchising is associated with 24% lower SBA default risk in this category.
Vintage analysis
Closets By Design charge-off rate by loan vintage
Top lenders financing Closets By Design franchisees
Showing 3 of 26 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 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.
What could kill this investment?
SBA loans here charge off near the 16.0% national average.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
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.
Litigation (Item 3)
3 pending: (1) customer class action (Vernon v CBD); (2) competitor false advertising (Casablanca v CBD); (3) CBDF appeal against former franchisee/competitor (CBD v Central Jersey/One Day). 2 concluded: CBD v Van Alstyne (breach/bankruptcy, recovered $127K); CBD v Frank Dres (settled $320K).
Largest disclosed settlement: $320,000
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Windes, Inc.
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: No
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 56 / 100 verdict
- 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
What are you signing up for?
Ongoing fees run about 9.5% 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 | exclusive |
| Protected territory | Yes |
| Exclusive territoryℹ | Yes |
| Territory population | 180,000 |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 35 mi |
| Right of first refusalℹ | Yes |
| RoFR response window | 45 days |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | No |
| Arbitration location | California |
| Jury trial waiver | No |
| Governing law | CA |
| Litigation count | 5 |
View Item 3 litigation summary
3 pending: (1) customer class action (Vernon v CBD); (2) competitor false advertising (Casablanca v CBD); (3) CBDF appeal against former franchisee/competitor (CBD v Central Jersey/One Day). 2 concluded: CBD v Van Alstyne (breach/bankruptcy, recovered $127K); CBD v Frank Dres (settled $320K).
Items 10, 11
Training & Operations
- Classroom training
- 64 hrs
- On-the-job training
- 56 hrs
- Training location
- Garden Grove, California or other designated training center (or virtually)
- Ongoing training
- Required
- Site selection
- Franchisee with franchisor guidance
- Franchisor financing
- Offered
- Item 10
- 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 Item 19 in the Closets By Design 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 Closets By Design FDD and qualifies whose outlets they describe.
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 79 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 verdict score of 56 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
Are you the franchisor?
If you represent Closets By Design, you can request corrections or provide updated information.
Other Home Services franchises
Compare similar franchise opportunities in the Home Services category
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.