Closet Factory
Closet Factory franchises market, install, and repair custom closets and storage systems. Known for offering tailored solutions to enhance home organization, it operates in the home improvement and storage products sector.
Closet Factory franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operations of a Closet Factory franchise ranges from $531,500 to $903,500 as stated on [p.1].
What is the initial franchise fee?
The initial franchise fee is $65,500 and is nonrefundable [p.8]. This fee must be paid in full when you sign the Franchise Agreement [p.8].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is either 6.75% of gross receipts or a minimum of $975 per week, whichever is greater, starting from the fortieth week after opening. This amount can be adjusted for inflation as specified in Section 9.8 [p.82]. Additionally, Franchisees must make mandatory minimum payments regardless of sales levels, though specific amounts for these fees are not detailed in the provided excerpts [p.5].
How long is the initial franchise agreement, and can I renew it?
The length of the initial franchise agreement isn't specified in the excerpts. Regarding renewal, the document mentions "Requirements for franchisee to renew or extend" but doesn't provide details on this topic [p.188]. For specific conditions related to non-renewal and compensation requirements, you may need to refer to Section 20 of the Illinois Franchise Disclosure Act as mentioned in pages [p.181] and [p.182].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you can discuss potential transfers with the franchisor at their discretion [p.102], but the franchisor is not required to give consent for a transfer. The franchisor may condition or withhold consent based on their business judgment, particularly if they believe it jeopardizes the economic viability of the franchise or under other circumstances [p.102].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on any grounds available by law [p.188]. Additionally, the franchisee's business may need to be repurchased by the franchisor without their consent if certain buy-back provisions are in place and meet specific conditions [p.199], though this is subject to legal restrictions [p.196].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD focuses on maintaining adequate reserves and working capital but does not provide specific details about net worth or liquid capital required for qualification as a franchisee.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory according to the excerpts. You may face competition from other franchisees, company-owned outlets, or other channels of distribution or competitive brands controlled by the franchisor [p.176, p.26].
What training and ongoing support does the franchisor provide?
The initial training program includes an overview of the standard management system, marketing, sales, and closet installations and lasts approximately 10 business days. This training is provided at a Closet Factory production facility or another designated location. On-the-job field training for both installations and sales will also be conducted at your facility when you open for business [p.24].
How many franchised outlets are there, and how many have closed or been terminated?
This isn't specified in the excerpts.
Does the franchisor share any financial performance or earnings information?
The franchisor may provide financial performance information based on unaudited reports from some franchisees, but it has not audited this information nor verified its accuracy [p.34]. The franchisor can also provide actual records of existing outlets you are considering buying, or supplement the information provided in Item 19 under certain circumstances [p.34].
What am I restricted to selling, and where must I buy supplies?
You are required to use only the contracts, waivers, and other forms designated by the franchisor [p.87], which you must have reviewed for compliance with state laws at your expense. Additionally, you may need to purchase or lease items from a limited group of suppliers designated by the franchisor, which could be more expensive than sourcing elsewhere [p.3].