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CLOSETS BY DESIGN Franchise ProfileHome Based Franchises > Home Repair Services |
What Are the Initial Investment Requirements for a Closets By Design Franchise?
To open a Closets By Design franchise, you need to consider a range of initial investment costs. The total investment can vary significantly, with a low end of approximately $154,000 and a high end reaching up to $511,000. This includes a franchise fee of $20,000. Additionally, potential franchisees should be prepared for ongoing royalty fees of 7.25% and a marketing fee of 2.25%. Ensuring you have sufficient cash on hand, with a requirement ranging from $154,000 to $511,000, is crucial for a successful startup.
What Are the Financial Performance Metrics for Closets By Design?
Closets By Design franchises have demonstrated strong financial performance, with an average annual revenue per unit of approximately $9,569,421. The median annual revenue stands at $7,221,275, while the lowest recorded revenue is $5,729,421. Franchisees can expect to reach breakeven within about 18 months, with a payback period on their investment of around 36 months. These figures indicate a potentially lucrative opportunity for those entering the franchise.
What Are the Ongoing Costs Associated with Running a Closets By Design Franchise?
Operating a Closets By Design franchise involves various ongoing costs that franchisees should anticipate. These include selling expenses, which average around $61,636,460 annually, and administrative expenses of approximately $3,896,251. Rent can vary widely, ranging from $2,000 to $12,000, along with business insurance costs between $1,500 and $2,000. Additional expenses for legal and accounting services, advertising, and initial operating funds should also be factored into your budget for the first few months.
What Is the Growth Potential for a Closets By Design Franchise?
Closets By Design has shown steady growth in franchised units over the years, increasing from 60 units in 2021 to 66 units in 2023. The company currently operates 6 corporate units. This growth trend, coupled with strong average revenues, suggests a positive outlook for potential franchisees. With a well-established brand and a growing market demand for custom storage solutions, franchisees may find ample opportunities for expansion and profitability in their local markets.
CLOSETS BY DESIGN Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
CLOSETS BY DESIGN Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 67 | 71 | 72 |
| Net Change YoY | 4 | 1 | |
| Franchised Units | 60 | 65 | 66 |
| Net Change YoY | 5 | 1 | |
| Corporate Units | 7 | 6 | 6 |
| Net Change YoY | -1 | 0 |
Initial Investment
The investment required to open a Closets by Design franchise ranges from $154,000 to $511,000. This includes a franchise fee of $20,000, along with other start-up costs such as equipment, signage, and initial inventory. Potential franchisees should be prepared for these financial commitments to effectively launch their business.
Financial Performance
Closets by Design franchises generate significant revenue, with an average annual revenue of $9,569,421 per unit. The median annual revenue stands at $7,221,275, while the lowest reported revenue is $5,729,421. This financial performance highlights the potential for profitability within the franchise model.
Royalty and Marketing Fees
Franchisees are required to pay a royalty fee of 7.25% on gross sales, along with a marketing fee of 2.25%. These fees contribute to the ongoing support and resources provided by the franchisor, including national advertising campaigns and brand development strategies.
Required Financial Qualifications
Prospective franchisees must have a net worth of $500,000 to $1,000,000 and access to cash ranging from $154,000 to $511,000. These financial qualifications ensure that franchisees have the necessary resources to invest in their business and sustain operations during the initial growth phase.
Breakeven and Payback Period
The average breakeven period for a Closets by Design franchise is approximately 18 months, with an investment payback period of around 36 months. This timeline indicates a relatively quick return on investment, which is attractive for entrepreneurs looking to enter the franchise market.
Growth and Expansion
As of 2023, Closets by Design operates 72 total units, with 66 being franchised. The franchise has shown steady growth, increasing from 60 franchised units in 2021 to 66 in 2023. This upward trend reflects the brand's expanding market presence and the increasing demand for customized storage solutions.
Frequently Asked Questions
The initial investment for a Closets by Design franchise ranges from $154,000 to $511,000, which includes the franchise fee of $20,000 and other startup costs.