Remodeling Franchise Showdown: Closets by Design vs Closet Factory (2024)

Written by: Parth Parth
Last Updated by Rocio Somoza: January 23, 2023
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The interior remodeling industry comprises establishments primarily responsible for the remodeling and renovation of single-family and multifamily residential buildings. Because both Closets by Design and Closet Factory are in the same industry, let’s take a closer look at both and analyze their key franchise metrics.


closets by design2


Closets by Design is led by CEO Gil Santos who was a partner at WMG, a boutique management consulting firm before taking on his current role. Jerry Enger is the President of the company – he has been on the board of Home Organisers Inc. since 2009.

Closet Factory is led by CEO and President Steve Newman who was with AIG Interiors as President and CEO between 2008 and 2014 and in the same role at Neighborhood Painting Masters between 2018 and 2021 before he moved to Closet Factory.

Suffice to say, both businesses are led by executives which have considerable experience in the industry.

Initial Franchise Investment Costs

The following information has been collected from the 2022 FDDs (Franchise Disclosure Document) for the companies:

 Closets by DesignCloset Factory
Initial Fee$20,000$58,500
Location/TerritoryGreater of $18,000 or $1,000 for each increment or portion of 10,000 households in the Territory.$16,000 – $36,000
Furniture, Fictures and Equipment$35,000 to $250,000$125,000 – $195,000
Vehicles$1,000 to $4,000$2,500 – $7,500
Opening Marketing$30,000 to $45,000$20,000 – $45,000
Signage and Uniforms$500 to $1,000 + Uniforms$1,000 – $4,000
Inventory$10,000 to $25,000$10,000 – $20,000
Property Improvements$5,000 to $30,000$5,500 – $25,000
Additional Costs$25,000 to $75,000$35,000 – $75,000
Total$152,000 to $503,000$273,500 – $466,000


Clearly, both companies are in the range of $330,000 - $370,000 when it comes to the initial investment and cost of setting up a franchised location.

Ongoing Costs

The following are the ongoing costs compared side by side for both companies.

Closets by Design Closet Factory
Royalty The greater of 6.75% of your previous month’s Gross Revenues, or $3,000 per month. Equal to the greater 6.75% of Gross Receipts or $975 per week ($3,900 for 4 weeks)
Advertising Can be anywhere from 14% to 40% of your Gross Revenues Minimum of 15% of Gross Receipts
Renewal Fee $5,000 $7,000

While these are the major fees, there are other fees associated with running these businesses too. Closets by Designs’ agreement is very convoluted depending on the population living in your area.

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According to the 2022 FDDs for both companies, the following are the sales figures:

 Closets by DesignCloset Factory
Average annual sales$7,947,014$5,685,942
Median annual sales$5,550,937$4,331,102

From the table above, it is clear that Closets by Design stores make slightly more money than do Closet Factory stores. As such, let’s look at how long it will take a potential investor to earn their money back. Using the figures above, we can calculate how long it will take for you to get your money back:

Closets by Design:

Initial investment (midpoint) %Profit margin of average franchise sales Estimated Profits Time to recoup investment
$327,500 5% $277,546 3.75 years
$327,500 10% $794,701 3 years
$327,500 15% $1,192,052 2.75 years

Closet Factory:

Initial investment (midpoint) %Profit margin of average franchise sales Estimated Profits Time to recoup investment
$369,750 5% $216,555 3.75 years
$369,750 10% $568,594 3.5 years
$369,750 15% $852,891 3.25 years

At a 10% profit margin, Closets by Design will recoup your investment in 3 years while Closet Factory will do so in 3.5 years. This includes the time it takes to scale up your business. However, depending on location, collection, and other factors, you might get different profits or profit margins making the time longer.

closets by design1


Closet Factory has no pending litigation against it.

CBD is engaged in litigation with one of its franchisees for breach of contract and of a non-competition covenant. It is engaged in litigation with another one of its franchisees for breach of its franchise agreement.


Closet Factory Unit Growth

Outlet TypeYearOutlets At The Start Of YearOutlets At The End Of YearNet Change


The figures above are for Closet Factory. They have opened only 5 new stores in the last three years. That’s a growth rate of only 7% as they expanded from 70 stores in 2019 to 75 in 2021. Closets by Design also has similar numbers as shown below. Between 2019 and 2021, they grew from 57 to 72 stores, a growth rate of 26% which is much higher than Closet Factory.

Closets by Design Unit Growth

Outlet type Year Outlets at the Start of the Year Outlets at the End of the Year Net Change
Franchised 2019 51 57 +6
2020 57 60 +3
2021 60 65 +5
Owned By CBDI and CBDF 2019 6 6 0
2020 6 6 0
2021 6 7 +1
Total Locations 2019 57 63 +6
2020 63 66 +3
2021 66 72 +6


The Closet Factory Franchise Corporation Statements Of Income (Loss)

For the Year Ended December 31,
2021 2020
Franchise fees $213,028 $170,945
Royalties 13,652,766 9,187,903
Other revenue 368,122 224,227
Total revenue 14,233,916 9,583,075
Operating expenses
Marketing and advertising 5,115,150 3,083,362
General and administrative 9,019,830 6,458,497
Total operating expenses 14,134,980 9,541,859
Net income (loss) from operations 98,936 41,216
Other income 10,000
SBA grant 108,936 41,216
Provision for income tax (expense) (31,492) (41,786)
Net Income (loss) $77,444 $(570)

Closet Factory posted a profit of $77,444 in 2021 compared to a loss of $570 in 2020. It remains to be seen if they can sustain this growth. In comparison, CBD had a net income of $27 million in 2021. This is up 51.6% from $18 million in 2019. Their statement of income is below:

CBD Franchising, Inc. Statements Of Income

 For the Year Ended December 31,
Royalty and related income$67,456,469$44,716,864
Advertising fund management income449,141872,359
Franchise fees664,332731,466
Total revenue68,569,94246,320,689
Total operating expenses40,820,44028,045,604
INCOME FROM OPERATIONS27,749,50218,275,085
INCOME TAX EXPENSE416,243274,496
NET INCOME$27,333,259$18,025,216



When compared, Closets by Design does recoup the initial investment first but only by half a year which does not count for a lot in the long run. Closets Factory also has a slightly higher initial cost of investment.

Find out more about the Industry and discover other franchises in the Interior Remodelling Industry.

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