The Closet Factory

The ad fund rate of 15.0% is significantly higher than typical for home services franchises (1.0-2.0%). How is this fund allocated, and can you provide a detailed breakdown of marketing expenditures and ROI metrics for franchisees?

Your sales figures substantially exceed industry norms (median $4.6M vs. typical $287K-$1.0M). What explains this performance differential, and is this representative across all units or concentrated in top performers?

The franchise fee of $58,500 combined with total ongoing fees appears relatively accessible, yet your Investment Costs score is 42/100, well below typical. What explains this low investment score despite reasonable fee structure?

Your initial contract term is 5 years with a total potential term of 5 years, significantly shorter than the typical 10-10 or 15-20 year structure. What is the rationale for this shorter commitment period, and what happens at term expiration?

The transfer fee of $18,500 exceeds typical ranges. Is this fee negotiable, and what does it cover in terms of training and support for incoming franchisees?

You report zero litigation cases over 3 years. Can you confirm this is accurate across all dispute types, and are there any pending regulatory investigations or complaints not captured in this data?

With a 5-year term and renewal fee of $7,000, what are the renewal terms? Are there any changes to royalties, fees, or territory upon renewal?

Four units transferred in 2024 compared to 8 in 2023 and 6 in 2022. Why has the transfer rate declined, and does this indicate changes in franchisee satisfaction or market conditions?

Can you provide details on the 3 units closed over the 3-year period? Were these franchisor-initiated closures, franchisee abandonments, or business failures, and what were the specific circumstances?

The Contract Terms score is 48/100, below typical range. What specific contract elements are considered unfavorable relative to industry standards, and are you open to negotiating key terms?

Your non-compete clause restricts competition within 25 miles for 2 years post-termination. How is this enforced, and have there been disputes with former franchisees over this restriction?

Binding arbitration is required for all disputes. Has arbitration been used to resolve conflicts, and what were the outcomes? What is the average cost and duration of arbitration proceedings?

The agreement requires personal guarantees from all equity owners including spouses. Can this be negotiated, and are there situations where personal guarantees have been called against franchisees?

You mandate exclusive use of designated equipment and products. Can you provide a complete list of approved vendors, and what percentage of franchisees' costs does this represent?

The minimum monthly royalty is $975 or 6.75% of gross receipts, whichever is higher. For an average unit generating $6.1M annually, what is the actual average monthly royalty paid?

Late payment interest accrues at up to 1.5% monthly (18% annually). How often do franchisees incur late payment penalties, and has this become a revenue source or compliance mechanism?

With System Health score of 79/100 (above typical range), what metrics indicate strong system health? Can you detail franchisee satisfaction, retention, and support metrics?

Your Support & Training score is exceptionally high at 97/100. What specific training programs and ongoing support services justify this top percentile ranking?

Units have grown from 80 to 92 over 3 years (9.5% annual growth). What are your growth targets for the next 3-5 years, and in which geographic markets are you actively recruiting?

What percentage of franchisees achieve the median sales figure of $4.6M, and what is the range between top and bottom quartile performers? What factors correlate with higher-performing units?