Growing Without Growing: Closets by Design Franchise Perfects Business Model, Ready to Re-Franchise

Posted on February 08, 2007 by

Los Angeles – While tripling revenues over five years without increasing the number of franchises, focusing instead on infrastructure and best practices, Closets by Design is officially re-launching its franchise opportunity.

“After developing home organization systems for millions of U.S. homeowners, we have done a bit of “remodeling” ourselves,” said Jerry Egner, president of Closets by Design, the nation’s leading home organizing franchise. “We took a step back in 2002 and decided to slow franchise growth to focus on perfecting our marketing, sales, manufacturing and installation processes. Now, we're ready to open the door to entrepreneurs wanting to grab a share of the $3 billion home organization industry."

During the strategic franchise sales hiatus, the company focused on educating existing Closets by Design franchisees on all aspects of the business to ensure maximum profitability. System-wide sales figures are evidence that the strategy worked: despite limiting the number of operating franchises to 27 for the past five years – revenues nearly tripled from $23 million in 2002 to more than $65 million by the end of 2006.  Closets by Design projects system-wide sales of $80 million in 2007, with an additional $21 million from the company’s three corporate locations.

"After we launched the franchise opportunity in 1998, we opened 18 franchise locations grossing $17 million in revenues in just 24 months,” noted Egner, a pioneer in the closet industry with 25 years experience. “Although the tremendous growth was exciting, we didn’t want to expand at a rate that made it impossible to properly support all of our franchisees. Now we can say that our support systems and business model is stronger than ever and ready for the next phase of growth.”

Still, the company remains cautious and conservative in its approach to growth, projecting to open six new Closets by Design franchises in 2007 and an additional 12 locations in 2008.

A look inside the closet

When Closets by Design was founded in1982, the closet organization industry was fragmented, with several independent operations and a few startup franchise concepts vying for a share of the market. Since then, the company has grabbed a significant share of the market, fueled by an increased consumer demand for home organization. Closets by Design offers homeowners comprehensive solutions to all their organizational needs in a short and simple process, designing, building and installing custom closets, garage cabinets, home offices, wall units, laundries, pantries, wardrobe mirror doors, and other home organization systems with a wide selection of finishes, accessories, and hardware.

The Closets by Design process is designed to be quick and hassle-free for the customer.  Phone inquiries are quickly followed up with an immediate in-home consultation appointment, where a designer brings a variety of photos and layouts of organizational systems offered, as well as product samples of different colors, styles and hardware for the customer to choose from.  Installation follows shortly thereafter and typically takes 1-2 days, depending on the system(s) ordered. All labor is completed at the Closets by Design local manufacturing facility, eliminating the mess associated with traditional home improvement contractors.

“By empowering our customers to tell us exactly what they are looking for in an organization system, whether it’s for their closet or home office, we are able to provide consistent, quality service and a top-of-the-line product,” he said.  “Our design consultants are experts in engaging the homeowner throughout the entire decision making process.  They are experts at interpreting and understanding what the customer wants, even when the customer can’t necessarily visualize the finished product themselves.” 

Closet by Design currently offers territories that encompass 300,000 – 600,000 households.  The initial fee for exclusive rights to operate a Closets by Design franchise ranges from $39,900 to $49,900. The total initial investment for a Closets by Design franchise can reach up to $340,900, depending on real estate and territory size. 

“The demand for closet organization continues to grow exponentially,” Egner said. “We plan to stay ahead of the competition by continuing to provide our current and future franchisees with the most innovative and efficient processes.  Now, our focus is to find dedicated, qualified franchisees that are serious about this business opportunity, willing to follow our formula for growth and stay consistent with the business model we’ve perfected over the past 25 years.” 

About Closets by Design

Since 1982, Closets by Design has built a reputation as the nation’s leader in the closet organizing and storage remodeling industry. The concept began offering franchise opportunities in 1998 and quickly grew to 27 locations by the end of 2002.  With revenues reaching $65 million in 2006, Closets by Design was ranked in Entrepreneur magazine’s top 500 franchises as a leader in the home organization category.