Clozetivity Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$81,500 - $196,500
Franchise Fee
$31,200
Total US Locations
57
Business Summary
Clozetivity operates a business specializing in the design, sale, and installation of closet systems and organizational units. These services are provided for homes, home offices, garages, and various other residential and commercial spaces, along with offering related services and products, all utilizing the Clozetivity business system.
Corporate History
Clozetivity Holdings, LLC was established as a New Jersey Corporation on November 15, 2023, and officially began offering franchises under this new entity on March 20, 2024. This follows the acquisition of assets, including trademarks, business systems, and existing franchise agreements, from its predecessor, Clozetivity Franchising, LLC, on March 3, 2024. The predecessor company, Clozetivity Franchising, LLC, was originally formed on June 20, 2021, and had been actively offering Clozetivity franchises since 2021 until its assets were transferred.
Financial Overview
Investment Range
$81,500 - $196,500
Franchise Fee (Low)
$31,200
Franchise Fee (High)
$78,000
Equipment Costs (Low)
$10,500
Equipment Costs (High)
$23,000
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Going concern qualification
Financial Health Notes
Clozetivity Holdings, LLC's financial statements indicate an accumulated deficit of $204,401 as of March 20, 2024. This deficit, combined with the company being in its early stages of development, has led auditors to express substantial doubt about Clozetivity Holdings, LLC's ability to continue as a going concern. While management is actively exploring various financing strategies to expand its sales and operations, there is no guarantee that these plans will be successful. The financial statements do not include any adjustments that might be necessary if Clozetivity Holdings, LLC is ultimately unable to continue as a going concern, which raises concerns about the franchisor's financial capacity to provide services and support to its franchisees.
Financing Details
Clozetivity Holdings, LLC may, at its discretion, offer direct financing for a portion of the Initial Franchise Fee. For a single territory, franchisees might be financed up to $15,600 of the Initial Franchise Fee, requiring a minimum down payment of $23,400. For a double territory, up to $31,200 of the Initial Franchise Fee may be financed, with a minimum down payment of $46,800. Any financing offered will be structured as a promissory note with a term of up to two years and an annual interest rate of 10%. Payments will be made in monthly installments covering principal and interest, with no penalty for early repayment. Franchisees and their individual owners must personally guarantee the loan, and the financing is secured by the assets of the Clozetivity business. Clozetivity Holdings, LLC does not receive referral fees from third-party financing providers and does not guarantee franchisee notes or obligations to third parties.
Performance Metrics
Total US Locations
57
Franchised Units
57
Corporate Units
0
Franchising Since
2021
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
18
Litigation Summary
Clozetivity Holdings, LLC and its affiliates, along with its CEO Leiby "Leo" Goldberger and COO Curtis Swanson, have been involved in 18 legal and administrative proceedings. Many of these cases were filed between 2022 and 2023, with several reaching settlements in late 2023 and early 2024, indicating recent legal activity. The disputes primarily involved former partners and franchisees of Clozetivity and its affiliated brands (Dryer Vent Squad, Frost Shades, Magnetainment), with allegations including breach of duty, fraudulent inducement, concealment of information, defamation, conversion, and computer fraud. Many of these were dismissed or settled without monetary exchange, such as cases involving Thomas Scott, Angie Scott, Kane Scott, Aaron Cotton, and Will Farris. However, Clozetivity Holdings, LLC did make payments in settlements for cases brought by B&P Glass and Mirror LLC ($10,000), Bridwell Enterprises, LLC (undisclosed amount), and Kari Denton ($20,000 from DVS Franchising Corporation). Two cases, one involving George "Bob" Lunt and another Steven Hatch, are currently pending in arbitration or court, having been filed in late 2022. Additionally, a case with Barbara Fein, a former Clozetivity franchisee, was settled in February 2024 for an undisclosed sum, citing work environment misconduct and fraudulent inducement. Past administrative actions include findings by Maryland and Minnesota regulators in 2021 against Frost Shades, LLC and Patch Boys Franchising, LLC (previous companies of the CEO), for violations of franchise registration and disclosure laws, leading to consent orders and fines. A significant disclosure is an Assurance of Discontinuance from 2016 by the New York Attorney General against Patch Boys Franchising, Inc. and Leiby Goldberger, concerning the sale of franchises without disclosing Mr. Goldberger's 1999 felony conviction for credit card fraud.
Bankruptcy History
Clozetivity Holdings, LLC states in Item 4 of its Franchise Disclosure Document that no bankruptcy information is required to be disclosed in this item.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew a Clozetivity franchise, franchisees must be in full compliance with their current franchise agreement and any other agreements with Clozetivity Holdings, LLC, including those signed by their owners. They need to provide Clozetivity Holdings, LLC with 180 days' written notice before their current term expires. As part of the renewal, franchisees must sign Clozetivity Holdings, LLC's then-current franchise agreement and related agreements for the renewal term, which may have terms materially different from their original agreement. A general release in favor of Clozetivity Holdings, LLC is also required, along with payment of a renewal fee and meeting all other renewal requirements contained in the franchise agreement.
Training & Support Program
Franchisor Assistance
Clozetivity Holdings, LLC provides comprehensive support to its franchisees starting with pre-opening assistance. This includes granting the right to operate, approving the administrative office location (which can be home-based), and providing access to confidential operations manuals. Clozetivity Holdings, LLC also provides lists of approved suppliers, equipment, and signage, and lists the franchisee's business on its website while controlling digital media usage. Initial training for the franchisee or managing owner and one manager is provided at no additional fee over three days in Lakewood, New Jersey, covering business overview, scaling, van outfitting, sales, design software, CRM (Jobber), closet measurement, and installation practice. Ongoing support from Clozetivity Holdings, LLC includes communicating operating standards, marketing guidelines, and lists of approved vendors. The company may coordinate and require attendance at an annual system conference, for which a fee may be charged. Supplemental training is available upon request or may be required if performance standards are not met, incurring a fee. Training programs for replacement managers are also offered for a fee. Clozetivity Holdings, LLC may administer system-wide brand development funds and advertising cooperatives. While the franchisor does not directly assist with employee hiring, it provides guidance on employee uniforms and brand standards. All franchisee marketing efforts must be pre-approved by Clozetivity Holdings, LLC, and it provides approved marketing templates. Franchisees are required to use a designated Business Management System (currently "Jobber") and are responsible for its maintenance and upgrades.
Initial Training Hours
25
Training Location
Lakewood, New Jersey
Ongoing Support
After opening, Clozetivity Holdings, LLC provides ongoing support by communicating operating standards, marketing guidelines, and lists of approved vendors. Clozetivity Holdings, LLC may also coordinate and require attendance at an annual system conference, for which a fee may be charged. Supplemental training is available upon request or may be required if performance standards are not met, incurring a fee. Training programs for replacement operating managers are also offered for a fee. Clozetivity Holdings, LLC may administer system-wide brand development funds and advertising cooperatives. While the franchisor does not directly assist with employee hiring, it provides guidance on employee uniforms and brand standards.
Franchise Requirements
Ideal Candidate Profile
Clozetivity Holdings, LLC seeks franchisees, or their designated Managing Owners if a corporate entity, who are committed to full-time, hands-on involvement in the daily management and supervision of their Clozetivity business. The Managing Owner must be approved by Clozetivity Holdings, LLC and be on-site at the business facility, dedicating their full efforts to its operation.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Full-Time
Territory Type
Non-Exclusive
Territory Size Requirements
Clozetivity Holdings, LLC defines its single territories based on a geographic area with an approximate population ranging from 250,000 to 350,000 people. Double territories are larger, covering a geographic area with an aggregate population of roughly 750,000 to 1,000,000 people. These population figures are based on raw data and do not consider demographics or age.
Staffing Notes
Clozetivity Holdings, LLC requires franchisees to manage and supervise their own employees, as the franchisor does not provide hiring or training assistance. However, for brand consistency, all employees must wear approved system-branded uniforms and apparel. Franchisees are also responsible for ensuring that all services and products are prepared and maintained according to Clozetivity Holdings, LLC's system standards. If a franchisee hires a manager to oversee daily operations, that manager must meet specific criteria, complete the initial training program, and sign confidentiality and non-competition agreements. Any other employees or representatives who access confidential information must also sign a confidentiality agreement.