The Closet Trading Co. Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$137,400 - $350,300
Franchise Fee
$15,000
Total US Locations
7
Business Summary
The Closet Trading Co. operates branded retail consignment stores that buy and sell gently used women's designer fashion clothing, accessories, and related products. These stores aim to provide a beautiful boutique environment for customers to buy and sell these items, participating in the circular economy within the retail fashion industry.
Corporate History
The Closet Trading Co. brand originated from a predecessor store called 'The Closet' which operated as a sole proprietorship in Santa Barbara from 2003 to 2009. In 2009, Luca B. Styles, a California corporation, was formed, and the store rebranded as 'The Closet Trading Co.' Luca B. Styles operated these stores until March 2019. At that time, through a corporate reorganization, the stores and related operations were assigned to The Closet Trading Company, LLC, an affiliate. The Closet Trading Company Franchising, LLC, the franchisor entity, was formed on January 25, 2019, as a Wyoming limited liability company, and began offering franchises in 2019.
Financial Overview
Investment Range
$137,400 - $350,300
Franchise Fee (Low)
$15,000
Franchise Fee (High)
$40,000
Royalty %
5%
Marketing %
1%
Equipment Costs (Low)
$55,000
Equipment Costs (High)
$170,000
Working Capital
$57,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The Closet Trading Co. has faced recurring operating losses and a net capital deficiency, which raise substantial doubt about its ability to continue as a going concern. As of December 31, 2023, The Closet Trading Co. reported cash of $28,958, an accumulated deficit of $204,494, and negative working capital of $293,766. The Closet Trading Co. plans to improve its financial resources by increasing revenues and securing additional capital contributions from its members.
Financing Details
The Closet Trading Co. does not currently offer any direct or indirect financing to its franchisees, nor does it guarantee any leases, notes, or obligations for them. However, The Closet Trading Co. retains the right to offer financing options in the future.
Performance Metrics
Total US Locations
7
Franchised Units
4
Corporate Units
3
Avg Square Footage
1,200
Franchising Since
2019
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
The Closet Trading Co. has no litigation that is required to be disclosed in Item 3 of its Franchise Disclosure Document. This indicates that The Closet Trading Co. has no reportable legal disputes or lawsuits.
Bankruptcy History
The Closet Trading Co. has no bankruptcy history that is required to be disclosed in Item 4 of its Franchise Disclosure Document.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, The Closet Trading Co. franchisees must provide 180 days prior written notice. They must have enough remaining lease term to operate for the renewal period and not be in default of their franchise agreement or any other related agreements. Franchisees are also required to remodel and modernize their store at their own expense to match the current appearance and standards of new The Closet Trading Co. stores. They must sign The Closet Trading Co.'s then-current franchise agreement, which may have different terms, pay a non-refundable renewal fee of $10,000, and execute a general release of all claims against The Closet Trading Co. and its affiliates.
Training & Support Program
Franchisor Assistance
The Closet Trading Co. provides franchisees with extensive assistance throughout the process. Before opening, The Closet Trading Co. assists with site selection and approval, provides general specifications for store layout and design, approves the premises, and offers a list of approved suppliers and product specifications. Franchisees also receive an initial training program for up to two individuals, followed by at least two days of in-store grand opening and opening assistance. During operation, The Closet Trading Co. grants electronic access to and updates the Brand Standards Manual, provides general guidance and consultation upon request, and offers recommended pricing and consignment commissions. The Closet Trading Co. also provides inventory control procedures and related information for inventory management, offers additional training for a fee, administers the advertising fund, and provides access to and maintains a proprietary database, computer system, and designated point-of-sale system. Franchisees are also required to attend regional or national conferences.
Initial Training Hours
80
Training Location
Franchisor headquarters in the Los Angeles, California area, a designated training facility, an operating The Closet Trading Co. store, and/or online.
Ongoing Support
After opening, The Closet Trading Co. provides ongoing support by granting electronic access to and regularly updating the Brand Standards Manual, which covers operational procedures. Franchisees can request general guidance and consult with The Closet Trading Co. during regular business hours. The Closet Trading Co. may provide recommended pricing for system consistency and specifies recommended consignment commissions. It also offers inventory control procedures and related information for inventory management. Additionally, The Closet Trading Co. administers the advertising fund and offers marketing-related services and standards. Franchisees have access to and are required to use The Closet Trading Co.'s proprietary database, computer system, and designated point-of-sale system. The Closet Trading Co. may also require or offer additional training programs for a fee, and franchisees must attend mandatory regional or national conferences.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Protected
Territory Size Requirements
The Closet Trading Co. grants franchisees a protected territory that is generally a two-to-three-mile radius around the authorized store location. The exact size of this protected territory is determined by The Closet Trading Co. based on factors such as demographics and population density.