Risk Score
Pending analysis
Investment Range
$71,350 - $218,000
Franchise Fee
$34,000
Min Cash Required
$10,000
Total US Locations
44
Business Summary
Up Closets is a business that designs, sells, and installs custom closet systems and organizational units for various spaces, including homes, home offices, garages, and other residential and commercial areas. Up Closets also provides related services and products under its brand.
Corporate History
Up Closets Franchising LLC was formed as a Tennessee limited liability company on October 27, 2022. It operates as a wholly-owned subsidiary of Home Run Holdings LLC, which was formed on October 31, 2023. Up Closets Franchising LLC began offering its franchises on December 12, 2022. The company's affiliate, Pelican Franchising LLC, has been operating a custom closet business since 2020 under different names prior to the registration of the "Up Closets" trademarks. Up Closets Franchising LLC focuses solely on franchising under the "Up Closets" brand.
Financial Overview
Investment Range
$71,350 - $218,000
Franchise Fee (Low)
$34,000
Franchise Fee (High)
$117,000
Minimum Cash Required
$10,000
Equipment Costs (Low)
$4,000
Equipment Costs (High)
$12,000
Working Capital
$30,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Home Run Holdings LLC, the parent company of Up Closets Franchising LLC, reported negative members' equity of $154,440 as of October 31, 2024. While the company generated positive cash flow from its operations, significant distributions to its members exceeded contributed capital and net income for the period, leading to an overall decrease in cash and the negative equity position. The independent auditors issued an unqualified opinion on the financial statements.
Financing Details
Up Closets Franchising LLC does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any notes, leases, or other financial obligations for franchisees. Franchisees must arrange their own funding.
Performance Metrics
Total US Locations
44
Franchised Units
44
Corporate Units
0
Franchising Since
2022
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
Up Closets Franchising LLC has two arbitration claims filed against it and its founder, Thomas Scott, on August 14, 2024. One claim is from a former franchisee, Nina Parmar and Zarpo Designs, LLC, alleging fraudulent inducement to enter a franchise agreement, breach of contract due to constructive termination, and Tennessee Consumer Protection Act violations, following the termination of their franchise. The second claim is from Lindsey Puckett and Bad Britches, LLC, a former franchisee of an Up Closets affiliate, Dryer Vent Superheroes Franchising LLC, also against the affiliate and Thomas Scott, with similar allegations. Up Closets Franchising LLC denies all allegations in both cases, which have been submitted to arbitration.
Bankruptcy History
Up Closets Franchising LLC has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Up Closets franchisees must be in full compliance with the agreement and have had no more than five instances of default during the current term. They must provide written notice of their intent to renew at least ten months before the term ends, sign a new franchise agreement (which may have different terms), and pay a successor agreement fee of at least $5,000 or 10% of the then-current initial franchise fee, whichever is greater. Franchisees also need to repair, upgrade, or replace their business assets, including equipment, to meet the then-current standards, complete any required advanced training, and sign a general release.
Training & Support Program
Franchisor Assistance
Up Closets Franchising LLC provides a range of support to its franchisees. Before opening, Up Closets defines the territory, grants access to its Operations Manual and online resources, provides a list of approved equipment and supplies, and offers an initial management training program that lasts 1-2 months with a final week in-person. Up Closets also supplies samples and digital artwork for initial marketing. After opening, ongoing support includes offering mandatory advanced training programs (up to 5 days per year), providing in-territory training upon request (for a fee), and offering individualized assistance by phone, video conference, and email. Up Closets maintains a brand website linking to each franchisee's contact and work information, provides updated lists of approved suppliers and product specifications, and may recommend pricing for services. All franchisee advertising and promotional materials must be submitted to Up Closets for approval.
Initial Training Hours
106
Training Location
Online and Franklin, TN
Ongoing Support
After opening, Up Closets Franchising LLC offers ongoing support that includes mandatory advanced training programs and participation in an annual business meeting or conference, up to five days per year. Franchisees can request in-territory training and assistance for a fee, and also receive individualized help via telephone, video conference, and email. Up Closets provides updated advertising and promotional materials, maintains a brand website that lists each franchisee's contact and work information, and offers written specifications for equipment and approved suppliers. The franchisor also recommends pricing guidelines and must approve all advertising materials used by franchisees.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Home-Based
Owner Participation
Hands-On
Territory Type
Protected
Territory Size Requirements
Up Closets Franchising LLC defines territories based on contiguous zip codes, offering three tiers: a Single Territory with a population of approximately 500,000, a Double Territory with about 1,000,000 people, and a Triple Territory with around 1,500,000 people. These population figures are based on recent census data and determined by a third-party mapping service.
Staffing Notes
Up Closets Franchising LLC requires its franchisees to employ enough qualified individuals who are appropriately trained and, if necessary, licensed, to operate the business efficiently. These employees must act courteously and wear uniforms as specified by Up Closets. Franchisees are fully responsible for all aspects of employment, including hiring, training, and supervision of their staff. All employees who will have access to confidential information must sign a confidentiality and non-compete agreement. Additionally, franchisees must conduct background checks, including criminal history and sex offender searches, for all prospective employees, particularly those who will enter customer residences. Franchisees should not hire individuals whose background check indicates a propensity for violence, dishonesty, or criminal convictions.