How does Closet Storage Concepts determine the cost of its inventory?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
h December 2023. Payments paused after the Company collected $28,727, but are expected to continue and be paid in full. There is no interest charted on this note.
Inventories
Inventory is comprised primarily of raw materials (e.g., laminate, accessories, closet hardware) which have not been charged to specific jobs as well as logo and promotional items sold to the franchises. Due to the custom nature of the Company's business model, there are no finished goods inventory and work‐in‐progress inventory is minimal. Inventories are stated at the lower of cost or
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the company primarily holds raw materials like laminate, accessories, and closet hardware in its inventory, along with logo and promotional items for franchises. Due to the custom nature of the business, finished goods and work-in-progress inventories are minimal.
Closet Storage Concepts values its inventory at the lower of either its cost or its market value. The cost is determined using the first-in, first-out (FIFO) method, meaning the first items purchased are assumed to be the first ones sold. The market value is based on the most recent selling price.
For a prospective franchisee, understanding Closet Storage Concepts' inventory valuation method is important for managing their own inventory and assessing the financial health of the franchisor. The FIFO method can impact the franchisee's cost of goods sold and taxable income, especially during times of fluctuating prices. The inventory at December 31, 2023, was valued at $49,546.