When are the initial franchise fees deemed earned by Closet Storage Concepts?

According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the initial franchise fees are deemed fully earned by Closet Storage Concepts upon the signing and delivery of the Franchise Agreement by them. This means that once Closet Storage Concepts has signed and delivered the agreement, the initial franchise fee is considered earned, regardless of whether the franchisee has opened their business or not.

For a prospective franchisee, this implies that the initial franchise fee, which is $49,500 for a territory with a population of 1,000,000 or more, is non-refundable under most circumstances once the agreement is signed by Closet Storage Concepts. Even if the franchisee terminates the agreement or is unable to open their Closet Storage Concepts business, they will likely not receive a refund of this initial fee. The initial franchise fee for each Closet & Storage Concepts business beyond the first one is $40,000.00.

Closet Storage Concepts does state that they may negotiate the initial franchise fee as an inducement for existing operators to open additional locations, to induce someone to take over an operating Franchised Business or similar circumstances or considerations. This is a notable exception, but it is not guaranteed and is subject to negotiation with Closet Storage Concepts.

This earning policy is fairly standard in the franchise industry, as initial fees often cover the franchisor's costs associated with evaluating the franchisee, providing initial training, and setting up the franchise system. Franchisees should carefully consider this policy and their own financial situation before signing the Franchise Agreement with Closet Storage Concepts.