What primary direct costs are included in Closet Storage Concepts' cost of sales?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
obligations, therefore, the advances are classified as long‐term debt on the balance sheet. At December 31, 2024, there were no balances owed to the stockholder.
The Company's sole stockholder owns a separate entity that, in 2014, acquired substantially all of the assets and operations of a manufacturing entity that contractually supplies all of the "More Space Place" franchises. During the year, the Company made purchases from the entity in the amount of $23,355, which are included in materials and supplies in costs of sales. The entity also provided franchisee support in the amount of $60,000, and $627 of advertising, included in g
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the cost of sales includes purchases from an entity owned by the company's sole stockholder. This entity contractually supplies all of the "More Space Place" franchises.
For example, in 2024, Closet Storage Concepts made purchases from this entity amounting to $23,355, which were included as materials and supplies in the cost of sales. This related-party transaction indicates that a portion of the cost of sales is directly tied to the procurement of materials and supplies from a specific supplier affiliated with the company's ownership.
This arrangement means that a franchisee's cost of goods sold is affected by the pricing and availability of materials from this related entity. While the FDD provides this information, it does not detail all the specific costs that make up the overall "cost of sales." A prospective franchisee should seek clarification from Closet Storage Concepts regarding a comprehensive breakdown of all costs included in the cost of sales, to fully understand the expenses that will impact their profitability.