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1.
A crowded place so chock full of morons doing stupid things that they must be manufacturing them in a back room; thus, a factory. An organization housing so many idiots, it almost seems intentional.
"Want to hit Daily Grill?"
"Are you kidding? That place is a total clown factory. Last time we went, some muppet backed his Land Rover into 2 parked cars and ran over a potted tree on his way out."
by Karl Stall November 28, 2007
 
2.
a) Any government run organization; the biggest clowns usually being those in management. The higher up the ladder someone is, the greater their "Clown Factor".

b) A place where common sense is exchanged for a promotion or management training, (Also known as "Clown School")...thus creating a factory of sorts, specifically of Clowns.

C) A place where the biggest clowns (management), create a circus like environment where incompetance and stupidity reins supreme and filters down into lower management ranks. The entry level workers are left confused, as they still possess common sense, and do not speak "Clownese". The Clowns constantly try to fix that which is not broken in order to justify their jobs, thus turning a happy well-functioning work environment into shit. Anyone with a brain is laid off or fired, and the Management Clowns start creating yes-man clones of themselves in the back room, thus a "Clown Factory".

Also see "Fuckshow"
"The Government is a real Clown Factory!"

"Man, I can't wait to find another job and get out of this clown factory!"

"The management is really turning this place into a Clown Factory..."
by kitten78 April 23, 2010
 
3.
Term used to describe an overly crowded public domain. Often used in reference to after hours gathering places such as night clubs/bars.
"Crowbar was a total clown factory on friday night."
by Spark Plug September 30, 2007