How to Finance an Aaron’s Franchise: Inventory, Fees and SBA
By Anthony Cornella
An Aaron’s franchise loan finances a retail business with an unusual balance sheet. An Aaron’s store leases furniture, electronics and appliances to customers who pay over time, so a large part of the owner’s money ends up as lease merchandise sitting in customers’ homes rather than on a showroom floor. That shapes nearly every financing decision.
This article covers what the 2025 Franchise Disclosure Document (FDD) says it costs to open an Aaron’s store, how the royalty and other fees affect cash flow, how SBA and conventional loans are typically used, and what lenders look for when a buyer opens, converts or buys an Aaron’s location.
US Professional Funding is not affiliated with, sponsored by or endorsed by Aaron’s; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice, and buyers should review the current FDD and franchise agreement with a qualified franchise attorney and accountant.
Aaron’s Franchise Loan at a Glance
- Initial franchise fee: $35,000 per store, due at signing, according to the 2025 FDD issued June 30, 2025.
- Conversion and development fees: reduced initial fees of $21,000, $17,500 or $14,000 per store for qualifying conversions of existing rental-purchase stores, and a $20,000 per-store development fee credited against the initial fee.
- Royalty: a continuing license fee of 6% of gross revenues, paid weekly.
- Advertising: an ad production fund of the lesser of $3,750 a year or 0.5% of gross revenues, if established; the media fund has been suspended since January 1, 2014.
- Estimated initial investment: $307,170 to $837,975 for a first store.
- Largest line items: initial inventory of $120,000 to $160,000 and additional funds of $100,000 to $240,000 for the first 6 to 15 months.
- Store size: 4,000 to 8,000 square feet, generally leased.
- System size: 1,201 stores in the U.S. and Canada at December 31, 2024, including 224 franchise agreements in effect in the U.S.
- SBA Franchise Directory: listed, with notes about lease assignments and lien positions.
What Is Aaron’s?
The U.S. franchisor is Aaron’s, LLC, a Georgia limited liability company based in Atlanta. According to the 2025 FDD, the business was originally incorporated in a prior form on March 28, 1962, and began offering franchises in May 1992. Aaron’s describes itself as a technology-enabled, omnichannel provider of lease-to-own and retail purchase solutions for appliances, electronics, furniture and other home goods.
At December 31, 2024, Aaron’s and its franchisees operated 1,201 stores in the U.S. and Canada. The company operated 974 showrooms in 43 states and Canada, 224 franchise agreements were in effect in the U.S., and 3 franchised stores operated in Canada. The company also runs 13 distribution centers.
How an Aaron’s store works. Franchisees operate stores under the Aaron’s Sales & Lease Ownership mark, leasing and selling residential furniture, consumer electronics, appliances and accessories, mainly to customers who do not buy with cash or traditional credit. Customers make weekly, semi-monthly or monthly payments, can return merchandise at any time without further obligation, or can keep paying through the lease term to own the item. The FDD describes lease programs of 6, 12, 18 or 24 months. Until a customer owns or returns an item, the franchisee is responsible for performing or arranging repairs.
Store format. Stores are usually in free-standing buildings or strip centers in moderate-income neighborhoods and need 4,000 to 8,000 square feet. Each store also needs at least one delivery vehicle, because merchandise is delivered to and picked up from customers’ homes.
Why lenders view Aaron’s the way they do. Lenders generally see a long-established brand with a defined operating system, distribution support and a recurring payment stream from customer leases. They also see a business that requires heavy, ongoing investment in merchandise, depends on collections discipline and operates under state lease-to-own laws. An Aaron’s franchise loan request needs to show the lender that the owner understands both sides.
Aaron’s Franchise Costs
The 2025 FDD cover page states that the total investment necessary to begin operation of a first Aaron’s Sales & Lease Ownership franchise ranges from $307,170 to $837,975.
Initial franchise fee. The initial fee is $35,000, paid when the franchise agreement is signed. Under the Conversion Program for operators of existing rental-purchase stores, the fee is reduced to $21,000 per store for 1 to 5 stores, $17,500 per store for 6 to 10 stores and $14,000 per store for more than 10 stores. Developers pay a nonrefundable $20,000 per-store development fee that is credited against each store’s initial fee once the developer is in compliance.
Real estate and build-out. The FDD assumes the franchisee leases its premises and does not estimate the cost of buying property. It estimates annual rent of $7.00 to $20.00 per square foot, possibly more in some markets, plus $1.50 to $5.00 per square foot for common area maintenance, taxes and insurance. Leasehold improvements, including flooring, counters, wiring, shelving, paint and decor built to Aaron’s floor plans and an equipment package of about $8,000, are estimated at $8,000 to $275,000. That wide range reflects how much a site’s condition and landlord contribution can change the budget.
Equipment, technology and vehicles. The estimate includes $12,500 to $20,000 for equipment and fixtures, $11,800 to $15,000 for computer equipment and weekly computer equipment lease payments of $50 to $150. Aaron’s buys the exterior signs and leases them to the franchisee for the first five years, with weekly sign lease charges of $20 to $225. A delivery vehicle that meets Aaron’s specifications is estimated at $1,500 to $7,600, reflecting either a lease deposit or a purchase down payment.
Inventory. Franchisees must buy their initial inventory from Aaron’s, estimated at $120,000 to $160,000 including freight and handling. Some components may come from approved suppliers.
Opening costs and working capital. Additional funds for the first 6 to 15 months are estimated at $100,000 to $240,000. Insurance, cyber liability insurance, training travel and opening advertising complete the budget.
Total investment. The Item 7 line items in the 2025 FDD:
- Initial fee: $35,000
- Real estate (rent estimate): $3,800 to $20,000
- Leasehold improvements: $8,000 to $275,000
- Signs (weekly lease): $20 to $225
- Computer equipment lease (weekly): $50 to $150
- Computer equipment: $11,800 to $15,000
- Equipment and fixtures: $12,500 to $20,000
- Delivery vehicle: $1,500 to $7,600
- Insurance: $6,500 to $11,000
- Cyber liability insurance: $5,000 to $30,000
- Training travel and living expenses: $1,000 to $4,000
- Pre-opening advertising: $2,000 to $5,000
- Grand opening advertising: $0 to $15,000
- Initial inventory: $120,000 to $160,000
- Additional funds (6 to 15 months): $100,000 to $240,000
Inventory and additional funds together make up well over half of the low-end estimate. For a lender, that means much of an Aaron’s franchise loan supports merchandise and operating cash rather than hard assets such as equipment or real estate.
Ongoing Fees and How They Affect Your Loan
Continuing license fee. The royalty is 6% of gross revenues, paid weekly. Because it is calculated on revenue, it comes off the top before inventory replenishment, payroll, rent and debt service.
Advertising. If established, the ad production fund costs the lesser of $3,750 a year or 0.5% of gross revenues. The FDD states that the media fund has been suspended since January 1, 2014, though it could be reinstated. Advertising agency fees run about 15% of advertising expense.
Technology and leases from the franchisor. New franchisees sign a Technology Services Agreement, pay a software license fee that reimburses Aaron’s costs, and make weekly computer equipment and sign lease payments. These are fixed weekly costs a lender will include in the cash flow model.
Transfer and renewal fees. The transfer fee is $6,000 per store, or the greater of $6,000 or 6% to 10% of the purchase price if Aaron’s helps locate the buyer. The renewal fee is $2,500.
How lenders factor these costs in. In a lease-to-own store, revenue arrives as a stream of customer payments, while merchandise must be bought before it can be leased. Lenders model weekly collections, the royalty, merchandise purchases, payroll, delivery costs and rent, then look at what is left for debt service. Strong collections and disciplined merchandise buying make the numbers work; weak collections or charge-offs can strain them quickly.
Franchisor Requirements for New Owners
The 2025 FDD describes what Aaron’s expects of franchisees:
- Full-time involvement: franchisees are expected to work full time on weekdays and most weekday evenings, plus some weekends, especially in the first two years.
- Following the system: franchisees must follow the Aaron’s methods for store design, leasing and repair procedures, inventory control, collections, training and marketing, and adopt changes Aaron’s makes.
- Legal compliance: franchisees use Aaron’s lease forms, including state-specific forms, and are responsible for complying with state lease-to-own laws.
- Technology: every new franchisee signs the Technology Services Agreement.
The FDD sections summarized here do not set minimum net worth or liquidity figures, so ask Aaron’s directly about its financial qualifications. Lenders will apply their own liquidity and equity requirements in any case, and a buyer should expect to show reserves beyond the down payment because the store’s early months are cash-intensive.
The approval process. Buyers receive the FDD, review it with advisors, complete Aaron’s approval process and sign the franchise agreement before opening. Line up financing before signing a lease so the lease, loan and opening schedule stay aligned.
Ways to Own an Aaron’s
Opening a new store. A new store follows the Item 7 budget: lease and build out a site, buy the initial inventory from Aaron’s, acquire a delivery vehicle and fund the first 6 to 15 months. Lenders underwrite new stores on projections and the owner’s management and retail background. See our page on retail start-up financing.
Converting an existing rental-purchase store. Aaron’s Conversion Program lets operators of one or more third-party rental-purchase stores join the system at reduced initial fees, with a temporary abatement of the continuing license fee of 1 to 4 months depending on the store’s trailing three-month average net revenue before conversion. Conversions can be easier to finance than new stores because the business already has customers, lease agreements and operating history. Our article on conversion franchise financing explains how lenders approach these deals.
Buying an existing Aaron’s store. Buying an existing franchised store gives a lender actual results to study, including the lease portfolio, collections history and merchandise levels. Aaron’s must approve the transfer, and the transfer fee applies. Our article on buying a franchise resale covers approval and timing, and our page on retail business acquisition financing explains how these purchases are structured.
Development agreements. Developers commit to open a set number of stores in a designated area on a schedule. A developer that meets its schedule and stays in compliance receives a 10-year right of first refusal to develop additional stores in the area.
Financing Options for an Aaron’s Franchise
SBA 7(a) loans. Because Aaron’s is on the SBA Franchise Directory, an SBA 7(a) loan is a common starting point for buyers. A 7(a) loan can combine the franchise fee, leasehold improvements, equipment, initial inventory and working capital, or finance the purchase of an existing store including goodwill and the lease portfolio.
SBA 504 loans. The 504 program finances owner-occupied real estate and long-lived fixed assets. Because the FDD assumes stores are leased, 504 financing generally applies only if an owner decides to buy a building for a store.
Conventional term loans. A conventional business loan may suit an experienced owner, particularly one converting existing rental-purchase stores or adding locations with strong operating history. Terms and collateral requirements vary by lender.
Equipment financing. Delivery vehicles, store fixtures and other equipment can often be financed separately, which preserves cash for inventory. Note that Aaron’s leases computer equipment and exterior signs to franchisees, so those items generally are not part of a separate equipment loan. Learn more about retail equipment financing and leasing.
Working capital and lines of credit. Every new lease agreement requires merchandise bought up front, while the customer pays it back over months. A growing store therefore needs a steady supply of cash for merchandise, especially during peak seasons. A line of credit can support that cycle. See our retail working capital and lines of credit options.
Seller financing on resales and conversions. When buying an existing store, the seller may carry part of the price. Any seller note must be acceptable to the senior lender, is typically subordinate to it, and SBA programs may limit how it is structured.
SBA Loans for Aaron’s Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, which lists brands whose franchise documents have been reviewed for SBA eligibility. SBA lenders generally require a brand to appear on the directory before making an SBA-guaranteed loan to one of its franchisees. A listing does not approve any borrower.
Aaron’s directory listing. Aaron’s appears on the SBA Franchise Directory under code S5055 with two notes. The first: “When the real estate where the franchise business is located will secure the SBA loan, the Assignment to Lease may not be executed.” The second: “Lender/CDC must ensure the appropriate lien position on all collateral in accordance with the SOP.”
What the notes mean in plain English. An assignment of lease is a document that can give the franchisor rights to take over a store’s lease. The first note says that if the property where the store operates will serve as collateral for the SBA loan, that document should not be signed. The second note reminds the lender, or the certified development company on a 504 loan, that it must confirm it holds the lien position SBA lending rules require on every asset pledged. In an Aaron’s store, where signs and computer equipment are leased from the franchisor and merchandise moves in and out of customers’ homes, documenting collateral carefully is part of the process.
Program size. The SBA 7(a) program maximum is currently $5 million, though program rules can change. That leaves room for a single store or, for an experienced operator, several stores.
SBA application tips. Prepare the FDD and franchise agreement, a personal financial statement, tax returns, a resume, a business plan built around your trade area and a proposed lease. For a conversion or resale, include lease portfolio reports, collections history and several years of financial statements.
How Lenders Evaluate an Aaron’s Deal
Personal credit and financial history. Lenders review credit reports, tax returns and a personal financial statement, and owners typically sign a personal guarantee.
Net worth and liquidity. Because initial inventory and additional funds make up so much of the Item 7 estimate, lenders pay close attention to the cash a buyer brings and the reserves left after closing.
Industry and management experience. Retail management, consumer finance, collections, sales or multi-site operations experience strengthens a request. Experience running rental-purchase stores is especially relevant for conversions.
Business plan and projections. Projections should model how quickly the store builds its base of active lease agreements, weekly collections, merchandise purchases, returns and charge-offs, delivery and repair costs, payroll, rent and fees. Lenders want to see how cash flow evolves as the lease portfolio grows, not just a revenue forecast.
The FDD and franchise agreement. Lenders review Items 5, 6, 7, 17 and 19, the franchise term and renewal rights, transfer conditions and the Technology Services Agreement. Our franchise due diligence checklist covers what to verify before signing.
Site and lease. Lenders look at the lease term, rent and renewal options, loading and delivery access, and whether the lease runs at least as long as the loan where possible.
Historical financials for existing stores. For a resale or conversion, lenders review tax returns, profit and loss statements, the aging of customer accounts, merchandise levels and the history of returns and charge-offs.
Lease Merchandise: The Heart of an Aaron’s Store
Lease merchandise is the asset that makes an Aaron’s store work and the one lenders scrutinize most.
How merchandise moves. A store buys furniture, electronics and appliances, leases them to customers, collects payments over the lease term and either transfers ownership at the end or takes the item back when a customer returns it. Each step affects cash flow and the value of the inventory on the books.
Why it matters for collateral. Merchandise in customers’ homes is harder to value and recover than equipment bolted to a shop floor. Lenders will want to understand how the store tracks merchandise, how it values items on lease and idle in the store, and how it handles returns, repairs and losses.
Growth uses cash. Because merchandise is bought before customers pay for it, a store that adds lease agreements quickly can be short of cash even when it is performing well. Planning for that dynamic is one of the most important parts of an Aaron’s financing plan.
Compliance. The FDD notes that many states regulate lease-to-own transactions, including disclosures, late fees, advertising, data privacy and collections. Lenders will want to know that the owner uses Aaron’s required forms and has a plan for staying compliant.
Multi-Unit Growth and Development Agreements
Aaron’s offers development agreements for owners who want to open several stores in an area. Each store opens under its own franchise agreement, and the $20,000 per-store development fee is credited against the initial fee.
Financing a development schedule. A development agreement commits the owner to deadlines, so financing should be planned store by store rather than all at once. Lenders typically want to see the first store performing before funding the next, and the owner needs enough equity and reserves to keep the schedule. Our article on financing an area development agreement explains how to plan for this.
Converting a group of stores. An operator converting more than 10 rental-purchase stores qualifies for the lowest conversion fee tier. Lenders will look at the combined portfolio, the transition plan and how quickly the converted stores adopt Aaron’s systems.
Real-World Scenarios
A retail manager opening a first store. A buyer with years of retail management experience opens a new store in a strip center. The financing plan includes an SBA 7(a) loan for the franchise fee, build-out, initial inventory and working capital, a separate lease for the delivery vehicle and a personal cash reserve. The lender focuses on the ramp-up of active leases and the plan for collections.
An independent operator converting three stores. An owner of three independent rental-purchase stores joins the Conversion Program at the reduced fee. The lender reviews each store’s lease portfolio and collections history, finances the rebranding and replacement merchandise, and builds the royalty abatement period into the projections.
A buyer purchasing an existing franchised store. A buyer acquires a store from a retiring franchisee. The lender values the lease portfolio and merchandise, reviews account aging and charge-off history, and the buyer negotiates a small seller note that is subordinate to the main loan.
A developer adding stores on schedule. An owner with a development agreement finances each new store as its opening date approaches, using results from earlier stores to support the next loan and keeping a line of credit for merchandise purchases across the group.
Common Mistakes to Avoid
- Underestimating how much cash a growing lease portfolio consumes
- Treating lease merchandise like ordinary retail inventory when planning collateral
- Budgeting the low end of leasehold improvements without seeing the site
- Ignoring weekly sign, computer equipment and technology costs in cash flow projections
- Skipping a detailed review of account aging and charge-offs when buying an existing store
- Overlooking state lease-to-own rules in the store’s market
- Signing a development schedule without a financing plan for each store
For more pitfalls that apply across the industry, read the retail store loan mistakes that cost owners the most.
Next Steps to Finance Your Aaron’s Franchise
Step 1: Get and review the FDD. Study Items 5, 6, 7, 10, 17 and 19 and the franchise agreement with a franchise attorney and accountant.
Step 2: Confirm Aaron’s qualifications. Ask Aaron’s about its financial and experience requirements and the time commitment it expects.
Step 3: Talk with a financing specialist early. Learn how lenders will treat inventory, working capital and the franchisor leases before you sign a real estate lease. Our SBA loan calculator can give you early payment estimates for planning only; they are not an offer or approval.
Step 4: Build your business plan. Model the growth of active lease agreements, collections, merchandise purchases and every fee in Item 6.
Step 5: Select a site. Find a 4,000 to 8,000 square foot location with delivery access and review the lease with your attorney.
Step 6: Apply for financing. Submit your personal financial statement, tax returns, resume, business plan, FDD and lease or letter of intent, and coordinate the timeline with Aaron’s approval.
Step 7: Close and open. Order initial inventory, arrange the delivery vehicle, complete training and open with working capital in place.
Aaron’s Franchise Loan FAQs
How much does it cost to open an Aaron’s franchise?
The 2025 FDD estimates the total investment to begin operation of a first Aaron’s store at $307,170 to $837,975, including the franchise fee, build-out, initial inventory and additional funds.
What is the Aaron’s franchise fee?
The initial fee is $35,000 per store. Qualifying conversions of existing rental-purchase stores pay $21,000, $17,500 or $14,000 per store depending on how many stores convert.
What royalty does Aaron’s charge?
The continuing license fee is 6% of gross revenues, paid weekly. Franchisees may also pay into an ad production fund of the lesser of $3,750 a year or 0.5% of gross revenues, if established.
How much inventory do I need to buy?
The FDD estimates initial inventory at $120,000 to $160,000, including freight and handling, purchased from Aaron’s. Ongoing merchandise purchases are a major part of working capital.
Can I get an SBA loan for an Aaron’s franchise?
Aaron’s is listed on the SBA Franchise Directory, so the brand is eligible for SBA review. Approval depends on your credit, experience, equity, business plan and the lender’s underwriting.
What net worth or liquid capital do I need?
The FDD sections summarized here do not set minimums, so ask Aaron’s for its current requirements. Lenders will expect an equity contribution and meaningful reserves, given the size of the inventory and working capital estimates.
Can I convert my rental-purchase store to Aaron’s?
Aaron’s offers a Conversion Program for operators of one or more third-party rental-purchase stores, with reduced initial fees and a temporary abatement of the continuing license fee.
Can I buy an existing Aaron’s store with an Aaron’s franchise loan?
Yes, with Aaron’s approval of the transfer. Lenders will underwrite the store’s actual results, lease portfolio and collections history.
Can I finance the delivery vehicle separately?
Often, yes. The FDD allows the vehicle to be leased or purchased, and a separate vehicle loan or lease can preserve cash for inventory.
Does Aaron’s offer financing?
Aaron’s leases exterior signs and computer equipment to franchisees. Review Item 10 of the current FDD for any other financing the franchisor offers, and compare it with SBA and conventional options.
Can I open multiple Aaron’s stores?
Yes. Aaron’s offers development agreements, and a developer that meets its schedule receives a 10-year right of first refusal to develop more stores in its area.
Final Thoughts
Financing an Aaron’s store is mostly about merchandise and cash flow timing. Buyers who plan for inventory needs as the lease portfolio grows, budget for every weekly fee and approach lenders with a clear collections and compliance plan put themselves in the strongest position, whether they are opening a first store, converting an existing operation or adding locations.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, conversions, equipment and working capital for established brands. Learn more about our franchise financing and retail business financing solutions.
