How to Finance an Aqua-Tots Franchise: Pool Build-Out Costs
By Chris Cornella
An Aqua-Tots franchise loan pays for something few franchise loans do: a heated indoor pool built inside leased commercial space. Tenant improvements and pool construction make up most of the budget, which puts this swim school franchise closer to a construction project than a typical service business when it comes to financing.
US Professional Funding is not affiliated with, sponsored by or endorsed by Aqua-Tots Swim Schools; the name is used only to describe the business. Figures from the franchisor’s website and 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 you should review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Aqua-Tots Franchise Loan at a Glance
- Initial franchise fee: $50,000, according to the franchisor’s investment page.
- Royalty: 6% of gross revenue.
- National marketing fee: 2% of gross revenue.
- Estimated initial investment: $1,619,095 to $2,638,514.
- Largest line item: tenant improvements of $1,200,000 to $1,800,000.
- Financial requirements: net worth exceeding $1 million and at least $500,000 in liquid capital.
- System size: the company reports 180 locations in 14 countries.
- Timeline: about 18 months from signing to launch, according to the franchisor.
- SBA Franchise Directory: listed as “Aqua-Tots Swim Schools” (code S0128), with a note about the Lease Assignment Agreement when real estate secures the loan.
What Is Aqua-Tots Swim Schools?
Aqua-Tots dates to 1991, when it began with a single swim lesson in a community pool in Arizona. Co-founders Ron Sciarro, Paul Preston and Heather Preston built the program, and in 2005 the company opened its first dedicated, year-round indoor facility in Mesa, Arizona. The franchisor is based in Mesa and describes itself as the largest international swim school franchise.
The company reports 180 locations in 14 countries and more than 2.5 million children taught.
How the school works. Aqua-Tots teaches children starting as young as four months old in an indoor pool kept at 90 degrees. Small-group classes run 30 minutes with a 4:1 student-to-instructor ratio, lessons are offered year-round and enrollment is always open. Tuition is billed monthly based on the number of weekly classes a child attends, and registration fees are charged annually.
Why lenders view the model the way they do. Monthly tuition from enrolled families gives the business a recurring revenue base that lenders like. On the other hand, the pool and the building improvements are expensive and highly specialized, and much of that investment sits in leased space the owner does not control. Lenders weigh both sides: a recurring-revenue business with heavy, location-specific capital costs.
Aqua-Tots Franchise Costs
The franchisor’s investment page lays out an estimated initial investment of $1,619,095 to $2,638,514 and refers candidates to Items 6 and 7 of the current FDD.
Initial franchise fee. The fee is $50,000.
Real estate and tenant improvements. Rent or real estate costs during the opening period are estimated at $12,000 to $85,000, while tenant improvements run $1,200,000 to $1,800,000. Converting a retail or commercial box into a natatorium means heavy plumbing, drainage, humidity control, mechanical systems, locker rooms and finishes that stand up to a wet environment.
Pool and aquatic equipment. Pool design, build, aquatic supplies and equipment are estimated at $250,000 to $400,000. This category covers the pool itself along with filtration, heating and related systems.
Opening costs and working capital. Additional funds for the first three months are estimated at $40,000 to $115,000, and three months of advertising at $26,000 to $45,000. Pre-opening marketing matters because a swim school needs enrolled families on day one.
Item 7 line items. The franchisor’s table lists:
- Initial franchise fee: $50,000
- Initial franchisee travel expenses for training in Arizona: $2,000 to $18,000
- Rent or real estate: $12,000 to $85,000
- Pool design, build, and aquatic supplies and equipment: $250,000 to $400,000
- Tenant improvement: $1,200,000 to $1,800,000
- Miscellaneous opening costs: $6,000 to $19,500
- Computer, color printer and copier: $5,000 to $15,000
- Signage: $15,000 to $60,000
- Opening inventory for retail lines: $9,000 to $18,000
- Advertising (three months): $26,000 to $45,000
- Preferred software: $1,595 to $2,514
- Insurance: $2,500 to $10,500
- Additional funds for the initial three months: $40,000 to $115,000
- Total estimated initial investment: $1,619,095 to $2,638,514
Tenant improvements and the pool together account for most of the budget at either end of the range, which is why the build-out plan drives the size and structure of the loan.
Ongoing Fees and How They Affect Your Loan
Royalty. Franchisees pay a royalty of 6% of gross revenue.
National marketing fee. A 2% national marketing fee is also charged on gross revenue, for a combined 8% of revenue before rent, payroll and debt service.
Other recurring costs. Software, local marketing, insurance and any remodel or refresh obligations are described in Item 6 and the franchise agreement. Review them so projections capture every recurring cost.
How lenders factor fees into cash flow. Lenders project tuition revenue from enrollment growth, subtract the royalty and marketing fee, instructor payroll, rent, utilities to heat the pool and the building, and maintenance, then compare what is left with annual loan payments. Because a new school builds enrollment over time, lenders want to see how payments will be covered during the ramp-up period.
Franchisor Requirements for New Owners
- Net worth: exceeding $1 million.
- Liquid capital: at least $500,000.
- Background: strong business acumen or successful career experience; no prior swim experience is required.
- Full-time involvement: owners must be fully engaged in the business, especially in year one, and must serve as general manager for the first 6 to 12 months.
- Staffing: schools typically run with two full-time and 15 to 20 part-time team members.
The approval process. The franchisor describes a nine-step path: an interest form, an introductory call, a confidential questionnaire, FDD review, a call with a co-founder about territory and business structure, conversations with existing owners, a call with the chief executive and chief operating officer, a Decision Day at headquarters in Mesa, and final agreements. Pre-approval primarily involves submitting a personal financial statement. Bring your financing conversation into this process before Decision Day.
Ways to Own an Aqua-Tots
A new school. Most new owners build a school from the ground up inside leased space. After agreements are signed, the franchisor’s in-house brokerage negotiates the location, and a construction consultant coordinates the build-out with preferred architects, the general contractor and vendors. Financing covers the improvements, pool, equipment and opening costs before any tuition comes in. See our educational center start-up financing options.
Buying an existing school. When an owner sells, the buyer acquires an operating pool, enrolled families and trained staff. Lenders can underwrite actual tuition revenue, and the franchisor’s transfer approval becomes part of the closing. Learn about educational center acquisition financing.
Multiple schools. Each owner receives a protected territory, and multi-unit agreements include a development schedule for additional locations. Later schools are often financed on the strength of the first.
Financing Options for an Aqua-Tots Franchise
Most buyers combine more than one source to build an Aqua-Tots franchise loan package. The franchisor says it does not offer direct financing.
SBA 7(a) loans. The brand appears on the SBA Franchise Directory, and the franchisor notes that some franchisees have secured SBA loans. The SBA 7(a) loan program can cover leasehold improvements, the pool, equipment, the franchise fee and working capital in one loan, with longer repayment terms that suit a long-lived build-out.
SBA 504 loans. If an owner buys the building that will house the school, the SBA 504 loan program can finance the real estate and major fixed improvements. Owning the building can make sense when the pool and improvements represent such a large share of the investment. Our page on educational center real estate financing explains these projects.
Conventional term loans. Owners with strong balance sheets, or those adding a second school, may use conventional business loans. Expect lenders to look closely at collateral, since improvements in leased space have limited resale value.
Equipment financing. Pool filtration and heating systems, dehumidification equipment, computers and front-desk technology can sometimes be financed separately from the build-out, keeping the main loan smaller.
Working capital and lines of credit. The investment table includes three months of additional funds and advertising, but many owners want more cushion for enrollment ramp-up, utility costs and staff training. A line of credit can also smooth slower enrollment months. See our educational center working capital options.
Seller financing on resales. A seller may agree to carry part of the price of an existing school. Seller notes are typically subordinate to the senior loan, and loan programs may limit how they are structured. Read more about seller financing in educational business acquisitions.
SBA Loans for Aqua-Tots Franchisees
The SBA Franchise Directory lists brands whose franchise agreements have been reviewed for SBA eligibility. A listing clears the franchise relationship for SBA lending but does not approve any borrower; each Aqua-Tots franchise loan is still underwritten on its own merits.
The listing for this brand. Aqua-Tots Swim Schools appears on the directory under code S0128. The note says that when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Lease Assignment Agreement may not be executed.
What the note means in plain English. A lease assignment agreement lets the franchisor take over the lease if the franchise ends, so it can keep a school operating at that location. If the owner owns the real estate and pledges it as collateral for the SBA loan, that agreement would conflict with the lender’s lien, so it is not signed in that case. For schools in leased space, the note simply flags a document your attorney and lender will review.
Program size. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Because the estimated investment can approach the upper end of what many owners finance, confirm early how much of the project your lender expects you to fund from your own cash.
SBA application tips. Assemble a personal financial statement, tax returns, a résumé, the FDD and franchise agreement, the lease, construction bids for the build-out and pool, and monthly projections that show enrollment growth. Our SBA loan calculator can help estimate payments; results are for planning only and are not an offer or approval.
How Lenders Evaluate an Aqua-Tots Deal
Personal credit and financial history. Lenders review credit, tax returns and existing debts, and principal owners typically sign personal guarantees.
Net worth and liquidity. The franchisor’s requirements of more than $1 million in net worth and $500,000 in liquid capital set the floor. Lenders also want reserves left after the equity injection, since construction overruns are common with specialized builds.
Management experience. No swim background is needed, but lenders look for business management, hiring and customer-service experience. The requirement that owners act as general manager for the first 6 to 12 months reassures lenders that the owner will be present during ramp-up.
Business plan and projections. Projections should build enrollment month by month, apply the monthly tuition model, account for the 4:1 class ratio and instructor scheduling, and include pool heating and humidity-control costs. Any seasonal swings in enrollment should be modeled realistically.
The FDD and franchise agreement. Lenders review the term, renewal rights, transfer conditions and territory provisions, and check whether Item 19 includes financial performance representations.
The lease. Because improvements are so large, lenders want a lease term, including renewal options, that is long enough to support the loan, along with any landlord improvement allowance.
Historical financials for resales. Buyers of an existing school should expect to provide several years of financial statements, enrollment data and tax returns, plus a recent assessment of pool and mechanical systems.
The Pool: Equipment and Build-Out Deep Dive
The pool is the business. Beyond the basin itself, a swim school needs water filtration and chemical systems, water heating to keep the pool at 90 degrees, air handling and dehumidification to protect the building, and finishes that resist moisture. Locker rooms, family viewing areas and a front desk complete the space.
Construction risk. Specialized builds carry more risk of delays and overruns than a typical retail fit-out. The franchisor’s construction consultant and preferred architects help, but your financing plan should include a contingency.
Ongoing maintenance. Pumps, heaters and dehumidifiers wear over time. Build a replacement reserve into your projections.
Multi-Unit Growth and Development Agreements
Multi-unit agreements include a development schedule for additional locations within a protected territory. Because each school requires a major build-out, financing a second or third school usually depends on the first reaching steady enrollment.
Financing additional schools. Lenders can use the first school’s tuition history when sizing a loan for the next one. Read our article on multi-unit franchise financing for how owners scale.
Real-World Scenarios
A corporate executive opening a first school. A former executive with strong savings but no swim background signs for a single territory. The lender structures an SBA 7(a) loan for the build-out and pool, gives weight to the owner’s management history and the franchisor’s construction support, and requires a working capital reserve beyond the three months shown in the investment table.
An owner who buys the building. An owner finds a building for sale in a strong family market and uses an SBA 504 loan to buy it. Because the real estate secures the SBA-guaranteed financing, the Lease Assignment Agreement is not executed, consistent with the directory note.
Buying an existing school. A buyer acquires an established school from a retiring owner. The lender bases the loan on tuition history and enrollment trends, the seller carries a small subordinate note, and the buyer budgets for upgrades to aging mechanical equipment.
Common Mistakes to Avoid
- Underestimating tenant improvement and pool costs or skipping a construction contingency
- Signing a lease without enough term and renewal options to cover the loan
- Projecting full enrollment too quickly after opening
- Ignoring utility and maintenance costs for a heated indoor pool
- Planning to run the school remotely when the franchisor expects owners to serve as general manager
- Relying on only three months of working capital through the ramp-up period
For more pitfalls, read about the educational business loan mistakes that cost owners the most.
Next Steps to Finance Your Aqua-Tots Franchise
Step 1: Confirm you meet the requirements. Check your net worth and liquid capital against the franchisor’s thresholds and confirm you can commit full time.
Step 2: Review the FDD with advisors. Study Items 5, 6, 7, 17 and 19 and the franchise agreement with a franchise attorney and accountant.
Step 3: Talk with a financing specialist. Get an early view of SBA and conventional options before Decision Day.
Step 4: Work with the site and construction team. Once a location is identified, gather lease terms and construction bids for the build-out and pool.
Step 5: Build your projections. Model enrollment growth, tuition, payroll, utilities, fees and loan payments month by month.
Step 6: Apply for financing. Submit your package with the lease, bids, franchise documents and financial statements.
Step 7: Close, build and launch. Coordinate construction draws, training in Mesa and pre-opening marketing so the school opens with families enrolled.
Aqua-Tots Franchise Loan FAQs
How much does it cost to open an Aqua-Tots franchise?
The franchisor’s investment page estimates the initial investment at $1,619,095 to $2,638,514, including the franchise fee, tenant improvements, the pool, equipment, opening costs and three months of additional funds.
What is the Aqua-Tots franchise fee?
The initial franchise fee is $50,000.
What royalty does Aqua-Tots charge?
Franchisees pay a 6% royalty and a 2% national marketing fee, both on gross revenue.
How much liquid capital do I need?
The franchisor typically looks for at least $500,000 in liquid capital and a net worth exceeding $1 million.
Is Aqua-Tots eligible for SBA loans?
Yes. Aqua-Tots Swim Schools is listed on the SBA Franchise Directory under code S0128, and the franchisor notes that some franchisees have secured SBA loans. Each loan is subject to lender approval.
Does Aqua-Tots offer financing?
No. The franchisor says it does not offer direct financing but provides resources for exploring outside lenders. Review Item 10 of the current FDD for details.
Do I need swimming experience?
No. The franchisor says no prior swim experience is required, though it looks for strong business acumen.
Can I finance the pool equipment separately?
Some equipment, such as filtration, heating and dehumidification systems, may be financed separately, though much of the pool is built into the tenant improvements and is usually covered by the main loan.
How long does it take to open?
The franchisor says opening typically takes around 18 months from signing to launch, which matters for interest during construction and pre-opening costs.
Can I buy an existing Aqua-Tots school?
Yes, if an owner sells and the franchisor approves the transfer. Lenders can then underwrite actual tuition revenue.
Can I open more than one school?
Yes. Multi-unit agreements include a development schedule for additional locations, and each owner receives a protected territory.
How long is the franchise term?
The term, renewal and transfer conditions are set out in Item 17 of the FDD and the franchise agreement. Lenders typically want the term and the lease to extend at least as long as the loan.
Final Thoughts
An Aqua-Tots franchise loan is really a construction and equipment loan wrapped around a recurring tuition business. Owners who plan for the build-out, keep more working capital than the minimum and line up a lease that supports the loan are in the strongest position with lenders.
US Professional Funding helps franchise owners and buyers finance new schools, acquisitions, equipment, working capital and refinancing. Learn more about our franchise financing and educational services financing solutions.
