How to Finance a Baba’s Chicken Franchise: Hot Chicken Startup
By Chris Cornella
A Baba’s Chicken franchise loan funds a fast-casual restaurant built around Nashville-style hot chicken: a fryer-heavy kitchen, a counter-service dining room and a menu that lives or dies on speed and consistency. The financing questions are how to pay for the build-out and kitchen, how much cash to hold for the opening months and how the brand’s SBA Franchise Directory listing and its notes shape the loan.
This article explains how to approach those questions, what to look for in the franchise disclosure document and how lenders typically underwrite a hot chicken restaurant, whether you are opening a new unit or buying an existing one.
US Professional Funding is not affiliated with, sponsored by or endorsed by Baba’s Chicken; 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 Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Baba’s Chicken Franchise Loan at a Glance
- Concept: Nashville-style hot chicken served fast-casual, with a focused menu of tenders and sandwiches.
- Origins: a Southern California brand that grew from a pop-up into restaurants in several cities.
- Costs and fees: the initial franchise fee, royalty and estimated initial investment are disclosed in Items 5, 6 and 7 of the current FDD; we could not independently verify them for this article.
- SBA Franchise Directory: listed under code S8948, with two notes about lease documents and lien position, explained below.
- Typical financing needs: leasehold build-out, fryers and kitchen equipment, ventilation, signage, the franchise fee and opening working capital.
What Is Baba’s Chicken?
Baba’s Chicken is a hot chicken concept that began in Riverside, California. It started as a pop-up, moved into a permanent space in downtown Riverside and then opened restaurants in other Southern California markets, including Costa Mesa, San Diego and Bakersfield.
The menu follows the Nashville hot chicken format: fried chicken tenders and sandwiches seasoned at several heat levels, with sides and sauces. A short menu keeps the kitchen simple, which suits smaller footprints and fast service.
How lenders view the concept. Lenders see hot chicken as a popular fast-casual category with many competing brands. For a younger franchise system, they rely heavily on the owner’s restaurant experience, the strength of the site and the FDD’s disclosures about system size and performance.
Baba’s Chicken Franchise Costs
The franchisor’s fee schedule was not available on pages we could access, so take every dollar figure from the current FDD. Here is what each category usually covers for a fast-casual chicken restaurant.
Initial franchise fee. Item 5 states the fee, when it is due and whether multi-unit buyers pay a different amount.
Real estate and build-out. Most units occupy leased in-line or end-cap retail space. Build-out covers plumbing, grease interceptors, electrical upgrades, hood and fire suppression systems, restrooms, finishes and the dining room. A second-generation restaurant space can cost much less to convert than a raw shell. Our article on restaurant build-out financing covers how lenders fund this stage.
Equipment. Pressure or open fryers, breading stations, refrigeration and freezers, holding equipment, prep tables, point-of-sale systems and digital menu boards.
Opening costs and working capital. Expect training, initial inventory, hiring, grand opening marketing, insurance, permits and additional funds for the first months. Item 7 lists these lines and the period the additional funds are meant to cover.
Total investment. Item 7 gives a low-to-high range for opening one restaurant. Check that the line items add up to the total and that your landlord’s tenant improvement allowance, if any, is reflected in your plan.
Ongoing Fees and How They Affect Your Loan
Item 6 lists the royalty, any brand or marketing fund contribution, local advertising requirements, technology fees and transfer and renewal fees. Read it alongside the operations manual requirements for approved suppliers and remodels.
How lenders factor fees in. Lenders deduct royalties and fund contributions from projected sales before measuring debt coverage. In a fryer-based kitchen, food and labor costs are the largest expenses, so lenders want projections that show realistic chicken and oil costs, staffing for peak hours and delivery commissions if you use third-party ordering. A Baba’s Chicken franchise loan request is stronger when those assumptions are spelled out.
Franchisor Requirements for New Owners
Net worth and liquid capital minimums, restaurant experience preferences and any multi-unit commitments will be in the FDD and the franchisor’s application materials. Ask the franchisor directly whether it prefers owner-operators or multi-unit groups, and whether it requires a minimum number of units.
The approval process. Candidates generally submit an inquiry, review the FDD, talk with existing franchisees, gain approval, secure a site and sign the franchise agreement. Line up financing conversations early, because lease negotiations and loan approval need to move together.
Ways to Own a Baba’s Chicken
A new restaurant. Most franchisees open a new unit. Lenders underwrite a start-up on projections, the owner’s restaurant background and the equity contributed. Our page on franchise start-up financing explains how these loans are structured.
Buying an existing restaurant. A resale gives lenders actual sales and expense history to underwrite, along with an existing lease and trained staff. Franchisor approval of the transfer is required. See our approach to franchise restaurant acquisition financing.
Multiple units. Owners with restaurant experience may pursue several units under a development agreement. See the multi-unit section below.
Financing Options for a Baba’s Chicken Franchise
SBA 7(a) loans. Because the brand is on the SBA Franchise Directory, the SBA 7(a) loan program can combine the franchise fee, build-out, equipment and working capital in one loan.
SBA 504 loans. The SBA 504 program fits an owner who buys or builds a freestanding restaurant building. This is where the directory’s first note matters, as explained below. Read more about franchise real estate financing.
Conventional term loans. Experienced multi-unit operators with strong financials may use conventional business loans, especially for second and third units.
Equipment financing. Fryers, hoods, refrigeration, holding cabinets and point-of-sale systems can be financed or leased separately to preserve cash. Learn more about restaurant equipment financing and leasing.
Working capital and lines of credit. New restaurants need cash for payroll, food and oil purchases and marketing while sales build. See franchise working capital options.
Seller financing on resales. In some resales, the seller may carry part of the price. Any seller note must be acceptable to the senior lender, is typically subordinate to it and may be limited under some loan programs.
SBA Loans for Baba’s Chicken Franchisees
SBA lenders rely on the SBA Franchise Directory to confirm that a brand’s franchise agreement has been reviewed for eligibility. A listing does not approve any borrower, but it tells lenders which documents and conditions apply.
Baba’s Chicken’s listing. The brand appears on the SBA Franchise Directory under code S8948 with two notes:
- Owned real estate and lease documents. When the real estate where the restaurant operates will secure the SBA-guaranteed loan, the franchisor’s Addendum to Lease and Collateral Assignment of Lease may not be executed. In plain English, those lease documents are built for leased sites. If you or an affiliate own the property and pledge it as collateral, the lender relies on its mortgage instead, and those lease documents are not used.
- Lien position. The lender, or the development company in a 504 loan, must obtain the correct lien position on all collateral as required by the SBA’s standard operating procedures. In practice, the lender will check whether any franchisor rights in equipment or other assets could affect its priority and make sure its liens are properly positioned.
Neither note bars SBA financing. They are documentation points that an experienced SBA lender handles at closing, so share the full franchise agreement and any lease riders with your lender early.
Application tips. Bring a personal financial statement, tax returns, a resume showing restaurant experience, the FDD, the lease or letter of intent, contractor bids, equipment quotes and monthly projections. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Our SBA loan calculator can help with planning estimates; it is not an offer or approval.
How Lenders Evaluate a Baba’s Chicken Deal
Personal credit and financial history. Expect a review of credit, tax returns and a personal financial statement, plus a personal guarantee.
Net worth and liquidity. Beyond any franchisor minimums, lenders want reserves left after your equity injection to cover a slow opening.
Restaurant experience. Prior food service management, especially in quick-service or fast-casual kitchens, is one of the strongest factors in an approval. A first-time owner should plan to hire an experienced general manager.
Business plan and projections. Build sales from realistic traffic and ticket assumptions, separate dine-in, takeout and delivery, and model chicken and oil price swings. A Baba’s Chicken franchise loan is easier to approve when the plan explains how the site will draw customers in a crowded category.
The FDD and franchise agreement. Lenders review the term and renewal, transfer conditions (Item 17), any franchisor financing (Item 10), the number of open and closed units and whether Item 19 includes financial performance representations.
Site and lease. Lenders look at lease term, renewal options, rent relative to projected sales, tenant improvement allowances and parking and visibility.
Historical financials for resales. Lenders review profit and loss statements, sales reports and tax returns for the restaurant being purchased.
Kitchen Equipment and Build-Out
A hot chicken kitchen is built around frying capacity. Fryers, a ventilation hood with fire suppression, breading and prep stations, walk-in or reach-in refrigeration and holding equipment drive both cost and speed. Make sure your contractor confirms hood and grease interceptor requirements with the local health and building departments before you finalize your loan request, because those items can shift the budget.
Equipment is collateral, but used restaurant equipment has limited resale value. Many owners finance it inside an SBA loan or lease it separately so more cash stays available for opening.
Multi-Unit Growth and Development Agreements
If the franchisor offers development agreements, they will set out how many units you commit to open and on what schedule, along with any development fee. Lenders look at whether your capital and management team can support the schedule.
Financing additional units. Once your first restaurant has a track record, lenders can consider its cash flow when financing the next one. Consolidated financial statements and a clear management structure make each request easier. Our article on multi-unit franchise financing explains how lenders approach growth.
Real-World Scenarios
An experienced manager opening a first unit. A former quick-service general manager leases a second-generation restaurant space. An SBA 7(a) loan covers the franchise fee, conversion work, fryers and working capital.
An owner buying the building. A franchisee buys a small freestanding restaurant building for a new unit and uses an SBA 504 structure. Because the real estate secures the loan, the lease documents described in the directory note are not used.
A buyer acquiring an operating restaurant. A buyer purchases an existing unit. The lender reviews sales history and tax returns, the franchisor approves the transfer and equipment upgrades are financed separately.
Common Mistakes to Avoid
- Budgeting for a raw-shell build-out at second-generation prices
- Underestimating hood, fire suppression and grease interceptor costs
- Ignoring delivery commissions and oil costs in projections
- Signing a lease before financing is lined up
- Leaving too little working capital for the opening months
For more pitfalls, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Baba’s Chicken Franchise
Step 1: Request the FDD. Note Items 5, 6, 7, 10, 17, 19 and 20.
Step 2: Review it with advisors. Go through fees, territory and transfer terms with a franchise attorney and accountant.
Step 3: Talk with a financing specialist. Learn how a lender will size a Baba’s Chicken franchise loan and what reserves it expects.
Step 4: Find a site. Work with the franchisor to secure a location and negotiate tenant improvements.
Step 5: Price the build-out and equipment. Get contractor bids and equipment quotes.
Step 6: Apply and coordinate. Submit your loan package and align closing with lease signing and construction.
Step 7: Close and open. Fund construction, install equipment, train staff and launch.
Baba’s Chicken Franchise Loan FAQs
How much does a Baba’s Chicken franchise cost?
The estimated initial investment is in Item 7 of the current FDD and covers the franchise fee, build-out, equipment, opening costs and additional funds.
What is the Baba’s Chicken franchise fee?
The initial franchise fee is disclosed in Item 5 of the FDD.
What royalty does Baba’s Chicken charge?
The royalty and other ongoing fees are disclosed in Item 6 of the FDD.
Can I get an SBA loan for a Baba’s Chicken franchise?
Yes, if you qualify. The brand is listed on the SBA Franchise Directory under code S8948, with notes on lease documents and lien position.
What do the SBA directory notes mean?
If owned real estate secures the loan, the franchisor’s lease addendum and collateral assignment of lease are not used. The lender must also secure the correct lien position on all collateral.
Can I finance fryers and kitchen equipment separately?
Yes. Restaurant equipment is often financed or leased separately, or included in an SBA loan.
Can I buy an existing Baba’s Chicken?
Yes, subject to franchisor approval. Lenders will review the restaurant’s sales and tax history.
Can a first-time owner get financing?
Yes, but lenders weigh restaurant experience heavily. A first-time owner should plan to hire an experienced manager and hold strong reserves.
Does Baba’s Chicken offer financing?
Check Item 10 of the current FDD for any franchisor financing. Most owners arrange their own SBA or conventional financing.
How long is the franchise term?
The term, renewal and transfer conditions appear in Item 17 of the FDD.
Final Thoughts
A Baba’s Chicken restaurant is a build-out and equipment-driven fast-casual business. Owners who read the FDD closely, price the kitchen carefully, understand the SBA directory notes and keep strong reserves give themselves a solid footing with lenders.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment and working capital for established brands. Learn more about our franchise financing and restaurant financing solutions.
