How to Finance a Destination Athlete Franchise: Team Apparel
By Anthony Cornella
A Destination Athlete franchise loan is usually a small, flexible financing package rather than a large build-out loan. The brand’s franchisees supply uniforms, athletic apparel, equipment and related services to teams, schools, leagues and organizations, and most run the business from home, so the money goes mainly to the franchise fee, startup costs and the working capital needed to fill team orders.
This article explains what Destination Athlete’s 2023 Franchise Disclosure Document (FDD) says about fees and startup costs, how financing fits a home-based team sales business, what the brand’s SBA Franchise Directory note means and how lenders evaluate a deal. US Professional Funding is not affiliated with, sponsored by or endorsed by Destination Athlete; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, and the current FDD may differ from the 2023 version we reviewed. Loan programs vary, and every loan is subject to approval. Nothing here is legal, tax or investment advice.
Destination Athlete Franchise Loan at a Glance
- Franchisor: Destination Athlete, LLC, a New Jersey company based in Lebanon, New Jersey, franchising since 2008
- Initial franchise fee: $20,000 to $50,000 depending on territory population, with discounts of up to 22% in some cases, per the 2023 FDD
- Estimated initial investment (home-based): $28,300 to $93,610, including three months of additional operating funds
- Optional retail store: an additional $6,050 to $26,500 in Item 7
- Royalty: 5% of non-internet sales and 8% of internet sales, with a minimum quarterly royalty of $500 starting in year two
- Franchise term: 10 years, with successor terms of five years
- Size of system: 229 franchised outlets and no company-owned outlets at the end of 2022, per Item 20
- SBA Franchise Directory: listed as Destination Athlete under code S5265, with a note on its store lease and development agreement
What Is Destination Athlete?
According to the FDD, Destination Athlete, LLC was formed in New Jersey in 2008 and has offered franchises since that year. Through its franchisees, the company provides athletic apparel, sports equipment and support services such as trophies, events and photographs to teams, athletes and organizations. Franchisees sell to athletes’ families through youth leagues, schools and nonprofit groups, and they can also solicit local businesses.
The FDD states that franchisees generally operate as home-based businesses, and a retail store is optional. That makes Destination Athlete closer to a business-to-business sales and service operation than a traditional storefront retailer. Revenue comes from winning team and school accounts, taking orders and delivering on time for each season.
Why lenders view it differently. Without a lease, build-out or large equipment package, there is little hard collateral. Lenders focus instead on the owner’s credit, sales ability, local relationships and the plan for building accounts. Smaller loan sizes and personal guarantees are typical for this kind of business.
Destination Athlete Franchise Costs
Initial franchise fee. The 2023 FDD prices territories by population:
- Platinum, over 1,000,000 residents: $50,000
- Gold, 500,000 to 999,999 residents: $40,000
- Silver, 250,000 to 499,999 residents: $30,000
- Bronze, up to 249,999 residents: $20,000
Discounts of up to 22% may apply at the franchisor’s discretion, for example for military service, first-in-state franchisees or multiple purchases. Military veterans can read our article on veteran franchise financing.
Home office startup costs. Beyond the fee, the home-based setup is modest: a laptop, phone, office supplies, accounting software, insurance, legal and accounting services and travel for training.
Item 7 line items for the home-based model. According to the 2023 FDD:
- Initial franchise fee: $20,000 to $50,000
- Travel: $100 to $400
- Living expenses while training: $150 to $1,500
- Cell phone and telephone: $20 to $200
- Fax and copier: $150 to $400
- Laptop: $700 to $1,500
- Invoices and proposals: $100 to $160
- Office supplies: $100 to $400
- File cabinets: $80 to $200
- Legal fees: $300 to $1,500
- Accounting software: $200 to $250
- Accounting services: $100 to $300
- Insurance: $300 to $800
- Additional operating funds for the first three months: $6,000 to $36,000
The total is $28,300 to $93,610.
The optional retail store. Owners who add a storefront face an additional Item 7 estimate of $6,050 to $26,500, covering rent of $1,000 to $5,000, furniture and fixtures of $500 to $5,000, signage of $1,550 to $5,000, utility deposits of $500 to $1,500 and build-out of $2,500 to $10,000, plus a rent security deposit. Our page on retail store start-up financing covers storefront launches.
Ongoing Fees and How They Affect Your Loan
The 2023 FDD lists a royalty of 5% of non-internet sales and 8% of internet sales for apparel and online team store sales, with a minimum quarterly royalty of $500 beginning in year two. A marketing fund of up to 2% of gross sales may be implemented on written notice, though the FDD says none existed at the time, and up to 1% may be credited for local advertising.
Software update fees run $10 to $80 per month, capped at $1,000 per year. An optional imprint program costs $480 per year. The transfer fee is $15,000, and a $5,000 renewal fee applies beginning with a later renewal term.
Lenders deduct royalties and other fees before measuring how much cash flow is left for debt payments. Because online team store sales carry the higher royalty, your projections should split sales by channel. The minimum quarterly royalty also matters: in a slow quarter, you still owe it.
Franchisor Requirements for New Owners
We did not find a published minimum net worth or liquid capital requirement in the FDD material we reviewed. In practice, the franchisor will look for sales drive, local connections in youth and school sports and the ability to manage customer orders. Owners must complete initial training before launching.
Item 12 ties territory protection to performance. Territories are defined by county boundaries, and exclusivity depends on reaching $15,000 in sales in year one, with the target rising 10% each year. If the minimum is missed, the franchisor may cancel exclusivity on 30 days’ notice. Lenders see that as a business risk, so a realistic sales plan matters.
Ways to Own a Destination Athlete
A new home-based territory. Most owners start this way. Financing needs are small, and many buyers combine savings with a modest loan or line of credit.
Adding a retail store. A storefront can help with walk-in sales, fittings and sample displays. It adds a lease, build-out and inventory to the financing picture.
Buying an existing territory. A resale comes with existing team, school and league accounts, which lenders can underwrite using past tax returns and sales records. The buyer must be approved and pay the $15,000 transfer fee. See buying a franchise resale and our page on retail business acquisition financing.
Multiple territories. The FDD mentions discounts for multiple purchases. A lender will look at whether you can cover each territory’s minimum sales and royalty obligations.
Financing Options for a Destination Athlete Franchise
SBA 7(a) loans. SBA 7(a) loans can fund the franchise fee, startup costs, an optional store and working capital in one package. Smaller 7(a) loans are often a good match for home-based franchises. The 7(a) program maximum is currently $5 million, and program rules can change.
SBA 504 loans. A 504 loan is designed for real estate and long-lived equipment, so it rarely fits a home-based Destination Athlete franchise loan unless an owner buys a building for a store and warehouse.
Conventional loans. Owners with strong credit and other assets may use conventional business loans, especially for a resale.
Franchisor financing. Item 10 of the 2023 FDD says the franchisor may, at its discretion, finance part of the initial franchise fee, with 25% as the standard amount. The note is secured by a lien on business assets and requires personal guaranties from owners and their spouses, with cross-default across financed franchises. Any primary lender will count this debt and may require it to be subordinated. Our article on franchisor financing explains how these notes work alongside a bank loan.
Equipment financing. If you add decorating equipment, display fixtures or a vehicle for deliveries, retail equipment financing may help.
Working capital and lines of credit. This is often the most important piece of a Destination Athlete franchise loan. Team orders follow sports seasons, and schools and leagues may pay after delivery, so you may pay for product before you collect. A line of credit can bridge that gap. See our page on retail working capital and lines of credit.
Seller financing on resales. A seller may carry part of the price. Seller notes are typically subordinate to the primary loan, and SBA rules may limit them.
SBA Loans for Destination Athlete Franchisees
SBA loans are made by participating lenders, with the SBA guaranteeing part of the loan. The SBA Franchise Directory helps lenders confirm that the franchise relationship is eligible.
The listing. Destination Athlete appears on the SBA Franchise Directory under code S5265. A listing does not approve any borrower or guarantee a loan.
The directory note. The directory says that when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the franchisee may not execute the Site Selection Lease of Site and Development of Store agreement. In plain English, that franchisor document deals with leased store sites. If you own the property and pledge it to the lender, that agreement does not apply, so the lender’s position on the real estate is not complicated by it. For most home-based owners, the note will not come into play at all.
Application tips. Bring a sales plan that names the leagues, schools and organizations you will target, a cash flow forecast built around sports seasons and a clear explanation of how you will meet the territory sales minimum. Our SBA loan calculator can help with planning estimates.
How Lenders Evaluate a Destination Athlete Deal
Personal credit and financial history. With limited collateral, credit and personal financial strength carry extra weight, and personal guarantees are standard.
Net worth and liquidity. Lenders want an equity contribution and enough reserves to carry the business through its early months.
Sales and sports industry experience. Coaching, athletic administration, school relationships or business-to-business sales experience strengthen an application.
Business plan and projections. Projections should reflect seasonal order patterns, payment timing, the royalty split between internet and other sales, the minimum quarterly royalty and the territory sales target. The 2023 FDD does not include a financial performance representation, so projections should come from your own research and conversations with existing franchisees.
The FDD and franchise agreement. Lenders review the 10-year term, five-year successor terms, transfer rules and Item 10 financing terms. See our article on how much franchise you can afford.
For resales, account history. Buyers should obtain tax returns, customer lists and evidence that key accounts are likely to stay.
Multi-Unit Growth
Owners who do well in one county may add neighboring territories. Lenders typically want the first territory to show steady sales and on-time royalty payments before approving a second Destination Athlete franchise loan. Because each territory carries its own sales minimum, expansion plans should show how you will staff and serve each one.
Real-World Scenarios
A former coach. A coach with strong league relationships buys a smaller territory, uses savings for most of the cost and adds a small line of credit for spring and fall order peaks.
A veteran. A veteran qualifies for a fee discount and uses an SBA 7(a) loan to cover the fee and working capital, keeping cash in reserve for the first season.
A resale buyer. A buyer takes over an established territory with school accounts. The lender underwrites past sales, and the seller carries a subordinate note for part of the price.
Common Mistakes to Avoid
- Underestimating working capital needed between paying for orders and collecting
- Ignoring the minimum quarterly royalty in slow seasons
- Overlooking the territory sales target that protects exclusivity
- Stacking franchisor financing on top of a bank loan without telling the lender
- Opening a retail store before the sales base can support rent
For more, read the retail store loan mistakes to avoid.
Next Steps to Finance Your Destination Athlete Franchise
Step 1: Request the current FDD. Compare it with the figures here and review Items 5, 6, 7, 10, 12, 17 and 20 with a franchise attorney.
Step 2: Choose your territory. Understand the population tier, fee and sales minimum.
Step 3: Map your accounts. List the leagues, schools and organizations you can realistically win.
Step 4: Build a seasonal cash flow plan. Show order timing, collections and royalties.
Step 5: Talk with a financing specialist. Compare SBA, conventional and franchisor financing.
Step 6: Assemble your application. Gather tax returns, a personal financial statement, a resume and the franchise agreement.
Destination Athlete Franchise Loan FAQs
How much does a Destination Athlete franchise cost?
The 2023 FDD estimates $28,300 to $93,610 for the home-based model, with an optional retail store adding $6,050 to $26,500.
What is the Destination Athlete franchise fee?
It ranges from $20,000 to $50,000 based on territory population, with discounts of up to 22% in some cases.
What royalty does Destination Athlete charge?
The 2023 FDD lists 5% of non-internet sales and 8% of internet sales, with a $500 minimum quarterly royalty from year two.
Is Destination Athlete a home-based franchise?
Yes. The FDD says franchisees generally operate from home, and a retail store is optional.
Does Destination Athlete offer financing?
The franchisor may finance part of the franchise fee, typically 25%, at its discretion, with personal guaranties required.
Can I use an SBA loan for a Destination Athlete franchise?
The brand is listed on the SBA Franchise Directory under code S5265. Each borrower must still qualify.
How long is the franchise agreement?
The initial term is 10 years, with five-year successor terms.
How many Destination Athlete franchises are there?
Item 20 of the 2023 FDD reports 229 franchised outlets at the end of 2022.
Final Thoughts
A Destination Athlete franchise loan is smaller than most retail franchise loans, but the business still needs real working capital to handle seasonal team orders. Owners who plan around sports seasons, territory sales targets and royalty minimums are in the best position to borrow wisely.
US Professional Funding helps franchise owners finance startups, resales and working capital. Learn more about our franchise financing and retail business financing.
