How to Finance an Encore Salon Suites Franchise: Suite Build-Outs
By Marc Cornella
An Encore Salon Suites franchise loan finances a real estate-style business: a building divided into private suites that independent beauty professionals lease to run their own businesses. The owner’s income comes from suite rent rather than haircuts or retail sales, so lenders look at build-out cost, lease terms and how quickly suites fill.
This article explains how an Encore Salon Suites deal is put together, what the brand’s SBA Franchise Directory note means for borrowing, and which conventional financing tools fit a new location or an existing one.
US Professional Funding is not affiliated with, sponsored by or endorsed by Encore Salon Suites; 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.
Encore Salon Suites Franchise Loan at a Glance
- Concept: private salon suites leased to independent stylists, barbers, estheticians, nail technicians and other beauty and wellness professionals.
- Origins: founded in the Atlanta, Georgia area by a licensed master barber and stylist; the franchisor entity is Encore Franchising LLC.
- Franchise fee, royalty and investment: disclosed in Items 5, 6 and 7 of the current FDD; we could not verify current amounts from the franchisor’s own materials.
- SBA Franchise Directory: listed, with a note that the brand is eligible only for SBA Disaster Assistance loans.
- Primary financing route: conventional term loans, equipment financing and working capital lines, supported by the owner’s equity.
What Is Encore Salon Suites?
Encore Salon Suites is a salon suite franchise. Each location is a leased or owned building divided into private studios. Beauty professionals rent a suite, decorate and equip it to suit their brand, set their own prices and keep their own clients. Shared areas welcome guests, and some locations offer common amenities such as shampoo stations and dryers.
The brand began in metro Atlanta, where its founder, a licensed master barber and stylist, opened her own salon before building the suite concept and launching the franchise. The company has described the model as one that franchisees without a beauty background can own.
Why lenders view salon suites the way they do. A salon suite owner is effectively a landlord with a franchise brand. Revenue depends on how many suites are leased and at what rent, while expenses are mostly occupancy, utilities, cleaning and franchise fees. That makes the build-out budget, the master lease and a realistic lease-up schedule the core of any loan request.
Encore Salon Suites Franchise Costs
We could not confirm current dollar amounts from the franchisor’s own materials, so use the current FDD for the actual figures. Here is what each category typically covers.
Initial franchise fee. Item 5 states the fee and whether reduced fees apply to additional locations or multi-unit agreements.
Lease and build-out. This is the largest cost. Turning open retail or office space into individual suites requires demising walls, doors, plumbing for a shampoo bowl in each suite, upgraded electrical service, HVAC zoning, lighting, flooring and finishes in common areas. Plumbing and electrical can move the budget more than anything else.
Furniture, fixtures and equipment. Common-area furniture, laundry equipment, security and access systems, signage and any shared salon equipment.
Opening costs and working capital. Rent during construction, deposits, insurance, marketing to recruit tenants before opening and reserves to cover expenses while suites fill.
Total investment. Item 7 of the FDD gives a low and high estimate. Typical categories include:
- Initial franchise fee
- Lease deposits and rent during construction
- Construction and leasehold improvements
- Furniture, fixtures, equipment and signage
- Security, technology and access systems
- Pre-opening tenant recruitment marketing
- Additional funds for the initial operating period
Compare these ranges with contractor bids for your actual space.
Ongoing Fees and How They Affect Your Loan
Royalty and marketing. Item 6 lists the royalty and any brand or marketing fund contribution. In salon suite systems these are usually based on gross revenue, which here means suite rent collected.
Occupancy costs. Your master lease rent, common area charges, utilities and cleaning are largely fixed, whether suites are full or empty.
How lenders factor fees in. Lenders project rent by suite, apply a realistic occupancy rate, subtract the master lease, operating costs and franchise fees, and compare the result to loan payments. A lender will want to see that the business can carry its debt before reaching full occupancy.
Franchisor Requirements for New Owners
We could not verify published net worth or liquid capital requirements from the franchisor’s own materials. Ask the franchisor and review the current FDD. Salon suite franchisors generally look for:
- Enough liquidity to fund the equity portion of the build-out and opening reserves
- Business, sales or property management experience
- Strong communication skills to recruit and retain beauty professionals
- Time to oversee construction and lease-up, even if the business is later run semi-absentee
The approval process. Expect an inquiry, an application, delivery of the FDD, discovery meetings and approval before signing. Start financing conversations early so your Encore Salon Suites franchise loan and your site search move together.
Ways to Own an Encore Salon Suites
A new location. Most owners build a new location in leased space. Lenders underwrite projections, the lease and the owner’s liquidity. See our franchise start-up financing page.
Buying an existing location. An operating location offers a rent roll, tenant history and actual expenses that a lender can underwrite, subject to franchisor approval of the transfer. Read about buying a franchise resale.
Multiple locations. Owners who sign for several locations finance each project separately, with lenders reviewing the combined obligations.
Owning the building. Some owners buy the property that houses their suites. Our page on franchise real estate and expansion financing covers that route.
Financing Options for an Encore Salon Suites Franchise
Conventional term loans. Because SBA 7(a) and 504 loans are not available under the current directory listing, a conventional business loan is the main tool for build-out, equipment and opening costs. Conventional lenders typically expect a meaningful owner equity contribution and personal guarantees.
Equipment financing. Shampoo bowls, styling chairs, dryers, laundry machines, security cameras and access systems can be financed separately. See franchise equipment financing and leasing.
Working capital and lines of credit. Lease-up is the key risk. A line of credit can cover rent and operating costs while suites fill and smooth out tenant turnover later. Learn about franchise working capital.
Commercial real estate loans. If you buy the building, a conventional commercial mortgage may finance the property separately from the business.
Seller financing on resales. When buying an existing location, the seller may carry part of the price. A seller note is typically subordinate to the senior loan.
SBA Loans for Encore Salon Suites Franchisees
The SBA Franchise Directory lists brands whose franchise agreements have been reviewed for SBA eligibility, and SBA lenders generally rely on it before making a guaranteed loan to a franchisee.
What the directory note says. Encore Salon Suites is listed with a note stating that the brand is eligible only for SBA Disaster Assistance loans. In plain English, SBA 7(a) and SBA 504 loans are not available for an Encore Salon Suites franchise under the current listing, whether for a new location or the purchase of an existing one.
What disaster assistance is. SBA Disaster Assistance helps businesses recover from physical damage or economic injury in a declared disaster. It is not a way to fund a new build-out or an acquisition.
What this means for you. Plan on conventional financing and a larger equity contribution. Directory status can change, so confirm it with your lender when you apply. If the brand’s status ever changed, the SBA 7(a) program maximum is currently $5 million, though program rules can change.
How Lenders Evaluate an Encore Salon Suites Deal
Personal credit and financial history. Expect a full review of credit, tax returns and personal guarantees.
Net worth and liquidity. Conventional lenders weigh post-closing liquidity heavily. Our guide to how much franchise you can afford helps you size your budget.
Management experience. Property management, sales or multi-unit business experience helps, especially for an owner who will not work in the beauty industry.
Business plan and projections. Show suite count, rent assumptions by suite size and a month-by-month lease-up schedule.
The FDD and franchise agreement. Lenders review term, renewal, transfer, territory and fees.
Site and lease. The master lease term should cover the loan term. Tenant improvement allowances and rent abatement during construction can reduce what you need to borrow. Read why it matters to avoid signing a lease before loan approval.
Historical financials for resales. Expect to provide the rent roll, tenant agreements and several years of statements.
Semi-Absentee Ownership and Lease-Up
Salon suites are often run with few or no employees, which is why the model attracts investors who keep other jobs. Lenders still want to know who will recruit tenants, handle maintenance and collect rent. Our article on semi-absentee franchise financing explains how lenders view these owners.
Multi-Unit Growth and Development Agreements
Owners who plan several locations should ask about development agreements and schedules. Lenders usually want the first location substantially leased before funding the next. See our guide to multi-unit franchise financing.
Real-World Scenarios
An investor keeping a full-time job. A professional opens a location with a conventional loan and a line of credit, and hires a part-time manager to recruit tenants.
A stylist becoming a suite owner. An experienced stylist opens a location, rents one suite to herself and leases the rest, using equipment financing for shampoo bowls and chairs.
A buyer acquiring a filled location. A buyer purchases an established location with a strong rent roll, and the lender underwrites actual rent and expenses.
Common Mistakes to Avoid
- Assuming an SBA 7(a) or 504 loan is available when the listing limits the brand to disaster assistance
- Underestimating plumbing and electrical costs for every suite
- Projecting full occupancy at opening instead of a realistic lease-up
- Signing a master lease shorter than the loan term
- Leaving too little working capital for slow lease-up
For more pitfalls, read about franchise loan mistakes.
Next Steps to Finance Your Encore Salon Suites Franchise
Step 1: Request the current FDD. Review Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 2: Review your finances. Prepare a personal financial statement and confirm your available equity.
Step 3: Talk with a financing specialist. Our conventional loan calculator provides planning-only payment estimates, which are not an offer or approval.
Step 4: Select a site. Negotiate lease terms, allowances and construction timing.
Step 5: Build your budget and projections. Get contractor bids and model lease-up month by month.
Step 6: Apply and close. Submit the loan package and coordinate timing with the lease and franchise agreement.
Encore Salon Suites Franchise Loan FAQs
How much does it cost to open an Encore Salon Suites franchise?
The estimated initial investment is in Item 7 of the current FDD. Costs depend heavily on space size, suite count and construction.
What is the franchise fee?
The initial fee is disclosed in Item 5 of the FDD.
What royalty does Encore Salon Suites charge?
The royalty and any marketing fees are listed in Item 6 of the FDD.
Can I get an SBA-backed Encore Salon Suites franchise loan?
Not for a new location or acquisition under the current listing. The directory note limits the brand to SBA Disaster Assistance loans, so most buyers use conventional financing.
How much liquid capital do I need?
Ask the franchisor for current requirements. Conventional lenders typically expect a larger equity contribution than SBA programs.
Do I need beauty industry experience?
The company has said franchisees do not need a beauty background, but lenders value management and leasing experience.
Can I finance equipment separately?
Yes. Shampoo bowls, chairs, dryers and security systems can be financed with equipment loans or leases.
Can I buy an existing location?
Yes, with franchisor approval. Lenders underwrite the rent roll and actual expenses.
Does Encore Salon Suites offer financing?
Check Item 10 of the current FDD. Most owners arrange outside financing.
How long is the franchise term?
The term and renewal rights are in Item 17 of the FDD and the franchise agreement.
Final Thoughts
An Encore Salon Suites franchise loan is mostly about construction cost, lease terms and lease-up. With SBA 7(a) and 504 off the table under the current listing, buyers who bring solid equity, conservative projections and a strong master lease give themselves the best chance at conventional approval.
US Professional Funding helps franchise owners finance build-outs, acquisitions, equipment and working capital. Learn more about our franchise financing solutions.
