How to Finance a Four Points by Sheraton Franchise: Costs and SBA
By Chris Cornella
A Four Points by Sheraton franchise loan finances a branded, mid-size hotel, usually a new build, a conversion of an existing hotel or the purchase of a Four Points that is already open. Because a new hotel can cost well into eight figures before land, the financing plan typically combines a substantial equity contribution with construction or acquisition debt, and it has to account for the brand’s application fee, ongoing fees and renovation standards from day one.
This article covers what the 2025 Four Points Franchise Disclosure Document (FDD) says about fees and development costs, how the brand’s SBA Franchise Directory note on management agreements works, and how lenders evaluate new, converted and existing Four Points hotels.
US Professional Funding is not affiliated with, sponsored by or endorsed by Four Points by Sheraton; 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 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.
Four Points by Sheraton Franchise Loan at a Glance
- Franchisor: MIF, L.L.C., which began franchising Four Points hotels in March 2017, according to the 2025 FDD. Affiliates franchised the brand from 1995 until then.
- Application fee: $75,000 plus $400 per guestroom above 150 rooms for new-to-system hotels, including conversions.
- Franchise fees: 5.5% of gross room sales, paid monthly.
- Program Services Contribution: 2.75% of gross room sales (including a 1% Marketing Fund contribution), plus $10,000 per year and $220 per guestroom per year.
- Estimated initial investment: $12,656,210 to $30,253,410 for an 80 to 110-guestroom hotel, and $17,551,110 to $36,903,710 for a 120 to 150-guestroom hotel, excluding real estate and related costs, insurance and contingencies.
- Hotel size: typically about 90 to 250 guestrooms in urban or suburban markets.
- System size: 147 franchised Four Points hotels in the U.S. and Canada as of December 31, 2024, plus one operated by the franchisor’s affiliates.
- SBA Franchise Directory: listed, with a note on third-party management agreements.
What Is Four Points by Sheraton?
Four Points by Sheraton is a hotel brand that the franchisor’s affiliates have operated since 1995. According to the 2025 FDD, Four Points hotels typically range from about 90 to 250 guestrooms, are generally located in urban or suburban markets, and serve family, leisure and business travelers.
The hotel format. The FDD says Four Points hotels generally feature a restaurant and bar called “Best Brews,” although food and beverage options may vary by location, and public spaces that include meeting space. That puts the brand between a pure select-service hotel and a full-service property: it carries a food and beverage component and some meeting business, but on a smaller scale than a full-service convention hotel.
The new-build prototype. The brand’s Gen 4.0 new-build prototype, released to owners in 2019, is a 121-key, four-story wood-frame design built for development in North America. Design packages include guideline drawings, building product manuals, an interior design specification manual and a foodservice equipment package.
Who owns Four Points hotels. The system is almost entirely franchised, which means a Four Points by Sheraton franchise loan is the normal route to ownership.
Why lenders view Four Points the way they do. Lenders value the brand’s reservation distribution, loyalty program and recognized flag. They also look closely at the bar and restaurant operation, the market’s mix of business and leisure demand, the hotel’s position against nearby competitors and the cost of keeping the property at brand standard.
Four Points by Sheraton Franchise Costs
Application fee. According to the 2025 FDD, new-to-system hotels, including conversions of hotels from outside the franchisor’s system, pay $75,000 plus $400 per guestroom above 150 rooms. Existing Four Points hotels, such as those changing ownership, fall under a separate fee of $150,000 or $500 per guestroom as described in Item 5. The FDD says application fees are generally non-refundable once approved; if an application is withdrawn or denied, the refund is reduced by $10,000 per hotel plus outside counsel costs.
Real estate and construction. The FDD’s investment range excludes real estate and related costs, so land or an existing building must be budgeted separately.
Furniture, fixtures and equipment. Guestroom furniture, lobby and Best Brews finishes, kitchen and bar equipment, fitness equipment and meeting room furnishings make up the FF&E budget. If you buy FF&E or opening supplies through the franchisor’s procurement services, the FDD lists a charge of the greater of $3,500 or about 4.5% to 5% for FF&E, and the greater of $7,500 or about 4.5% to 5% for opening supplies.
Technology and pre-opening services. The FDD estimates pre-opening technology costs of about $37,300 to $73,700 for current systems and about $67,000 to $124,000 for new systems. Pre-opening training and services are estimated at about $39,000 to $80,000, not including trainer travel costs.
Conversion costs. Conversions and transfers carry a $12,000 Property Improvement Plan (PIP) fee. Conversion support and training runs $1,800 to $15,000 for purchases or managed-hotel conversions and $35,000 to $75,000 for other conversions.
Total investment. The 2025 FDD estimates a total initial investment of $12,656,210 to $30,253,410 for an 80 to 110-guestroom hotel and $17,551,110 to $36,903,710 for a 120 to 150-guestroom hotel, excluding real estate and related costs, insurance and contingencies. Of those totals, approximately $162,300 to $249,200 is paid to the franchisor or an affiliate. A new-build budget typically includes:
- Application fee and pre-opening services
- Building construction and site improvements
- Furniture, fixtures and equipment, including the Best Brews bar and kitchen
- Technology systems, at the ranges above
- Opening supplies and inventory
- Pre-opening payroll, training and marketing
- Additional funds for the initial operating period
Read the full Item 7 table in the current FDD for each line item’s range, assumptions and exclusions. A conversion or acquisition is budgeted very differently, around the purchase price and the PIP.
Ongoing Fees and How They Affect Your Loan
Franchise fees. The 2025 FDD sets franchise fees at 5.5% of gross room sales, due monthly. A temporary reduction may apply under development incentive programs described in Item 10.
Program Services Contribution. Owners pay 2.75% of gross room sales, including a 1% Marketing Fund contribution, plus $10,000 per year and $220 per guestroom per year.
Loyalty program charges. The FDD lists a loyalty charge of 3.3% of qualifying loyalty revenue, reduced to 3.2% through December 2027, plus 1% of qualifying event revenue for select group and catering events, capped at $300 per event.
Other fees. Item 6 also lists revenue management, sales and booking program fees. Review every line, since several are charged monthly regardless of occupancy.
How lenders factor fees into cash flow. Hotel lenders underwrite net operating income after franchise fees, program contributions, loyalty charges, management fees, payroll, utilities, insurance, property taxes and a reserve for FF&E replacement. Because the main fees are tied to room revenue, lenders stress-test occupancy and average daily rate together.
Franchisor Requirements for New Owners
Hotel franchisors evaluate the owner, the site and the hotel’s operator rather than publishing a simple liquidity checklist. Expect the franchisor to review:
- The ownership group’s financial strength and hotel experience
- The proposed site, market demand and competing hotels
- The plan for management, either the owner or a third-party management company acceptable to the franchisor
- Design and construction plans, which go through the franchisor’s design review
- For conversions and transfers, a PIP that sets the work needed to bring the hotel to brand standard
The approval process. Owners submit an application with the fee, the franchisor reviews the site and ownership, and approved projects move into design review. Lenders usually want franchisor approval before a Four Points by Sheraton franchise loan closes.
Ways to Own a Four Points by Sheraton
New construction. Building from the ground up delivers a new prototype hotel but carries construction risk and the full development budget. Our page on hotel start-up financing covers how new hotel projects are structured.
Conversion. Converting an existing hotel from another brand or an independent flag pays the new-to-system application fee, the $12,000 PIP fee and conversion support costs, plus the renovation itself. Conversions often open faster and cost less than new construction.
Buying an existing Four Points. Acquiring an open hotel gives the lender operating history, but the franchisor will typically issue a PIP as a condition of the transfer. Our hotel acquisition financing page explains how purchase loans work.
Four Points by Sheraton Franchise Loan Options
SBA 7(a) loans. Because Four Points is listed on the SBA Franchise Directory, an SBA 7(a) loan may be part of the capital stack for smaller acquisitions, conversions or PIP work. The SBA 7(a) program maximum is currently $5 million, though program rules can change, so most new Four Points projects need additional financing beyond a 7(a) loan.
SBA 504 loans. The SBA 504 program is built for owner-occupied real estate and long-lived assets, and hotels often fit because the operating business occupies the property. A 504 loan pairs a senior loan with a second loan for the remaining financed portion.
Conventional loans. Larger new builds and acquisitions often use conventional business loans, including construction loans that convert to permanent financing once the hotel stabilizes.
PIP and renovation financing. Conversions, transfers and periodic brand updates all require capital. Learn more about financing a hotel PIP.
Equipment financing. Kitchen and bar equipment for Best Brews, fitness and laundry equipment and technology can sometimes be financed separately.
Working capital and lines of credit. Pre-opening payroll, sales efforts and the ramp-up to stabilized occupancy all require cash. See our hotel working capital options.
Seller financing on acquisitions. A seller may carry part of the price. A seller note must be acceptable to the senior lender, is typically subordinate to it, and SBA rules may limit it.
SBA Loans for Four Points by Sheraton Franchisees
The SBA Franchise Directory lists franchise brands whose agreements 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 clears the franchise relationship for review; it does not approve any borrower.
Four Points’ directory listing and note. Four Points by Sheraton is listed on the SBA Franchise Directory under code S0665. The directory note says that if the applicant also operates under a management agreement with a third party, the lender or Certified Development Company must review the management agreement under SBA rules to determine whether the applicant and the management company are affiliated. The applicant is not eligible if the management company is, or is affiliated with, the franchisor.
What the note means in practice. If you plan to use a management company, the SBA lender will review that agreement for affiliation, which can affect size standards and eligibility. If the franchisor or one of its affiliates would manage the hotel, the deal is not eligible for SBA financing, so owners in that situation plan on conventional debt instead. Our article on SBA loans for hotels covers how these programs fit hospitality deals.
Application tips. Prepare a feasibility study, construction budget or purchase agreement, the FDD and franchise application, any management agreement, a PIP if one applies, and personal financial statements for every significant owner. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Four Points by Sheraton Deal
Personal credit and financial history. Lenders review credit, tax returns and personal financial statements, and typically require personal guarantees from significant owners.
Net worth and liquidity. Hotel lenders look for owners with enough liquidity to fund the equity contribution, cost overruns and the ramp-up period, with reserves left over.
Hotel experience. Lenders weigh hotel ownership or management experience heavily, or a qualified management company’s track record.
Feasibility and projections. A third-party feasibility study is often required for a new build. Projections should reflect local occupancy and rate trends, Best Brews revenue and costs, the full fee load and a realistic ramp to stabilization.
The FDD and franchise agreement. Lenders review the term, termination provisions, transfer conditions and renovation obligations. Our article on how lenders read a Franchise Disclosure Document explains what matters most.
Real estate and appraisal. Hotel loans are typically secured by the property, so the appraisal, environmental review and construction contract are central.
Historical financials for acquisitions. For an existing hotel, lenders review several years of operating statements, monthly reports and market share data, along with the cost of the PIP.
FF&E, Renovations and the PIP
Hotels wear out on a cycle, and brand standards evolve. The franchisor has released renovation requirements for existing Four Points owners, with design guideline drawings, purchase-ready FF&E packages and building product specifications.
PIPs at transfer. When a hotel changes hands or converts, the franchisor issues a PIP listing required improvements. Buyers should get the PIP early, price it with contractors and include it in the loan request rather than funding it later.
Multi-Unit Growth and Development
Hotel owners often grow one property at a time in markets they know. A stabilized first Four Points can support financing for the next acquisition or development.
Financing additional hotels. Each hotel is typically financed separately, secured by its own real estate, and lenders look at global cash flow across the portfolio.
Real-World Scenarios
A conversion of an independent hotel. An owner of a well-located independent hotel converts it to Four Points. The franchisor issues a PIP, and the owner finances the renovation and conversion costs with a combination of equity and a loan secured by the property.
Buying an existing Four Points. An experienced hotelier buys an open Four Points. The lender underwrites the hotel’s historical results, and the purchase loan includes funds for the PIP issued at transfer.
A new build with a third-party manager. An investor group builds a new Four Points and hires an independent management company. The SBA lender reviews the management agreement for affiliation before approving a 504 loan alongside the owners’ equity.
Common Mistakes to Avoid
- Leaving land and real estate costs out of the budget, since the FDD’s range excludes them
- Underestimating the PIP on a conversion or transfer
- Ignoring loyalty, program services and per-room fees in projections
- Assuming SBA financing works with any management structure
- Planning too little liquidity for construction overruns and the ramp to stabilization
- Treating Best Brews as an afterthought instead of a staffed revenue center
For more pitfalls, read the hotel loan mistakes that cost owners the most.
Next Steps to Finance Your Four Points by Sheraton Franchise
Step 1: Choose your path. Decide whether you are building, converting or buying an existing Four Points.
Step 2: Review the FDD with advisors. Study Items 5, 6, 7, 10, 17 and 19 and the franchise agreement with a franchise attorney and accountant.
Step 3: Commission a feasibility study. Confirm market demand, rate and occupancy assumptions for the site.
Step 4: Talk with a financing specialist early. Learn which mix of SBA, conventional and PIP financing fits your project and management plan.
Step 5: Apply to the franchisor. Submit the application and fee, and obtain approval and any PIP.
Step 6: Apply for financing. Submit your loan request with the budget or purchase agreement, feasibility study, franchise documents, management agreement and financial statements.
Step 7: Close and open. Coordinate construction or renovation, pre-opening training and working capital for the ramp-up.
Four Points by Sheraton Franchise Loan FAQs
How much does it cost to build a Four Points by Sheraton?
The 2025 FDD estimates $12,656,210 to $30,253,410 for an 80 to 110-guestroom hotel and $17,551,110 to $36,903,710 for a 120 to 150-guestroom hotel, excluding real estate and related costs, insurance and contingencies.
What is the Four Points application fee?
For new-to-system hotels, including conversions, the fee is $75,000 plus $400 per guestroom above 150 rooms. A separate fee applies to existing Four Points hotels, as described in Item 5.
What royalty does Four Points charge?
The franchise fee is 5.5% of gross room sales. Owners also pay a Program Services Contribution of 2.75% of gross room sales plus fixed annual amounts, and loyalty program charges.
Can I get an SBA loan for a Four Points by Sheraton?
Yes, subject to lender approval. Four Points is listed on the SBA Franchise Directory, but a hotel managed by the franchisor or its affiliate is not eligible, and any third-party management agreement must be reviewed for affiliation.
Does the franchisor offer financing?
Item 10 of the FDD describes development incentive programs that may temporarily reduce franchise fees. Review Item 10 for the current terms; most owners arrange their own construction and permanent financing.
Can I convert my existing hotel to Four Points?
Yes, if the franchisor approves the hotel. Conversions pay the new-to-system application fee, a $12,000 PIP fee and conversion support costs, plus the renovation.
Can a first-time hotel owner get a Four Points by Sheraton franchise loan?
It is possible, but lenders and the franchisor will look for hotel experience on the team, often through a qualified management company, along with strong liquidity.
How long is the franchise term?
The term, renewal and transfer conditions are set out in Item 17 of the current FDD. Lenders prefer a term that runs well beyond the loan’s maturity.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see what financial performance representations it includes, and rely on a feasibility study or historical statements for your specific hotel.
Final Thoughts
Financing a Four Points by Sheraton means planning for land, construction or a purchase price, a demanding fee structure and brand renovations, all while choosing a management setup that keeps the right financing options open. Owners who budget completely and line up the PIP and management plan early are best positioned to close.
US Professional Funding helps hotel owners and franchisees finance construction, acquisitions, conversions, PIPs and working capital. Learn more about our franchise financing and hotel and motel financing solutions.
