How to Finance a Fred Astaire Dance Studios Franchise: Costs, SBA
By Marc Cornella
A Fred Astaire Dance Studios franchise loan pays for a ballroom studio whose biggest costs are a leased room with the right floor, the instructors who teach in it and the months it takes to build a student base. With little equipment to pledge, the deal depends on a sound budget, a well-chosen lease and a credible plan to cover rent, payroll and debt service while enrollment grows.
Below we cover studio costs, ongoing fees, ownership paths, SBA and conventional options and what lenders review. US Professional Funding is not affiliated with, sponsored by or endorsed by Fred Astaire Dance Studios or FADS USA, Inc.; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change from year to year, loan programs and terms vary, and every loan is subject to approval. Nothing here is legal, tax or investment advice.
Fred Astaire Dance Studios Franchise Loan at a Glance
According to the April 22, 2024 Franchise Disclosure Document issued by FADS USA, Inc., and the franchisor’s own franchising pages:
- Initial franchise fee: $30,000 to $55,000 for a single studio, based on location and cost of living
- Estimated initial investment: $301,200 to $669,700 for one studio, including 3 months of working capital
- Royalty: 7% of gross revenue, paid weekly
- Advertising fund: currently $150 per month, plus local marketing equal to 2% of the prior quarter’s gross revenue
- Technology fee: $50 per week in year one, $75 per week in year two and $100 per week from year three
- Candidate requirements: minimum net worth of $300,000 and liquid capital of $150,000, according to the franchisor’s investment page
- System size: 247 franchised studios in the United States and 8 in 7 other countries as of December 31, 2023, with no company-owned studios
- Franchisor financing: none offered, according to Item 10
- SBA Franchise Directory: listed as Fred Astaire Dance Studios (code S0668) with notes on the lease rider, area franchisors and a real estate purchase option
A newer disclosure document may be in circulation, so confirm every number in the current version.
What Is Fred Astaire Dance Studios?
Fred Astaire Dance Studios traces its history to 1947, when the first studio opened on Park Avenue in New York City, co-founded by the famous dancer and a motion picture executive. Every studio is franchisee-owned, and the franchisor, FADS USA, Inc., is a Delaware corporation headquartered in Enfield, Connecticut.
The concept is ballroom and social dance instruction delivered through private lessons, group classes, practice parties, showcases and competitions under a proprietary curriculum. A typical studio occupies about 2,000 to 4,500 square feet, built around open floor space rather than equipment.
Why the model matters to a lender. Students often buy lesson programs in advance, and the largest expenses are rent and instructor payroll. A lender therefore focuses less on collateral and more on cash flow: how quickly enrollment builds, how prepaid lessons are handled and whether the owner can recruit and keep qualified instructors.
Fred Astaire Dance Studios Franchise Costs
The 2024 disclosure document estimates the cost of opening one studio at $301,200 to $669,700. The spread reflects rent, market, studio size and how much construction a space needs.
Initial franchise fee
A single studio carries a franchise fee of $30,000 to $55,000, depending on location and cost of living, due when the franchise agreement is signed. An initial training fee of $5,000 also applies, reduced for trainees with 3 consecutive years of affiliation with the system.
Lease, build-out and studio design
Leasehold improvements are the largest single line, estimated at $100,000 to $250,000 net. A studio needs a properly cushioned dance floor, mirrors, sound, lighting and a reception area, and a landlord may need to approve the work. Get contractor bids early and ask about tenant improvement allowances that could reduce the amount you borrow.
Technology, opening costs and working capital
The required studio management and technology system is estimated at $15,000 to $20,000, and the estimate also includes captive market insurance, a $5,000 grand opening budget and $50,000 to $70,000 of working capital for the first 3 months after opening. The disclosure document notes those funds may not be enough.
Item 7 line items
- Initial franchise fee: $30,000 to $55,000
- Initial training fee: $0 to $5,000
- Travel and living expenses for training: $1,000 to $3,500
- Security deposits and utilities: $8,500 to $25,500
- Rent (3 months): $25,500 to $76,500
- Construction management: $0 to $15,000
- Construction due diligence: $1,000 to $5,000
- Design, architecture and engineering: $7,000 to $25,000
- Permits: $1,000 to $10,000
- Net leasehold improvements: $100,000 to $250,000
- Furniture, fixtures and equipment: $10,000 to $30,000
- Studio management and technology system: $15,000 to $20,000
- Signage and graphics: $10,000 to $15,000
- Supplies and accessories: $4,000 to $14,000
- Required supplies and marketing materials: $1,000
- Business licenses: $500 to $2,500
- Technology fee (3 months): $600
- Professional fees: $2,500 to $10,000
- Insurance: $3,000 to $5,500
- Captive market insurance: $25,600
- Grand opening marketing: $5,000
- Additional funds (3 months): $50,000 to $70,000
- Total: $301,200 to $669,700
Build your budget from Item 7 and your own landlord and contractor quotes, not a marketing summary.
Ongoing Fees and How They Affect Your Loan
A lender sizes a studio loan on the cash flow left after operating costs, and franchise fees come off the top. According to the 2024 disclosure document:
- Royalty: 7% of gross revenue, paid weekly
- Advertising fund: currently $150 per month; increases are capped at $100 once per year with 180 days’ notice
- Local marketing: 2% of gross revenue for the prior quarter, spent with outside vendors
- Technology fee: $50, $75 and then $100 per week, capped at $250 per week
- Captive market insurance: $200 to $800 per month
- Transfer fee: the greater of $4,000 or 2% of the purchase price for a change of control
- Renewal fee: 50% of the original franchise fee
Because the royalty and local marketing requirement scale with sales, they grow as the studio grows, and any Fred Astaire Dance Studios franchise loan should be sized on cash flow after these fees. The weekly technology fee steps up in years two and three, and a performance royalty can apply if a studio misses minimum performance levels.
The prepaid lesson program
Dance students often buy lesson programs up front, which creates an obligation to deliver lessons later. The 2024 disclosure document describes a prepaid lesson program that requires an escrow of $5,000 to $25,000 at opening, plus 3% of gross revenue each month until the balance reaches $25,000. That escrow ties up cash a new owner might otherwise use for payroll, and lenders will ask how unearned lessons are tracked and how the escrow affects monthly cash flow.
Franchisor Requirements for New Owners
The franchisor’s investment page lists a minimum net worth of $300,000 and liquid capital of $150,000. The brand recruits dancers and instructors, independent studio owners and business people.
The path to ownership on the franchisor’s site runs through a request for information, an application, a review of financials, a background and credit check, delivery and review of the disclosure document, territory selection, signing the franchise agreement and paying the initial fee. After signing, the disclosure document gives the owner 90 days to sign a lease or purchase agreement for an approved site, and the studio must open by the earlier of 180 days after the landlord delivers the space or 270 days after the agreement’s effective date. A $2,000 monthly extension fee applies if more time is needed, so your loan closing and build-out schedule should fit inside those deadlines.
Ways to Own a Fred Astaire Dance Studio
Opening a new studio. A new location has no operating history, so projections, the owner’s experience and a solid working capital reserve carry the request. Our page on financing a new education or instruction center covers how start-up requests are typically structured.
Converting an independent studio. The franchisor actively recruits independent studio owners. A converting owner already has students, staff and a lease, so a lender can review real results while budgeting for the fee and upgrades. See our article on financing a conversion franchise.
Buying an existing studio. A resale brings students, instructors and financial history. The franchisor must approve the buyer, a transfer fee applies, and prepaid lessons the seller already collected need careful review. Our page on education business acquisition financing explains how purchase loans work, and our guide to buying a franchise resale covers the approval process.
Developing several studios. Under a development agreement, the franchise fee drops to $15,000 to $35,000 per studio, and the development fee totals $70,000 to $150,000 for 2 to 10 studios.
Financing Options for a Fred Astaire Dance Studios Franchise
SBA 7(a) loans. For many owners, a Fred Astaire Dance Studios franchise loan starts with the 7(a) program. An SBA 7(a) loan can fund the franchise fee, build-out, technology, opening costs and working capital in one loan, or the purchase of an existing studio, subject to program rules and approval.
SBA 504 loans. The 504 program targets owner-occupied real estate and long-lived assets, so it fits only if an owner buys and occupies a building.
Conventional term loans. Owners with strong credit, liquidity and an operating record, including converting studio owners, may qualify for conventional business loans.
Equipment financing. Sound systems, lighting, mirrors, furniture and the technology system may be financed separately through franchise equipment financing, though these items are a small share of the budget and the main lender will count that debt.
Working capital and lines of credit. A studio pays instructors and rent before enrollment matures, funds the prepaid lesson escrow and spends on showcases that bring revenue in uneven waves. See our page on working capital for education and instruction businesses.
Seller financing on resales. When buying an existing studio, part of the price may sometimes be carried by the seller. A seller note is typically subordinate to the primary loan, and SBA rules may limit how it is structured.
SBA Loans for Fred Astaire Dance Studios Franchisees
SBA loans are made by participating lenders, with the SBA guaranteeing part of the loan, and the SBA Franchise Directory simplifies the review of franchise documents. The 7(a) program maximum is currently $5 million, and program rules can change.
The directory listing. Fred Astaire Dance Studios appears on the SBA Franchise Directory under code S0668. A listing does not approve any borrower or loan.
What the directory notes mean. The listing carries four notes. First, when real estate where the studio is located will secure the SBA loan, the franchisor’s form of lease rider may not be executed; in practice, a borrower who owns the building and pledges it should not sign that rider. Second, applicants operating as area franchisors or area representatives are not eligible, while unit franchises are. Third, applicants operating under a subfranchisor agreement are not eligible. Fourth, the franchisor may not enforce a purchase option on real estate owned by the franchisee or an affiliate and taken as collateral for the SBA loan. In short, studio operators can be eligible; regional representatives cannot.
SBA application tips. Have the franchise agreement, lease or letter of intent, contractor bids and a sources and uses statement ready. Our article on SBA loans for education and instruction businesses covers more of what lenders ask for.
How Lenders Evaluate a Fred Astaire Dance Studios Deal
Personal credit and financial history. The franchisor runs a credit and background check, and lenders review each owner’s credit, tax returns and debts.
Net worth and liquidity. The franchisor’s minimums are a starting point; lenders also look at the cash you will have left after injecting equity.
Dance and management experience. A background as an instructor, competitor or studio manager helps, as does experience leading a sales-driven team. Owners without dance training should show how they will hire and keep a qualified lead instructor, because the disclosure document’s fees for temporary instructor support and extra training show how central teachers are to the model.
Business plan and projections. Lenders want monthly projections based on active students, the mix of private and group lessons, instructor headcount, prepaid programs, showcase timing and every franchise fee. A clear reading of the disclosure document shows you understand the obligations behind your numbers.
The disclosure document and franchise agreement. Lenders review the term, transfer conditions, performance requirements and the lease rider.
The site and lease. Because build-out is the largest cost, the lease term, renewal options and landlord contributions matter, and a lender wants the lease to run at least as long as the loan.
Historical financials on resales. For an existing studio, expect requests for tax returns, financial statements, instructor payroll and a schedule of prepaid lessons still owed to students.
Multi-Unit Growth and Development Agreements
A development agreement lowers the per-studio franchise fee in exchange for a development fee and a schedule of openings. Most owners take a separate Fred Astaire Dance Studios franchise loan for each studio, and lenders look at the first studio’s cash flow, global debt service and remaining liquidity before funding the next.
Remember the directory note: owning several studios is a unit franchise arrangement, while acting as an area representative for the franchisor is not SBA-eligible.
Real-World Scenarios
An instructor becoming an owner. A longtime ballroom instructor with savings and a strong student following opens a new studio. An SBA 7(a) request bundles the franchise fee, build-out and working capital.
An independent studio converting. The owner of an established independent studio converts to the brand. The lender reviews its history and finances the fee and upgrades.
A buyer acquiring a resale. A business owner buys an existing studio from a retiring franchisee. The lender studies the financials and prepaid lesson balance, and the seller carries a subordinate note.
A multi-studio developer. An experienced operator signs a development agreement and finances the second studio once the first shows stable cash flow.
Common Mistakes to Avoid
- Budgeting from a website figure instead of the Item 7 table and your own lease and contractor quotes
- Forgetting the prepaid lesson escrow when projecting cash flow
- Leaving out the stepped technology fee, local marketing and captive insurance
- Signing a lease before confirming financing and the opening deadline
- Buying a resale without a schedule of lessons already paid for but not yet taught
- Planning to act as an area representative and assuming SBA financing applies
For more, read the loan mistakes education business owners make most.
Next Steps to Finance Your Fred Astaire Dance Studios Franchise
Step 1: Confirm you meet the requirements. Compare your finances with the franchisor’s minimums and decide whether you will teach or hire a lead instructor.
Step 2: Review the disclosure document. Read the current version with a franchise attorney, focusing on Items 5, 6, 7, 11, 17 and 19 and the lease rider.
Step 3: Build a realistic budget. Start with Item 7, replace estimates with real quotes and add a contingency.
Step 4: Talk with a financing specialist. Our SBA loan calculator can help estimate payments for planning only; results are not an offer or approval.
Step 5: Assemble your documents. Gather tax returns, personal financial statements, a résumé, the franchise agreement, the lease or letter of intent, contractor bids, a sources and uses statement and monthly projections.
Step 6: Coordinate approvals and deadlines. Align franchisor approval, lease, loan closing and construction with the opening deadline.
Fred Astaire Dance Studios Franchise Loan FAQs
How much does a Fred Astaire Dance Studios franchise cost?
The 2024 disclosure document estimates $301,200 to $669,700 for a single studio, including the franchise fee, build-out, opening costs and 3 months of working capital.
What is the Fred Astaire franchise fee?
The franchise fee for one studio is $30,000 to $55,000, based on location and cost of living. Under a development agreement, the per-studio fee is $15,000 to $35,000.
What royalty does Fred Astaire charge?
The royalty is 7% of gross revenue, paid weekly, according to the 2024 disclosure document. Owners also pay an advertising fund contribution, local marketing and a weekly technology fee.
How much net worth and liquid capital do I need?
The franchisor’s investment page lists a minimum net worth of $300,000 and liquid capital of $150,000.
Can I use an SBA loan for a Fred Astaire Dance Studios franchise?
Possibly. The brand is listed on the SBA Franchise Directory under code S0668, and unit franchises are eligible. Area representatives and subfranchisors are not. Approval still depends on the borrower, the project and program rules.
Does Fred Astaire offer financing?
No. Item 10 of the 2024 disclosure document says the franchisor and its affiliates do not offer direct or indirect financing and do not guarantee franchisee loans or leases.
Do I need dance experience?
No. The franchisor recruits business people as well as dancers and instructors. Owners without dance training should show lenders how they will hire and keep qualified instructors.
Can I buy an existing studio?
Yes, with the franchisor’s approval. A transfer fee applies, and lenders will review the studio’s financial history, staff and prepaid lesson obligations.
How long is the franchise agreement?
The term, renewal and transfer conditions appear in Item 17 of the current disclosure document, and renewal requires a fee equal to 50% of the original franchise fee. Also check Item 19 to see whether the franchisor makes financial performance representations.
Can I open more than one studio?
Yes. A development agreement covers 2 to 10 studios at a reduced per-studio fee, and lenders typically fund each new studio based on the performance of the ones already open.
Final Thoughts
A Fred Astaire Dance Studios franchise loan finances a business built on a room, a curriculum and great teachers. Owners who budget from the disclosure document, plan for the prepaid lesson escrow and present a clear instructor plan put themselves in the strongest position.
US Professional Funding helps franchise owners finance new studios, conversions, acquisitions and growth. Learn more about our franchise business financing and education and instruction business financing.
