How to Finance a Knights Inn Franchise: Economy Hotel Conversions
By Chris Cornella
A Knights Inn franchise loan usually funds one of two things: the purchase of an existing economy motel that will fly the Knights Inn flag, or the renovation needed to convert a hotel the owner already holds. Because the brand targets value travelers and conversions, financing centers on real estate, property condition and cash flow.
US Professional Funding is not affiliated with, sponsored by or endorsed by Knights Inn; the name is used only to describe the business. Figures in the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to 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.
Knights Inn Franchise Loan at a Glance
- Segment: economy hotels, positioned around a convenient location, reliable essentials and a thrifty price.
- Development model: the franchisor targets conversions and new builds in primary, secondary and tertiary markets.
- Franchise fees and royalty: set out in Items 5 and 6 of the current FDD; request the latest version from the franchisor before you apply for financing.
- Total investment: disclosed in Item 7 of the FDD and driven mostly by the price of the real estate and the scope of renovation.
- Active franchising: the franchisor’s parent company reported new Knights Inn franchise agreements in 2024 and a new Knights Inn opening in the first half of 2026.
- SBA Franchise Directory: listed (code S0952), with a note about third-party management agreements explained below.
- SBA 7(a) maximum: currently $5 million under program rules, which can change.
What Is Knights Inn?
Knights Inn is a long-running economy motel brand in the United States. Its franchisor markets it with the line “Right Room. Right Place. Right Price.” and describes the brand as smart and simple: clean rooms, the essentials travelers expect and a price that appeals to budget-minded guests.
Today Knights Inn sits within a larger hotel company’s value tier, and that company says it owns, manages and franchises hotels across a portfolio of brands. The franchisor’s brand materials say Knights Inn is aimed at conversions and new builds in primary, secondary and tertiary markets, which in practice means many Knights Inn properties are existing roadside and highway motels that change flags rather than ground-up projects.
Why lenders view Knights Inn the way they do. Economy hotels run lean, which can help cash flow, but older roadside properties can carry deferred maintenance and revenue swings with local travel. Lenders focus on the property, its trailing performance and the renovation plan.
Loyalty program note. The parent company’s 2026 update noted that Knights Inn properties are excluded from its loyalty program’s points earning. Buyers should ask how reservations and distribution work for the brand, because that affects how a lender views the revenue forecast.
Knights Inn Franchise Costs
We could not verify the current Knights Inn FDD fee schedule or Item 7 table from the franchisor’s own published materials, so this section explains what each cost category covers and how lenders treat it. Always build your loan request from the current FDD.
Initial franchise fee. Item 5 of the FDD discloses the initial fee or application fee, when it is due and whether any part is refundable.
Real estate. For most Knights Inn deals, the property itself is the largest cost. A buyer either purchases an existing hotel (with land, building and furniture) or already owns a hotel being converted. The purchase price, appraisal and condition report drive the size of the loan.
Renovation and property improvement plan. When a hotel joins the brand, the franchisor typically issues a property improvement plan (PIP) listing the work required to meet brand standards: guest room soft goods, bathrooms, exterior paint and lighting, signage and common areas. The PIP can be the second-largest cost in a conversion.
Opening costs and working capital. Training, opening supplies, insurance deposits, pre-opening payroll and an operating reserve round out the budget.
Total investment. Item 7 of the FDD gives the estimated range. Typical Item 7 categories for a hotel include:
- Initial franchise or application fee
- Real estate purchase or lease costs
- Construction, renovation and PIP work
- Furniture, fixtures and equipment
- Signage and exterior branding
- Technology and property management systems
- Training, travel and opening supplies
- Insurance, licenses and deposits
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Hotel franchise agreements usually charge a royalty on gross room revenue plus marketing, reservation and technology fees. Item 6 of the Knights Inn FDD lists each fee, its rate and when it is due. Also look for transfer, renewal and inspection fees.
How lenders factor these costs in. Lenders deduct franchise fees from projected room revenue before calculating cash available for debt service. Lenders also ask about future renovation cycles and whether a replacement reserve is in the budget.
Franchisor Requirements for New Owners
The franchisor does not publish a minimum net worth or liquidity figure for Knights Inn on the pages we reviewed. In practice, hotel franchisors evaluate the owner, the property and the market together.
- Property approval: the hotel must pass inspection and accept a PIP before it can open under the brand.
- Ownership review: the franchisor reviews the owners, their financial capacity and any hotel experience.
- Management plan: owners either operate the hotel themselves or hire a manager; the SBA note discussed below matters if a management company is involved.
The approval process. Expect an inquiry, an application, a property inspection, issuance of the PIP and execution of the franchise agreement. Coordinate the franchise approval and the loan closing so that the PIP budget and timeline are written into the financing.
Ways to Own a Knights Inn
Converting a hotel you already own. An independent or reflagging owner can convert to Knights Inn, financing the PIP and sometimes refinancing existing debt. Our overview of financing a franchise conversion explains how lenders structure these deals.
Buying an existing Knights Inn. A buyer can purchase a hotel already operating under the brand. The franchisor must approve the transfer, and a new PIP may be required at the change of ownership. Lenders underwrite the hotel’s trailing revenue and expenses. See our page on hotel and motel acquisition loans.
Buying and converting at closing. A buyer can purchase an independent property and sign with Knights Inn at the same time, with one loan funding the purchase and the PIP.
Building new. New builds fit the brand’s development strategy but require construction financing, a feasibility study and more equity. Learn about hotel start-up financing.
Financing Options for a Knights Inn Franchise
SBA 7(a) loans. The SBA 7(a) loan program can fund a hotel purchase, PIP renovation, FF&E and working capital in one loan for qualifying owner-operators, up to the current $5 million program maximum.
SBA 504 loans. Because economy hotels are real estate heavy, the SBA 504 program can be a strong fit for buying or substantially renovating the property, with long-term fixed-asset financing that pairs a bank loan with a certified development company loan.
Conventional term loans. A conventional business loan may fit owners with strong equity, larger properties or deals outside SBA size or eligibility limits. Terms vary with the property, the market and the borrower.
Equipment and FF&E financing. Owners sometimes finance PIP items separately, such as mattresses and case goods, HVAC units, laundry machines, televisions and property management technology. That can preserve cash for the rest of the renovation.
Working capital and lines of credit. Economy motels can see seasonal swings and need cash for payroll, utilities and supplies during the ramp-up after a conversion. A line of credit can bridge those gaps. See our hotel working capital solutions.
Seller financing on resales. A seller may carry part of the price; any seller note is typically subordinate to the senior loan and may be limited by the program.
For more on renovations, read our article on financing a hotel PIP.
SBA Loans for Knights Inn Franchisees
SBA franchise lending runs through the SBA Franchise Directory, which lists brands whose franchise documents have been reviewed for SBA eligibility. Knights Inn appears on the directory under code S0952, so a Knights Inn franchise loan can be considered for SBA 7(a) and SBA 504 financing, subject to normal underwriting. A listing does not approve any borrower.
What the directory note means. The Knights Inn listing carries a note about management agreements. If the hotel owner will also operate under a management agreement with a third-party management company, the lender or certified development company must review that agreement under SBA rules to decide whether the management company is affiliated with the owner. In plain terms, the SBA wants to confirm who really controls the business. The note also says the applicant is not eligible if the management company is, or is affiliated with, the franchisor. Owners hiring a manager should share the agreement with their lender early.
SBA application tips. Gather the FDD, the PIP and bids, an appraisal, the hotel’s financials and your personal financial documents. Our article on SBA loans for hotels covers hotel-specific requirements, and the SBA loan calculator can help with early payment estimates for planning only.
How Lenders Evaluate a Knights Inn Deal
Personal credit and financial history. Lenders review credit reports, tax returns and a personal financial statement.
Net worth and liquidity. Lenders want the equity injection plus reserves left after closing.
Hospitality experience. Prior hotel ownership or management is a major plus. First-time owners can strengthen a request by hiring an experienced general manager.
Business plan and projections. Projections should build from local occupancy and average daily rate, subtract franchise fees, payroll, utilities, insurance, taxes and a replacement reserve, and model a renovation slowdown for conversions.
The FDD and franchise agreement. Lenders check the term, termination and transfer terms and any liquidated damages. Item 10 shows whether the franchisor offers any financing, and Item 19 shows whether the FDD includes financial performance representations.
Real estate and property condition. An appraisal, property condition report and environmental review are standard.
Historical financials for existing hotels. Expect to provide operating reports, tax returns and occupancy data.
Hotel FF&E and the Property Improvement Plan
For an economy brand, the PIP is often where the money goes: mattresses and bedding, bathrooms, flooring, exterior paint, parking lot repairs, lighting, signage and Wi-Fi. Get firm bids and add a contingency, because older properties can hide problems.
Lenders like PIP budgets that are itemized, scheduled and funded at closing or through controlled draws. Ask when the next renovation cycle is expected.
Multi-Unit Growth and Development
Owners can grow by acquiring a second property nearby. Once the first Knights Inn has stable operating history, lenders can underwrite the combined cash flow and the owner’s management track record. Each additional hotel requires its own franchise approval, PIP and appraisal. Our article on buying a second hotel explains how financing changes as a portfolio grows.
Real-World Scenarios
An independent motel converts. An owner of an older highway motel signs with Knights Inn. An SBA 7(a) loan refinances existing debt and funds the PIP, with a working capital line for the renovation months.
A first-time buyer acquires an existing Knights Inn. A buyer from another industry purchases a branded motel and hires a third-party manager, so the lender reviews that agreement under the SBA directory note.
A real estate-focused purchase. A buyer uses an SBA 504 structure for the property and finances FF&E separately.
Common Mistakes to Avoid
- Underestimating the PIP cost or skipping a contingency on an older property
- Signing a management agreement without checking the SBA directory note on affiliation
- Projecting revenue without modeling a renovation slowdown
- Ignoring franchise fees that scale with room revenue when calculating debt coverage
- Assuming loyalty program demand that does not apply to the brand
- Leaving too little working capital for seasonal months
For more pitfalls, read hotel loan mistakes owners should avoid.
Next Steps to Finance Your Knights Inn Franchise
Step 1: Request the current FDD. Contact the franchisor’s development team and review Items 5, 6, 7, 10, 17 and 19 with a franchise attorney.
Step 2: Identify the property. Choose a hotel to buy or confirm that your existing property qualifies for conversion.
Step 3: Get the PIP and contractor bids. Have the property inspected, obtain the PIP and price every item.
Step 4: Decide on management. Choose self-management or a management company, and review any agreement against the SBA directory note.
Step 5: Build projections. Model occupancy, rate, fees, expenses and reserves.
Step 6: Apply for financing. Submit your loan package and align the closing with franchise approval.
Knights Inn Franchise Loan FAQs
How much does a Knights Inn franchise cost?
Item 7 of the current FDD gives the estimated range. For most buyers, the price of the hotel and the cost of the PIP renovation are the largest parts of the total.
What is the Knights Inn franchise fee?
Item 5 of the FDD discloses the initial fee. Hotel fees are often tied to room count, so request the current FDD for the exact amount.
What ongoing fees does Knights Inn charge?
Item 6 lists the royalty and other recurring fees, such as marketing, reservation and technology fees. Most are based on gross room revenue.
Is Knights Inn eligible for SBA loans?
Yes. Knights Inn is listed on the SBA Franchise Directory under code S0952. Each borrower still needs to qualify, and the listing carries a note about third-party management agreements.
What does the SBA note about management agreements mean?
If a management company will run the hotel, the lender must review that agreement to check for affiliation with the owner. The applicant is not eligible if the management company is, or is affiliated with, the franchisor.
Can I convert my existing motel to Knights Inn?
The franchisor targets conversions as well as new builds. Your property must pass inspection and complete a PIP.
Can I buy an existing Knights Inn?
Yes, subject to franchisor approval of the transfer. Lenders underwrite the hotel’s historical results, and a new PIP may apply.
Can a first-time hotel owner get a Knights Inn franchise loan?
It is possible. Lenders weigh experience, liquidity and the management plan.
Does the franchisor offer financing?
Check Item 10 of the current FDD for any financing the franchisor offers. Most owners use outside lenders.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see whether it includes financial performance representations, and rely on actual operating statements for an existing hotel.
Final Thoughts
A Knights Inn franchise loan is mostly a hotel real estate and renovation loan. Buyers who pin down the PIP, understand the SBA management agreement note and project cash flow conservatively give themselves the best chance at a smooth approval.
US Professional Funding helps hotel owners and franchise buyers finance acquisitions, conversions, renovations and working capital. Learn more about our franchise financing programs and hotel and motel financing.
