How to Finance a Knockouts Franchise: Men’s Salon Startup Costs
By Anthony Cornella
A Knockouts franchise loan typically pays for the build-out, styling stations, signage and opening reserves of a boxing-themed men’s grooming salon, or for the purchase of an existing salon from a current owner. Because a salon is a leased, labor-driven business with modest equipment needs, lenders focus on the location, the staffing plan and the owner’s cash reserves.
US Professional Funding is not affiliated with, sponsored by or endorsed by Knockouts; 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.
Knockouts Franchise Loan at a Glance
- Concept: a men’s haircut and grooming salon built around a boxing theme.
- Typical location: a leased storefront, usually in a retail center, finished out to brand standards.
- Franchise fee, royalty and marketing fund: disclosed in Items 5 and 6 of the current FDD; request it from the franchisor before you apply for financing.
- Total investment: disclosed in Item 7 of the FDD; build-out and pre-opening payroll are usually the largest pieces.
- SBA Franchise Directory: listed (code S3328), with notes about serving both men and women and about the lease rider and purchase option, explained below.
- SBA 7(a) maximum: currently $5 million under program rules, which can change.
What Is Knockouts?
Knockouts is a Texas-founded men’s salon brand that pairs haircuts and grooming services with a boxing-inspired atmosphere. The concept sits between a traditional barbershop and a full-service salon: guests come for regular haircuts and grooming in a setting designed to feel relaxed and sports-themed.
The business model. Like most salon franchises, a Knockouts location earns revenue from service tickets and retail grooming products. Its biggest operating costs are stylist payroll, rent and supplies. Revenue depends heavily on repeat customers and on keeping chairs staffed with licensed stylists.
Why lenders view Knockouts the way they do. A salon has low inventory and no heavy cooking or medical equipment, so startup costs are generally driven by the lease and build-out. Lenders see less hard collateral than in a restaurant or hotel and therefore lean on the owner’s credit, liquidity and plan for recruiting and retaining stylists.
Knockouts Franchise Costs
We could not verify the current Knockouts FDD fee schedule or Item 7 table from the franchisor’s own published materials, so the figures below are described by category. Build your loan request from the current FDD.
Initial franchise fee. Item 5 of the FDD discloses the initial franchise fee, any discount for additional units and refund terms. Lenders usually finance the fee as part of the startup package.
Leasehold improvements and build-out. A salon build-out includes plumbing for shampoo bowls, electrical for stations and dryers, flooring, lighting, restroom upgrades and the themed interior. Costs vary with the condition of the space and any tenant improvement allowance from the landlord.
Furniture, fixtures and equipment. Styling chairs, shampoo stations, mirrors, cabinetry, a reception desk, sterilization equipment and laundry machines make up most of the equipment package.
Signage, technology and opening inventory. Exterior and interior signs, a point-of-sale and booking system, and starter supplies and retail products are standard line items.
Opening costs and working capital. Stylist recruiting and training, grand opening marketing, insurance, deposits and a cash reserve for payroll while the customer base grows round out the budget.
Total investment. Item 7 gives the estimated range and states how long the additional funds are meant to last. Typical Item 7 categories for a salon include:
- Initial franchise fee
- Lease deposits and first month’s rent
- Leasehold improvements and build-out
- Furniture, fixtures and salon equipment
- Signage and decor
- Computer, point-of-sale and booking system
- Opening supplies and retail inventory
- Training and travel
- Grand opening marketing
- Insurance, licenses and permits
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Salon franchise agreements usually charge a royalty on gross sales, a contribution to a brand marketing fund and sometimes a technology or software fee. Item 6 of the Knockouts FDD lists each fee, how it is calculated and when it is due, along with transfer and renewal fees.
How lenders factor these costs in. Lenders subtract royalty and marketing fees from projected sales before stylist payroll, rent and debt service. Because payroll is the largest expense in a salon, a lender will test whether the business can still cover its loan payment if chairs sit empty during the ramp-up or after a stylist leaves.
Franchisor Requirements for New Owners
The franchisor’s minimum net worth and liquidity requirements were not available on the pages we could verify. Ask the franchisor’s development team for current criteria. In general, salon franchisors look for:
- Enough liquid capital to cover the equity injection and the early operating period
- Management, sales or people-leadership experience; a cosmetology license is often not required for owners who hire licensed stylists
- A plan for recruiting, training and keeping stylists
- A suitable site approved by the franchisor
The approval process. Expect an inquiry, receipt of the FDD, calls with the franchisor’s team, a discovery meeting and signing of the franchise agreement, followed by site selection, lease negotiation, build-out and training. Line up financing early so you can move when the right lease appears.
Ways to Own a Knockouts
A new salon. Most owners open a new location in a leased space. Lenders underwrite the deal on projections and the owner’s strength. Our page on franchise start-up financing covers this route.
Buying an existing salon. Existing Knockouts salons occasionally come up for sale. A resale gives the lender actual sales history, an established client base and a trained team, though the franchisor must approve the transfer and the lease must be assigned. Read more about buying a franchise resale.
Multiple salons. Owners who want several locations can ask about development agreements with a schedule for opening additional units.
Financing Options for a Knockouts Franchise
SBA 7(a) loans. The SBA 7(a) program is the most flexible SBA option for a salon, because it can cover the franchise fee, build-out, equipment and working capital in one loan for a qualifying borrower.
SBA 504 loans. The SBA 504 program fits owner-occupied real estate and long-lived equipment. It is less likely to apply to a single leased salon but can fit an owner buying the building that houses the salon.
Conventional term loans. A conventional business loan may suit experienced multi-unit owners or borrowers with strong collateral.
Equipment financing. Styling chairs, shampoo stations, dryers, sterilization units and point-of-sale hardware can be financed separately, preserving cash for build-out and payroll. See our franchise equipment financing and leasing options.
Working capital and lines of credit. A new salon often pays stylists before the appointment book fills. A line of credit can cover payroll and marketing during the ramp-up and smooth out seasonal swings in visits. Learn about franchise working capital.
Seller financing on resales. On an existing salon, a seller may carry part of the price. Any seller note must be acceptable to the senior lender, is typically subordinate to it and may be limited by the loan program.
SBA Loans for Knockouts Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, which lists brands whose franchise documents have been reviewed for SBA eligibility. Knockouts is listed under code S3328, so a Knockouts franchise loan can be considered for SBA 7(a) or SBA 504 financing, subject to normal underwriting. A listing does not approve any borrower.
What the directory notes mean. The Knockouts listing carries three notes:
- Open to men and women: because the brand is marketed to men, the SBA requires the lender to obtain an affidavit signed by the applicant stating that the business is open to both men and women, and to document that in the file with evidence such as appropriate restroom facilities or customer demographics. SBA programs cannot finance businesses that restrict service by sex.
- Lease rider: if the real estate where the salon operates will secure the SBA-guaranteed loan, the franchisor’s lease rider may not be executed. This matters mainly for an owner who buys the building.
- Purchase option: the franchisor may not exercise its purchase option if the real estate is owned by the franchisee or an affiliate and is used as collateral for the SBA loan.
In plain terms, a Knockouts owner can use SBA financing as long as the salon serves everyone who walks in and any owned real estate pledged to the loan is protected from the franchisor’s lease and purchase rights.
SBA application tips. Prepare the FDD and franchise agreement, a signed lease or letter of intent, contractor bids, a business plan with monthly projections, a staffing plan, your personal financial statement and tax returns. The SBA loan calculator can help with early payment estimates for planning only.
How Lenders Evaluate a Knockouts Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement, and owners of meaningful stakes typically sign personal guarantees.
Net worth and liquidity. Lenders want to see the equity injection plus cash left after closing for the ramp-up. Our article on how much franchise you can afford explains the math.
Management experience. Experience leading a team, retail or service management, or salon industry background strengthens a request. Owners planning to be semi-absentee should show a strong salon manager.
Business plan and projections. Projections should build from the number of chairs, realistic services per chair and the average ticket, then subtract stylist pay, rent, royalty, marketing fees and supplies. Lenders like a slow ramp with clear assumptions.
The FDD and franchise agreement. Lenders review the term, renewal, transfer and termination provisions, Item 10 for any franchisor financing and Item 19 to see whether the FDD includes financial performance representations. Our guide to how lenders read an FDD explains what matters most.
Site and lease. Lenders want a lease term that covers the loan, a reasonable rent and a location with visibility and parking. Tenant improvement allowances reduce the amount you need to borrow.
Historical financials for resales. Expect several years of profit and loss statements, tax returns and point-of-sale reports.
Salon Equipment and Build-Out
A Knockouts build-out is lighter than a restaurant but still specialized. Plumbing for shampoo bowls, hot water capacity, electrical for each station, ventilation and themed interior finishes all add cost. Getting firm contractor bids and confirming the landlord’s improvement allowance before you finalize the loan amount helps avoid a funding gap.
Equipment wears with daily use, so plan for eventual replacement of chairs, clippers, dryers and laundry machines.
Multi-Unit Growth and Development Agreements
Salons can be a good fit for multi-unit ownership because an owner can share a manager, marketing and recruiting across nearby locations. Lenders finance each new salon based on the combined performance of existing units. Read about multi-unit franchise financing and financing an area development agreement before committing to a schedule.
Real-World Scenarios
A first-time owner opens a new salon. A former sales manager signs for one Knockouts location and uses an SBA 7(a) loan for build-out, equipment and working capital, with the affidavit and documentation required by the SBA directory note.
A buyer acquires an existing salon. A buyer purchases a Knockouts salon from a retiring owner. The lender underwrites the salon’s history, the lease is assigned and the franchisor approves the transfer.
An owner buys the building. A multi-unit owner buys the strip-center space for a new salon with an SBA 504 loan, so the lease rider and purchase option notes are reviewed before closing.
Common Mistakes to Avoid
- Underestimating build-out costs for plumbing and electrical work
- Leaving too little working capital to pay stylists during the ramp-up
- Signing a lease shorter than the loan term
- Ignoring the SBA directory notes on serving all customers and on owned real estate
- Projecting full chairs from day one
For more pitfalls, read franchise loan mistakes to avoid.
Next Steps to Finance Your Knockouts Franchise
Step 1: Request the current FDD. Review Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 2: Confirm the franchisor’s requirements. Ask about net worth, liquidity, experience and territory.
Step 3: Choose a site. Work with the franchisor on site approval and negotiate the lease and improvement allowance.
Step 4: Price the build-out. Get contractor and equipment bids.
Step 5: Build your plan. Prepare monthly projections and a stylist recruiting plan.
Step 6: Apply for financing. Submit your package and coordinate the closing with the lease and franchise agreement.
Knockouts Franchise Loan FAQs
How much does a Knockouts franchise cost?
Item 7 of the current FDD gives the estimated total. Build-out, equipment and the early operating reserve are typically the largest parts.
What is the Knockouts franchise fee?
Item 5 of the FDD discloses the initial franchise fee and any multi-unit discounts.
What royalty does Knockouts charge?
Item 6 lists the royalty, marketing fund contribution and other ongoing fees.
Can I get an SBA loan for a Knockouts franchise?
Yes, if you qualify. Knockouts is listed on the SBA Franchise Directory under code S3328, with notes on serving both men and women and on owned real estate.
Why does the SBA require an affidavit for a men’s salon?
SBA programs cannot finance businesses that limit service by sex, so the applicant must confirm the salon is open to both men and women and the lender documents it.
Do I need to be a stylist to own a Knockouts?
Check the franchisor’s criteria. Many salon owners hire licensed stylists and focus on management.
Can I finance salon equipment separately?
Yes. Chairs, shampoo stations and other equipment can be financed or leased separately from the main loan.
Can I buy an existing Knockouts salon?
Yes, subject to franchisor approval and lease assignment. Lenders underwrite the salon’s historical financials.
Can a first-time owner get a Knockouts franchise loan?
Yes. Lenders weigh management experience, liquidity and the staffing plan.
Does the franchisor offer financing?
Check Item 10 of the current FDD. 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.
Final Thoughts
A Knockouts franchise loan finances a people business wrapped in a themed build-out. Owners who budget the space carefully, keep strong reserves for stylist payroll and address the SBA directory notes early are well positioned for a smooth financing process.
US Professional Funding helps franchise owners finance start-ups, acquisitions, equipment and working capital across many brands. Learn more about our franchise financing programs.
