How to Finance a LocOhana Tropical Grill Franchise: The $40K Fee
By Chris Cornella
A LocOhana Tropical Grill franchise loan funds a small, island-themed grill built for to-go meals, shopping malls and non-traditional venues. Because the brand is young and its first restaurant runs on a seasonal calendar, buyers need to understand both the published costs and the questions a lender will ask about a newer concept.
This article covers what LocOhana Tropical Grill publishes about its franchise fee, royalty and advertising requirement, how its SBA Franchise Directory listing and note work, and how to put together a financing request that holds up in underwriting.
US Professional Funding is not affiliated with, sponsored by or endorsed by LocOhana Tropical Grill; the name is used only to describe the business. Figures from the franchisor’s website and 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.
LocOhana Tropical Grill Franchise Loan at a Glance
- Franchise fee: $40,000, according to the franchisor’s website.
- Royalty: 6% of gross sales.
- Advertising: franchisees must spend 1% of gross sales on local advertising.
- Unit size: 900 to 1,500 square feet in shopping malls or non-traditional venues.
- Experience: no prior restaurant experience is required.
- Total investment, net worth and liquidity: not published on the franchise pages we could review; confirm them in Item 7 of the current FDD and with the franchisor.
- SBA Franchise Directory: listed under code S8785, with a note about the lease documents when real estate secures the loan.
What Is LocOhana Tropical Grill?
LocOhana Tropical Grill is a tropical, island-inspired grill whose name blends the Hawaiian word for family with the Spanish word for crazy. The concept grew out of a beach grill on Long Beach Island, New Jersey, where it built a following for fresh, handcrafted plates served quickly and an easygoing atmosphere. Its motto is “Good Vibes, Great Food.”
A compact, to-go format. The franchise model targets locations of 900 to 1,500 square feet in shopping malls or non-traditional venues. That is far smaller than a full-service restaurant, which keeps build-out and rent lower and puts the emphasis on counter service and takeout.
An emerging franchise system. LocOhana recently began franchising, and its first franchised restaurant opened in Destin, Florida. The company’s franchise site notes that its corporate outlet operates on a seasonal basis, which matters for anyone comparing that location’s results with a year-round mall site.
How lenders view it. A lender will see a small-footprint concept with modest equipment needs and a brand that is still building its system. That combination usually shifts the focus to the borrower’s own strength: liquidity, management experience, the specific site and a conservative projection. Our article on financing an emerging franchise explains how lenders approach newer systems.
LocOhana Tropical Grill Franchise Costs
Initial franchise fee. The franchisor’s website lists a $40,000 franchise fee. Item 5 of the FDD explains when it is due, what it covers and whether any portion is refundable.
Real estate and build-out. Most owners will lease mall or venue space. Costs depend on whether the space was previously used for food service, the condition of utilities and ventilation, and what the landlord contributes. Counter areas, food prep space, finishes and tropical-themed décor all fall into this category. Lenders typically want contractor bids and a construction budget before closing.
Equipment. A grill concept needs cooking equipment, refrigeration, prep tables, a ventilation system where the venue allows, point-of-sale hardware and smallwares. Mall food courts and venue spaces often have specific rules on hoods and fire suppression that affect the equipment list.
Opening costs and working capital. Opening inventory, training travel, insurance, deposits, grand opening marketing and payroll before sales ramp up all require cash.
Total investment. We could not verify a published total investment range on the franchise pages available to us. The franchisor offers a downloadable franchise kit, and Item 7 of the FDD lists every start-up cost category with a low and high estimate. Use that table as the base of your loan request and add a cushion for local construction pricing.
Ongoing Fees and How They Affect Your Loan
Royalty. LocOhana charges a royalty of 6% of gross sales.
Local advertising. Franchisees must spend 1% of gross sales on local advertising. Item 6 of the FDD will show whether any other brand fund, technology or software fees apply.
Why lenders care. When underwriting a LocOhana Tropical Grill franchise loan, lenders measure debt service coverage after royalties, advertising, rent, food cost and payroll. Because these fees come off the top line, a projection that understates them will overstate how much debt the unit can carry. Build them into every month of the forecast.
Seasonality and traffic. Mall traffic peaks around holidays and weekends, while venue locations follow their own event calendars. The franchisor’s corporate outlet is seasonal, so do not assume its pattern applies to your site; build monthly projections from your own location’s traffic.
Franchisor Requirements for New Owners
Experience. The franchisor states that no prior restaurant experience is required.
Selection process. LocOhana says it uses a thorough selection process to make sure each franchisee is the right fit. Prospective owners download the brochure, after which a team member reaches out to begin the process.
Site approval. The franchisor helps owners select a site, and every site must be approved by the LocOhana team.
Capital requirements. Minimum net worth and liquid capital were not stated on the pages we reviewed. Ask the franchisor directly, and expect a lender to set its own equity injection and post-closing reserve requirements regardless of the franchisor’s minimums.
Training. Owners and managers train at the brand’s corporate location, followed by on-site training for franchisees, managers and team members, plus operating manuals and ongoing support.
Ways to Own a LocOhana Tropical Grill
A new location. Most buyers in an emerging system will open a new unit. The loan is underwritten as a start-up based on the owner’s capital, experience, lease and projections. Learn about restaurant start-up financing.
Buying an existing location. As the system grows, resales may become available. A resale gives a lender real sales history, subject to franchisor approval of the transfer. Our article on buying a franchise resale covers the steps.
Several locations. Owners interested in a territory with more than one unit should discuss development terms with the franchisor before committing.
Financing Options for a LocOhana Franchise
SBA 7(a) loans. Because LocOhana Tropical Grill is on the SBA Franchise Directory, an SBA 7(a) loan can cover the franchise fee, build-out, equipment, opening inventory and working capital in one package.
SBA 504 loans. The SBA 504 program fits owner-occupied real estate and long-lived equipment. Most LocOhana units will lease space, so 504 matters mainly if an owner buys a building, which is also when the directory note applies.
Conventional term loans. Borrowers with strong credit, liquidity and restaurant experience may qualify for a conventional business loan, particularly for a second location.
Equipment financing. Grills, refrigeration, prep tables, hoods and point-of-sale systems can be financed separately. Explore restaurant equipment financing and leasing.
Working capital and lines of credit. Pre-opening payroll, inventory and slower months at a mall or venue all draw on cash. See restaurant working capital options.
Seller financing on resales. When buying an existing unit, a seller may carry part of the price. Any seller note would need to be acceptable to the senior lender, is typically subordinate to it, and loan programs may limit its terms.
SBA Loans for LocOhana Tropical Grill Franchisees
The SBA Franchise Directory lists brands whose franchise documents have been reviewed for SBA eligibility. Lenders check it before making an SBA-guaranteed loan to a franchisee, which saves time compared with reviewing an unlisted brand’s agreements.
LocOhana’s listing and note. LocOhana Tropical Grill appears under code S8785. The note says that when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Conditional Assignment of Lease and the Consent and Agreement of Landlord may not be executed.
What the note means. Those two documents give the franchisor rights in a franchisee’s lease, such as the ability to step in and take over the space. If you own the property and pledge it as collateral, there is no third-party lease, so those documents should not be signed. Owners who lease mall or venue space are generally unaffected.
Program limits and tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change. A directory listing does not approve any borrower. Prepare a complete package and use our SBA loan calculator for planning estimates only.
How Lenders Evaluate a LocOhana Deal
Personal credit and financial history. Lenders review credit reports, tax returns and a personal financial statement. Owners typically sign personal guarantees.
Net worth and liquidity. Because the franchisor’s minimums were not published on the pages we reviewed, lenders will judge liquidity against the Item 7 total, the required equity injection and reserves after closing.
Industry and management experience. The franchisor does not require restaurant experience, but lenders weigh it. First-time owners should show management ability and how they will use the brand’s training.
Business plan and projections. Base projections on your site’s foot traffic, mall or venue hours, food cost, staffing, rent, the 6% royalty and the 1% local advertising spend. Explain how your year-round location differs from the seasonal corporate outlet.
The FDD and franchise agreement. Lenders review the term and transfer provisions in Item 17, territory in Item 12, required purchases in Item 8 and any franchisor financing in Item 10. The franchisor’s site refers readers to Item 19 for performance information; review it with your accountant. Read how lenders use the FDD in franchise financing.
Site and lease. Lenders look at lease length, renewal options, rent escalations, operating hours set by the landlord and food court rules.
Multi-Unit Growth
Many owners in a young system start with one unit, prove the model in their market and then add a second location using the first unit’s results. If the franchisor offers development rights for a territory, review the opening schedule carefully, because each new location will need its own financing. Our article on multi-unit franchise financing explains how lenders treat each additional unit.
Real-World Scenarios
A first-time owner in a regional mall. A former retail manager with no restaurant background leases a food court space and uses an SBA 7(a) loan for the franchise fee, equipment, build-out and working capital, relying on the brand’s training.
A venue operator. An owner secures space in a non-traditional venue with event-driven traffic and builds monthly projections around the venue’s calendar before applying.
An existing owner adding a unit. An owner with a stable first location opens a second, using its financial statements to support a conventional or SBA loan.
Common Mistakes to Avoid
- Assuming the seasonal corporate outlet’s pattern matches a year-round site
- Signing a mall lease before confirming hood and fire suppression rules
- Leaving the 6% royalty or 1% local advertising out of projections
- Relying on a franchise fee alone instead of the full Item 7 total
- Leaving too little working capital for the ramp-up period
See the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your LocOhana Tropical Grill Franchise
Step 1: Request the franchise kit and FDD. Get the brochure and the current disclosure document.
Step 2: Confirm the capital needed. Ask the franchisor for net worth and liquidity expectations and compare them with your finances.
Step 3: Review the FDD. Study Items 5, 6, 7, 8, 10, 12, 17 and 19 with an attorney and accountant.
Step 4: Find and approve a site. Work with the franchisor on site selection and gather build-out estimates.
Step 5: Build projections and apply. Prepare a business plan, tax returns and bank statements and submit your loan request.
Step 6: Close and open. Coordinate loan closing with lease signing, construction and training.
LocOhana Tropical Grill Franchise Loan FAQs
How much is the LocOhana Tropical Grill franchise fee?
The franchisor’s website lists a $40,000 franchise fee.
What royalty does LocOhana charge?
The royalty is 6% of gross sales, and owners must spend 1% of gross sales on local advertising.
How much does a LocOhana Tropical Grill franchise cost in total?
A total investment range was not available on the pages we reviewed. Item 7 of the current FDD gives the full estimate.
Can I get an SBA loan for a LocOhana franchise?
Yes. LocOhana Tropical Grill is listed on the SBA Franchise Directory under code S8785, so lenders can consider SBA financing, subject to underwriting.
Do I need restaurant experience?
The franchisor says no prior restaurant experience is required, though lenders will still weigh your management background.
How big is a LocOhana location?
The franchisor targets 900 to 1,500 square feet in shopping malls or non-traditional venues.
Can I finance equipment separately?
Yes. Cooking equipment, refrigeration and point-of-sale systems can be financed through equipment loans or leases or included in an SBA 7(a) loan.
Can first-time owners get a LocOhana Tropical Grill franchise loan?
Yes, if they meet lender standards for credit, equity, liquidity and management ability.
Does LocOhana offer financing?
Item 10 of the FDD discloses any franchisor financing. Owners can also arrange their own SBA, conventional or equipment financing.
What documents will I need?
Expect personal and business tax returns, a personal financial statement, bank statements, a résumé, a business plan with projections, the FDD and franchise agreement, and the lease or letter of intent.
Final Thoughts
LocOhana Tropical Grill pairs a small footprint with a published fee and royalty, but as an emerging brand it leaves key figures to the FDD. A strong LocOhana Tropical Grill franchise loan request starts with Item 7, a site-specific projection and enough liquidity to carry the unit through its first months.
US Professional Funding helps franchise owners finance start-ups, equipment, resales and working capital. Learn more about our franchise financing programs and our restaurant financing solutions.
