How to Finance a Majestic Residences Franchise: Small Care Homes
A Majestic Residences franchise loan is really two financing questions in one: how to pay for the franchise and opening costs, and how to pay for the house itself. Majestic Residences franchisees operate residential assisted living homes, so the property, its conversion to a licensed care home and the cash needed to fill beds often matter more to a lender than the franchise fee.
This article explains what the franchisor’s disclosure document says about fees and investment, how real estate shapes the loan structure, how state licensing and payer mix affect underwriting, and which loan programs owners typically compare. US Medical Funding is not affiliated with, sponsored by or endorsed by Majestic Residences; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs vary, and every loan is subject to approval. Nothing here is legal, tax, billing or compliance advice.
Majestic Residences Franchise Loan at a Glance
- Franchisor: Majestic Residences Franchise Systems, LLC, a Delaware limited liability company formed in July 2020 and headquartered in Mesa, Arizona (2023 Franchise Disclosure Document)
- Concept: group residential homes offering 24-hour non-medical care, meals and help with daily living
- Initial franchise fee: $49,500 for a new home, or $10,000 to convert an existing licensed home (2023 FDD)
- Estimated initial investment: $133,190 to $870,185 to purchase and/or build a home, or $28,240 to $95,185 to convert an existing licensed facility (2023 FDD)
- Royalty: 6% of gross sales, with a $900 monthly minimum from month 13 (2023 FDD)
- Technology fee: $300 per month (2023 FDD)
- Franchise term: 5 years, with up to three 5-year successor terms (2023 FDD)
- System size: 7 franchised homes at the end of 2022, with 17 more franchise agreements signed but not yet open (2023 FDD)
- SBA Franchise Directory: listed (code S6150), with no additional directory notes
What Is Majestic Residences?
Majestic Residences franchises residential assisted living homes: state-licensed group homes in residential houses rather than large facilities, where residents receive 24-hour non-medical care, meals and help with daily living. The franchisor is based in Mesa, Arizona, and its 2023 FDD names co-founders Chuck Bongiovanni, the CEO, and Gene Guarino.
The 2023 FDD describes the offering as the franchisor’s initial franchise offering. It reports no franchised homes at the end of 2020, 6 at the end of 2021 and 7 at the end of 2022, in Arizona, Indiana and Texas, with no company-owned homes. For a lender, that means a young system where the borrower’s own experience, the property and the local market carry most of the weight.
The FDD says a home should have at least 3 bedrooms and 2 baths, and typically a minimum of 2,500 square feet or the state’s equivalent. Franchisees may lease or own the property.
Majestic Residences Franchise Costs
Initial Franchise Fee
The 2023 FDD lists a $49,500 initial franchise fee for a new home and a $10,000 fee to convert an existing licensed home. Reduced first-home fees apply to graduates of an affiliated training program, and additional homes under a multi-unit arrangement carry fees of $5,000 to $39,500 per home depending on how much training and opening support is needed.
Real Estate and Construction
For a home that is purchased and/or built, the FDD estimates real estate purchase costs of $40,000 to $200,000 and construction, remodeling and improvements of $2,000 to $500,000. That wide range reflects the difference between a light remodel and a substantial build or renovation to meet licensing, fire safety and accessibility standards.
Purchasing and/or Constructing a Home
The 2023 FDD’s estimate for this path totals $133,190 to $870,185:
- Initial franchise fee: $49,500
- Security deposits: $500 to $2,000
- Purchase of real estate: $40,000 to $200,000
- Construction, remodeling and improvements: $2,000 to $500,000
- Furniture, decor and fixtures: $10,000 to $20,000
- Office equipment and supplies: $700 to $6,000
- Opening inventory: $200 to $1,000
- Hardware and software: $2,000 to $5,000
- Licenses and permits: $250 to $10,000
- Professional fees: $1,000 to $28,500
- Association membership: $150 to $400
- Medication cart: $1,500 to $3,000
- Majestic Moments Package: $5,000
- Employee uniforms: $90 to $900
- Marketing and promotions: $500 to $1,000
- Insurance: $500 to $1,200
- Training expenses: $1,000 to $3,500
- Certification: $3,300 to $8,185
- Additional funds for the first 90 days: $15,000 to $25,000
Converting an Existing Licensed Home
An owner who already operates a licensed facility can convert it to the brand. The FDD estimates $28,240 to $95,185 for that path, including the $10,000 conversion fee, up to $15,000 for improvements, up to $15,000 for furniture and fixtures, the $5,000 Majestic Moments Package and $5,000 to $15,000 in additional funds for the first 90 days.
Ongoing Fees and How They Affect Your Loan
According to the 2023 FDD:
- Royalty: 6% of gross sales starting in month 2, with a minimum of $900 per month from month 13; if the home is not open within one year of signing, $500 per month is due until opening
- Brand Development Fund: up to $100 per month if the franchisor starts the fund on 60 days’ notice
- Technology fee: $300 per month
- Local advertising: at least $100 per month if required on 60 days’ notice
- Accreditation: homes must maintain accreditation from a national healthcare accreditation organization, with fees of $3,300 per year from year two plus about $4,845 every third year
- Transfer fee: $10,000
- Successor fee: $5,000
Item 12 also sets a minimum performance standard of at least $15,000 in gross revenue per month starting in month 13. A lender will compare that standard with your occupancy plan: if the home cannot reach it in time, both the franchise and the loan are at risk. Your projections should show how quickly beds fill, what each resident pays and how staffing costs scale.
Licensing, Payer Mix and Underwriting
Residential assisted living homes are licensed by state health agencies, and the requirements differ by state and locality. The FDD notes that franchisees must research business, zoning and licensing rules, that some states require staff certification and an administrator certification, and that homes must follow patient privacy laws.
Licensing affects financing in two ways. First, the license often comes near the end of the project, after the home is renovated and inspected, so interest, payroll and utilities may run for months before the first resident moves in. Second, the source of resident payments shapes cash flow. Small homes often rely heavily on private pay, while some states offer Medicaid waiver programs that may cover part of assisted living services at rates and timing set by the state. Our article on how Medicaid dependence affects loans explains why lenders look closely at that mix.
Staffing is the other big variable. A 24-hour care home needs caregivers on every shift, plus workers’ compensation and professional liability coverage. Our guide to workers’ compensation costs for care staff covers how those expenses hit cash flow.
Ways to Own a Majestic Residences Home
Buy and Convert a House
An owner may buy a house and renovate it into a licensed care home. Financing usually combines a real estate loan with funds for the franchise fee, furnishings and opening costs, and lenders will want the renovation scope, zoning approval and licensing plan before closing.
Lease a Property
Leasing reduces the upfront cash needed but leaves the owner dependent on a landlord’s willingness to allow a care home and the required modifications. A long lease with renewal options makes the project easier to finance.
Convert an Existing Licensed Home
An operator who already runs a licensed home can join through the conversion path, with a much smaller investment. Lenders will review the home’s existing occupancy and financial history.
Buy an Existing Franchised Home
Resales require franchisor consent and a $10,000 transfer fee under the 2023 FDD, and the buyer must meet the franchisor’s qualifications and complete training. A state license usually does not transfer automatically, so plan for a change-of-ownership process.
Financing Options for a Majestic Residences Franchise
SBA 504 Loans for the Property
When the owner will buy and occupy the property, SBA 504 loans can finance the real estate and major renovation as long-term fixed assets, while other funds cover the franchise fee and working capital.
SBA 7(a) Loans
An SBA 7(a) loan can combine real estate, renovation, furnishings, the franchise fee and working capital in one structure, which suits a project where the house and the business are bought together. The program maximum is currently $5 million.
Conventional Real Estate and Business Loans
Owners with strong liquidity or existing care homes may use conventional real estate loans for the property and conventional business loans for the operating company.
Equipment and Furnishings
Beds, lifts, medication carts, furniture and technology can be financed separately through equipment financing.
Working Capital
The FDD’s additional funds line covers only the first 90 days. A working capital line can help cover payroll, food and supplies while occupancy builds, and while any state payments arrive.
Seller Financing on a Resale
A seller may carry part of the price of an existing home. Any seller note is reviewed by the lender, is typically subordinate and may be limited by program rules.
SBA Loans for Majestic Residences Franchisees
For a Majestic Residences franchise loan, SBA programs are often the starting point. The brand appears on the SBA Franchise Directory under code S6150, and the directory lists no additional notes for the brand. A listing means the franchise documents have been reviewed for SBA eligibility; each borrower and project still has to qualify.
Because a care home involves both a business and real estate, lenders will want to see who owns the property. If the property is held in a separate real estate company, the lender will typically structure the loan with both entities. Our loan calculator can help you compare payment scenarios for the house and business.
How Lenders Evaluate a Majestic Residences Deal
Owner Experience
Lenders look for senior care, healthcare or residential care management experience, or a plan to hire a qualified administrator.
Credit, Liquidity and Equity
Expect a review of personal credit, tax returns and the documented source of your cash injection, plus reserves beyond the 90-day additional funds estimate.
Property and Licensing
Lenders review the appraisal, renovation budget, zoning and the timeline to licensure.
Occupancy and Revenue Projections
Build projections around a realistic lease-up schedule, the private pay rate in your market, any state program rates and staffing on every shift, and compare them with the $15,000 monthly minimum.
The FDD and Franchise Agreement
Review Items 5 through 7, 10, 12, 17, 19 and 20, and read Items 3 and 4 for litigation and bankruptcy history. The 2023 FDD does not include financial performance representations in Item 19, and Item 10 states the franchisor offers no financing.
Real-World Scenarios
A nurse buying her first house to convert. She has clinical credibility and savings to invest but no operating history. Her lender focuses on the renovation scope, the licensing timeline and a lease-up plan that reaches the minimum revenue standard.
An existing care home operator converting. He already holds a license and residents, so the conversion budget is small and the lender relies on his home’s existing financial statements.
An investor leasing a property. She hires an experienced administrator and signs a long lease. The lender looks at the administrator’s background and the landlord’s consent to a licensed care use.
Common Mistakes to Avoid
- Buying a house before confirming zoning and licensing rules
- Budgeting only 90 days of operating cash for a home that will take longer to fill
- Underestimating overnight staffing and insurance costs
- Ignoring the minimum revenue standard in Item 12
- Assuming a seller’s license transfers with the home
Our article on healthcare loan mistakes covers more issues to avoid.
Next Steps to Finance Your Majestic Residences Franchise
Step 1: Get the current FDD. Confirm current fees and investment figures with the franchisor.
Step 2: Learn your state’s licensing rules. Speak with your state licensing agency and a healthcare attorney.
Step 3: Choose your property path. Decide between buying, leasing or converting.
Step 4: Build a renovation and lease-up budget. Include staffing, insurance and accreditation costs.
Step 5: Gather financial documents. Tax returns, statements and a resume for each owner.
Step 6: Compare loan structures. Review SBA 504, SBA 7(a) and conventional options with a financing specialist.
Majestic Residences Franchise Loan FAQs
How much does a Majestic Residences franchise cost?
The 2023 FDD estimates $133,190 to $870,185 to purchase and/or build a home, or $28,240 to $95,185 to convert an existing licensed facility.
What is the franchise fee?
$49,500 for a new home or $10,000 for a conversion, with reduced fees for certain trained applicants and additional homes.
What royalty does Majestic Residences charge?
6% of gross sales, with a $900 monthly minimum from month 13, plus a $300 monthly technology fee.
Is Majestic Residences eligible for SBA loans?
Yes, the brand is listed on the SBA Franchise Directory under code S6150. Each borrower must still qualify.
Can I finance the house with my franchise loan?
Yes. A Majestic Residences franchise loan can include real estate through SBA 7(a), SBA 504 or conventional real estate financing, subject to approval.
Does Majestic Residences offer financing?
No. Item 10 of the 2023 FDD states the franchisor does not offer direct or indirect financing.
Do I need healthcare experience?
Not necessarily, but some states require a certified administrator, and lenders favor owners with care experience or a qualified administrator.
How long is the franchise term?
5 years, with up to three 5-year successor terms if conditions are met.
Final Thoughts
A Majestic Residences franchise loan works best when the property, the license and the lease-up plan are settled together. Owners who budget for a realistic path to the minimum revenue standard, plan staffing carefully and match the loan structure to the real estate are better positioned for approval. For more on growing through property ownership, see our real estate expansion tips, and compare with lenders’ approach to residential care facility financing.
US Medical Funding helps senior care owners finance residential care homes, including property, renovation and franchise start-up costs. Learn more about SBA 7(a) business and real estate loans.
