Lock hints on preconditions
Assuming EntityTypeId is the primary key of dbo.EntityTypes then REPEATABLE READ would suffice:

SET XACT_ABORT ON;
SET TRANSACTION ISOLATION LEVEL REPEATABLE READ;
BEGIN TRAN;

IF EXISTS (SELECT 1 FROM Entities WHERE EntityTypeID = 1)
BEGIN 
    RAISERROR('Cannot delete entity type which is referenced', 16, 1);
    RETURN;
END

DELETE FROM EntityTypes WHERE EntityTypeID = 1;

COMMIT TRAN;


The NOT EXISTS syntax Aaron suggested would also function as you require at REPEATABLE READ. The same would be achieved by specifying a hint on dbo.Entities:

DELETE et
FROM dbo.EntityTypes AS et
WHERE EntityTypeID = 1 
AND NOT EXISTS 
(
  SELECT 1 
  FROM dbo.Entities WITH (HOLDLOCK)
  WHERE EntityTypeID = 1
);