Glossary · People and paperwork
Franchise agreement
In short
The legal contract outlining the terms and conditions between a franchisor and a franchisee, including rights, responsibilities, and fees. The SBA reviews this agreement carefully for eligibility.
What it means in a deal
For an SBA loan, the franchise agreement must comply with SBA rules, particularly concerning the franchisor's control over the franchisee. The SBA generally requires the franchisor to be on its Franchise Directory or have an approved addendum, confirming the agreement doesn't violate SBA eligibility terms. Your lender will need to review it.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Franchise agreement
- What if a franchise agreement is not listed on the SBA Franchise Directory?
- What is required if a franchise agreement is not listed on the SBA Franchise Directory?
- What specific provisions in a franchise agreement, if present, would render a franchise ineligible for 7(a) financing?
- What if a franchise system is not listed on the SBA Franchise Directory but the agreement is SBA-compliant?
- What process must a lender follow if a franchise applicant's agreement is not listed on the SBA Franchise Directory?
- What if a franchise agreement contains provisions for indemnification that concern the SBA?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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