Glossary · Reading the business
Franchise business
In short
A business operating under a license from a franchisor, using their brand, system, and support. This structure comes with specific operating rules and fees.
What it means in a deal
Buying a franchise business involves reviewing the franchise agreement and ensuring the franchise is listed on the SBA Franchise Directory for 7(a) eligibility. You'll need to be approved by the franchisor as a new franchisee. Understand the ongoing royalty fees and operational constraints before committing.
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 business
- What are the eligibility requirements for a franchise business not listed on the SBA Franchise Directory?
- If I acquire a franchise, does the SBA approve the specific franchise location and its business plan?
- Can I use an SBA 7(a) loan to acquire a franchise business not yet listed on the SBA Franchise Directory?
- If I acquire a franchise, does the SBA approve the specific franchise location?
- What if a franchise agreement is not listed on the SBA Franchise Directory?
- What due diligence is required for a franchise not on the SBA Franchise Directory?
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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