Glossary · Doing the deal
Franchise fee
In short
A payment made by a franchisee to a franchisor for the right to operate a franchised business. Buyers of a franchise will incur this fee, either upfront or ongoing, as part of the total project costs.
What it means in a deal
The initial franchise fee is a component of your total project costs for a franchise acquisition. Ensure this fee and any ongoing royalty fees are clearly understood and budgeted for. The SBA has specific requirements for financing franchise acquisitions; confirm the franchise is on the SBA Franchise Directory.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Franchise fee
- Can I use an SBA 7(a) loan to finance a franchise fee for an existing franchise location?
- Can an SBA 7(a) loan finance the cost of a franchise fee for a new or existing franchise?
- Can I use an SBA loan to acquire a non-SBA approved franchise if I pay the franchise fee myself?
- Does an SBA 7(a) loan cover the initial franchise fee and associated startup costs?
- Are there any other lender-specific fees beyond the SBA guaranty fee and ongoing servicing fee?
- Can an SBA 7(a) loan cover the cost of a franchise transfer fee in an acquisition?
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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