Glossary · Doing the deal
Franchise fees
In short
These are payments made to the franchisor, typically including an upfront initial fee and ongoing royalties. These are significant costs you must factor into your total project costs.
What it means in a deal
The initial franchise fee is usually a significant upfront expense for the right to operate under the brand. Ongoing royalties (a percentage of revenue) and advertising fees will impact your cash flow post-acquisition. The SBA loan can finance the initial franchise fee.
Official sources
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 fees
- Can an SBA 7(a) loan be used to pay for franchise fees for a new or existing franchise?
- Are there specific franchise fees or royalties that are ineligible for 7(a) loan financing?
- Are there additional fees or costs associated with financing a franchise through an SBA 7(a) loan?
- Besides upfront fees, are there ongoing annual fees for an SBA 7(a) loan?
- 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?
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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