Glossary · People and paperwork
Franchisee
In short
A franchisee is the individual or entity that purchases the right to operate a business under the established brand and system of a franchisor. You would be the franchisee if buying an existing franchise.
What it means in a deal
As a franchisee, you'll be bound by the terms of the franchise agreement. Your lender will review this agreement closely to ensure it doesn't contain clauses that conflict with SBA loan requirements or your ability to repay the loan. Understand your obligations and rights before you commit.
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 Franchisee
- When does a franchisor's influence, even without ownership, trigger affiliation for the franchisee?
- What specific circumstances allow a franchisor to be considered affiliated with a franchisee for SBA size purposes?
- How does the SBA determine if a franchisor has "control" over a franchisee for affiliation purposes, beyond standard agreements?
- Can an SBA 7(a) loan finance a franchise resale where the current franchisee is selling the existing location?
- How does the SBA determine if a franchise agreement grants the franchisor 'undue control' over the franchisee, impacting 7(a) eligibility?
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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