Glossary · Reading the business
Franchisor Control
In short
The level of influence a franchisor has over the operations of a franchised business. This can impact your autonomy as an owner and affect SBA loan eligibility.
What it means in a deal
The SBA has specific rules about franchisor control to ensure the small business borrower, not the franchisor, controls the business. Your franchise agreement will be reviewed to confirm that the franchisor doesn't have "negative control" over critical management decisions, such as hiring/firing or setting pricing. Confirm the franchise is listed on the SBA Franchise Directory before proceeding.
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 Franchisor Control
- How does the SBA evaluate a franchise agreement not on the directory for acceptable franchisor control provisions?
- What issues in a franchise agreement typically lead to a determination of 'undue control' by the franchisor?
- How does the SBA determine if a franchisor has "control" over a franchisee for affiliation purposes, beyond standard agreements?
- How does the SBA define 'undue control' by a franchisor that could render a franchise ineligible for 7(a) financing?
- How does the SBA determine 'undue control' by a franchisor in a franchise agreement, making it ineligible for 7(a) financing?
- 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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