Glossary · Doing the deal
Mandatory Repurchase Option
In short
This is a clause in some franchise agreements that allows the franchisor to buy back the business from a franchisee under specific conditions, often related to performance or a change of ownership.
What it means in a deal
When buying a franchised business, a mandatory repurchase option means the franchisor can force a sale back to them if you trigger certain provisions in the franchise agreement. Your lender will scrutinize this as it impacts collateral. Ensure you understand all triggers and implications before signing the franchise agreement, as it could affect your exit strategy.
Related terms
Common questions about Mandatory Repurchase Option
- Does the SBA 7(a) loan program have an 'Express' option for quicker approvals?
- What environmental due diligence is mandatory for real estate collateral?
- Does an unfunded stock option agreement trigger affiliation for SBA 7(a) size standard calculations?
- When is life insurance on key principals a mandatory loan condition?
- Which SBA forms are mandatory for every 7(a) loan application?
- Is a comprehensive business plan mandatory for an SBA 7(a) loan?
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.
Line up financing while you're under LOI
Tell us the business, the price, and your timeline — we'll match you with lenders who close deals like yours and flag anything that stalls the process.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.