Glossary · Doing the deal
Master Franchise
In short
A type of franchise agreement where a franchisee is granted the right to develop and sub-franchise a brand within a specific territory, acting as a mini-franchisor. This is a complex deal structure.
What it means in a deal
If you're buying a master franchise, you're not just buying a single unit; you're buying the rights to sell multiple units to others. This significantly changes your due diligence and financial projections. Lenders view these deals as higher risk due to the added complexity and reliance on sub-franchisee performance.
Related terms
Common questions about Master Franchise
- Can an SBA 7(a) loan finance the purchase of a master franchise or multiple franchise units?
- How does the SBA evaluate a master franchise agreement for 7(a) loan eligibility if the borrower is a sub-franchisor?
- Can an SBA 7(a) loan finance a franchise resale where the current franchisee is selling the existing location?
- Can I use an SBA 7(a) loan to purchase a franchised business with no prior experience in that specific franchise system?
- How does the SBA determine if a franchise agreement grants the franchisor 'undue control' over the franchisee, impacting 7(a) eligibility?
- If I acquire a franchise, does the SBA approve the specific franchise location?
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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