Glossary · People and paperwork
Sub-franchisor
In short
A sub-franchisor is a business that holds a master franchise agreement and has the right to sell individual franchises to others within a defined territory. Buying one means you're not just running a business, but also managing a network of other franchisees.
What it means in a deal
When acquiring a sub-franchisor, you are buying a business that recruits and supports other franchisees. Your due diligence must focus on the health of the existing sub-franchises, the master franchise agreement terms, and the sub-franchisor's ability to attract new franchisees.
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 Sub-franchisor
- How does the SBA evaluate a master franchise agreement for 7(a) loan eligibility if the borrower is a sub-franchisor?
- What if the franchisor requires specific operational changes that impact the business's profitability?
- When does a franchisor's influence, even without ownership, trigger affiliation for the franchisee?
- What are the requirements for a franchisor to be listed on the SBA Franchise Directory?
- Does the franchisor's financial strength and stability impact my SBA 7(a) loan approval?
- How does the SBA evaluate a franchise agreement not on the directory for acceptable franchisor control provisions?
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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