Glossary · People and paperwork
Termination clause
In short
A provision in a contract that outlines the conditions under which the agreement can be ended by one or both parties. This protects you by specifying scenarios where you can walk away from a deal.
What it means in a deal
Your Letter of Intent (LOI) and purchase agreement will contain termination clauses. These typically cover breaches of contract, failure to meet due diligence contingencies, or inability to secure financing. Understand your rights and obligations to terminate to avoid penalties or being forced into a bad deal.
Related terms
Common questions about Termination clause
- How does the SBA review franchise agreements for compliance if there are unusual clauses regarding termination or transfer?
- What if a proposed franchise agreement includes a clause restricting the borrower's operational control or management?
- Can a seller note on full standby have an acceleration clause if the business defaults on the SBA loan?
- What specific franchise agreement clauses are generally unacceptable to the SBA and could prevent financing?
- What specific types of clauses in a franchise agreement would constitute "undue control" by the franchisor, rendering it ineligible for 7(a) financing?
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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