Glossary · Doing the deal
Termination Clauses
In short
These clauses define conditions under which a contract, like an LOI or purchase agreement, can be ended. As a buyer, understand these to know when you can walk away from a deal without penalty or when the seller can.
What it means in a deal
Pay close attention to termination clauses in the Letter of Intent (LOI) and the definitive Purchase Agreement. They often outline specific deadlines, due diligence failures, or financing contingencies that allow either party to terminate. Ensure your financing contingency is robust, especially for an SBA 7(a) loan.
Related terms
Common questions about Termination Clauses
- How does the SBA review franchise agreements for compliance if there are unusual clauses regarding termination or transfer?
- 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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