Glossary · Doing the deal
Transferability Clause(Assignment clause)
In short
A transferability clause dictates whether and how a contract, like a lease or franchise agreement, can be assigned to a new owner. This is crucial for seamless business transitions.
What it means in a deal
You must review all key contracts for transferability clauses during due diligence, especially leases and major supplier agreements. If a contract requires seller consent for assignment, ensure this is secured before closing. A non-transferable key contract can derail your acquisition.
Related terms
Common questions about Transferability Clause
- 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?
- How does the SBA review franchise agreements for compliance if there are unusual clauses regarding termination or transfer?
- 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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