Sba Franchise Agreement Requirements

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The Small Business Administration (SBA) is a U.S. government agency responsible for supporting entrepreneurs and small businesses. One way to provide this support is to guarantee the credit of banks and credit unions to qualified small businesses. The value of SBA 7(a) loans is easily visible to franchisees, as these loans can be a solid source of financing for new franchisees. It goes without saying that SBA 7(a) loans involve a more rigorous verification and qualification process. This verification and qualification process applies not only to the “borrowing franchisees”, but also to the franchisee and, in particular, to the nature of the franchise and the terms of the franchise agreement. Therefore, if you are preparing, developing and updating your FDD and franchise agreement, you as a franchisor must be aware of the qualification requirements for SBA franchise agreements. While registration in FRANdata`s franchise registry is not required for a franchised brand to qualify for SBA financing, FRANdata offers franchisors and potential lenders more information than a listing in the SBA Franchise Directory. As a private company, FRANdata collects a royalty for its services from franchisors. . . .

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