Sba`s Registry Of Approved Franchise Agreements

If it is not included in the list, additional documentation is required to process a credit application. In fact, some lenders will not even accept franchiseees` credit applications until the franchise is on the register. They justify that the application process will take too long if they are forced to start in first place. Information about the franchises provided in the registration should be considered as a first step. As Chautin pointed out, homework is essential. Find out all about the franchise, the industry and the satisfaction of today`s franchisees. Finally, make sure it`s a good fit. Lenders who believe that the SBA`s decision to join the franchise is inconsistent with the Agency`s guidelines and procedures may challenge the decision by sending a copy of the decision with an explanation of how the provision is inconsistent with the applicable version of SBA`s SOP 50 10. Franchise claims are reviewed by the SBA Franchise Committee, which is composed of the Office of General Counsel`s Attorney. For franchise claims, the Director of Financial Assistance or Design is an ex-officio member of the committee. The general counsel for Financial Law – Lender Oversight is empowered to reconsider the Committee`s decisions. In addition, franchisors who wish to lodge an appeal against the SBA`s decision not to place them in the register may do so under the same procedures. The SBA seeks information on these resources, as well as their usefulness and effectiveness in providing information, to help lenders determine their membership effectively and appropriately.

(6) Does SBA need to develop a procedure for accepting a certificate of non-membership from a franchisor and/or its advisor on the basis of standards established by the SBA rather than the SBA or verification of the franchise agreement and related documents by the SBA or lender? Many franchise agreements give the franchisor the opportunity to acquire the property in the event of default under the agreement. It may be reasonable to conclude that the franchisor should have the right to benefit from its agreement if it does not meet its obligations under the franchise agreement. In other words, if the franchisee is late under the franchise agreement, the franchisor should have the right to lease the property to the franchisee (for himself or for a third party franchisee) until the full term of the original franchise agreement. However, at the expiry of the original term of the franchise agreement, the SBA has decided that a franchisor should not be able to continue to lease the property or impose renewal fees under the franchise agreement. SBA welcomes the comments on all franchised memberships and excessive control issues that are addressed in this notice. The Agency also specifically seeks advice on the following issues, some of which may require new legal or regulatory authorities: effective January 1, 2018, the U.S. Small Business Administration (SBA) will only process credits to finance the acquisition and development of new franchises if the franchisee is included in the new SBA franchise list. Last month, the SBA announced changes that are expected to come into effect on January 1, 2018. SBA has established its own list of franchises of all franchise brands that SBA has defined as eligible for funding as part of its affiliation and other requirements.

Starting in 2018, a franchisee`s application for SBA financing will not be processed if a franchise system is not included in the SBA franchise directory. In order to assist in the review of the franchise and similar relationships under SBA commercial credit programs, SBA provides an identifying list of franchise agreements and other similar agreements that have been approved by the SBA only with respect to membership and control issues and therefore do not require further revision of the franchise agreement for these matters (i.e. these agreements are not subject to such control.