{"ok":true,"canonical_url":"https://dealroom.so/glossary/franchise","api_url":"https://dealroom.so/api/public/glossary/franchise","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"franchise","term":"Franchise","group":"Reading the business","definition":"A business model where an independent business owner (franchisee) operates under the brand and system of a larger company (franchisor). If you're buying a franchise, the SBA has specific eligibility requirements.","what_it_means":"When buying a franchise, the SBA requires the franchisor to be listed on its Franchise Directory or have an approved addendum. This ensures the franchise agreement meets SBA eligibility rules regarding control and affiliation. Always confirm the franchise's SBA status early in your due diligence.","url":"https://dealroom.so/glossary/franchise","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"franchise-agreement","term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"affiliation","term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"},{"slug":"franchise-directory","term":"Franchise Directory","url":"https://dealroom.so/glossary/franchise-directory"}],"related_questions":[{"question":"Can an SBA 7(a) loan finance a franchise resale where the current franchisee is selling the existing location?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-a-franchise-resale-where-the-current-franchisee-is-selling-the"},{"question":"Can I use an SBA 7(a) loan to purchase a franchised business with no prior experience in that specific franchise system?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-purchase-a-franchised-business-with-no-prior-experience-in-th"},{"question":"How does the SBA determine if a franchise agreement grants the franchisor 'undue control' over the franchisee, impacting 7(a) eligibility?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-determine-if-a-franchise-agreement-grants-the-franchisor-undue-control-ov"},{"question":"If I acquire a franchise, does the SBA approve the specific franchise location?","url":"https://dealroom.so/sba-7a/questions/if-i-acquire-a-franchise-does-the-sba-approve-the-specific-franchise-location"},{"question":"What if a franchise agreement is not listed on the SBA Franchise Directory?","url":"https://dealroom.so/for-lenders/questions/what-if-a-franchise-agreement-is-not-listed-on-the-sba-franchise-directory"},{"question":"What due diligence is required for a franchise not on the SBA Franchise Directory?","url":"https://dealroom.so/sba-7a/questions/what-due-diligence-is-required-for-a-franchise-not-on-the-sba-franchise-directory"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Franchise","url":"https://dealroom.so/glossary/franchise","source_type":"DealRoom Data"}}