{"ok":true,"canonical_url":"https://dealroom.so/glossary/franchise-rule","api_url":"https://dealroom.so/api/public/glossary/franchise-rule","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-rule","term":"Franchise rule","group":"The loan itself","definition":"The SBA has specific rules for how franchise businesses can qualify for 7(a) loans. It's not just about the business itself, but the franchise agreement's terms.","what_it_means":"The SBA must approve the franchise agreement. Check the SBA Franchise Directory to see if the franchise is already approved. If not, the agreement needs to be reviewed to ensure it doesn't give the franchisor \"control\" in a way that makes the franchisee ineligible.","url":"https://dealroom.so/glossary/franchise-rule","official_sources":[{"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"},{"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"}],"related":[{"slug":"franchise","term":"Franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"franchise-directory","term":"Franchise Directory","url":"https://dealroom.so/glossary/franchise-directory"}],"related_questions":[{"question":"How does the 'franchise rule' affect affiliation calculations for SBA 7(a) eligibility?","url":"https://dealroom.so/for-lenders/questions/how-does-the-franchise-rule-affect-affiliation-calculations-for-sba-7-a-eligibility"},{"question":"How does the \"franchise rule\" specifically apply to determine affiliation for an independent dealer or licensee model?","url":"https://dealroom.so/for-lenders/questions/how-does-the-franchise-rule-specifically-apply-to-determine-affiliation-for-an-independent"},{"question":"How does the SBA define 'active ownership' for the 24-month rule?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-define-active-ownership-for-the-24-month-rule"},{"question":"How does the 'not engaged in lending' rule apply to a loan applicant?","url":"https://dealroom.so/for-lenders/questions/how-does-the-not-engaged-in-lending-rule-apply-to-a-loan-applicant"},{"question":"What is the 24-month ownership rule for a $0-down SBA partner buyout?","url":"https://dealroom.so/sba-7a/questions/what-is-the-24-month-ownership-rule-for-a-0-down-sba-partner-buyout"},{"question":"How does the SBA define 'total control' rule to determine affiliation for size standards?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-total-control-rule-to-determine-affiliation-for-size-standards"}]},"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 rule","url":"https://dealroom.so/glossary/franchise-rule","source_type":"DealRoom Data"}}