{"ok":true,"canonical_url":"https://dealroom.so/glossary/initial-franchise-fee","api_url":"https://dealroom.so/api/public/glossary/initial-franchise-fee","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":"initial-franchise-fee","term":"Initial franchise fee","group":"Doing the deal","definition":"The upfront payment made to a franchisor to acquire the rights to operate a franchise business. This fee is a component of your total project costs and is an eligible use of 7(a) loan funds.","what_it_means":"When buying a franchise, this fee is a significant part of your capital outlay. The SBA allows 7(a) loan proceeds to cover this cost, along with working capital, equipment, and other eligible expenses. Ensure you budget for it accurately as part of your total project costs.","url":"https://dealroom.so/glossary/initial-franchise-fee","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","term":"Franchise","url":"https://dealroom.so/glossary/franchise"},{"slug":"franchise-agreement","term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"slug":"total-project-costs","term":"Total project costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"use-of-proceeds","term":"Use of proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"}],"related_questions":[{"question":"Does an SBA 7(a) loan cover the initial franchise fee and associated startup costs?","url":"https://dealroom.so/sba-7a/questions/does-an-sba-7-a-loan-cover-the-initial-franchise-fee-and-associated-startup-costs"},{"question":"What is the purpose of the initial upfront fee charged on an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-is-the-purpose-of-the-initial-upfront-fee-charged-on-an-sba-7-a-loan"},{"question":"Can I use an SBA 7(a) loan to finance a franchise fee for an existing franchise location?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-finance-a-franchise-fee-for-an-existing-franchise-location"},{"question":"Is an additional guaranty fee required if a 7(a) loan amount is increased after the initial authorization?","url":"https://dealroom.so/for-lenders/questions/is-an-additional-guaranty-fee-required-if-a-7-a-loan-amount-is-increased-after-the-initial"},{"question":"Can an SBA 7(a) loan finance the cost of a franchise fee for a new or existing franchise?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-the-cost-of-a-franchise-fee-for-a-new-or-existing-franchise"},{"question":"Can I use an SBA loan to acquire a non-SBA approved franchise if I pay the franchise fee myself?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-loan-to-acquire-a-non-sba-approved-franchise-if-i-pay-the-franchise-fee-m"}]},"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 — Initial franchise fee","url":"https://dealroom.so/glossary/initial-franchise-fee","source_type":"DealRoom Data"}}