{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-review-franchise-agreements-for-compliance-if-there-are-unusual-clauses-r","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-review-franchise-agreements-for-compliance-if-there-are-unusual-clauses-r","question":"How does the SBA review franchise agreements for compliance if there are unusual clauses regarding termination or transfer?","topic":"Franchise financing","audience":"borrower","bot_mode":"buyer","short_answer":"The SBA's Office of Franchise and Business Opportunity will meticulously review unusual clauses to ensure they do not grant the franchisor undue control or restrict the franchisee's operational independence, which could affect eligibility.","rule":"Any unusual or non-standard clauses in a franchise agreement, especially those pertaining to termination or transfer of ownership, will be closely scrutinized by the SBA. The goal is to ensure the franchisee maintains sufficient operational independence and that the agreement doesn't create impermissible affiliation or other eligibility issues.","example":"A franchise agreement contains a clause allowing the franchisor to veto any sale of the franchisee's business, even to qualified buyers. The SBA reviews this to ensure it doesn't represent an impermissible level of control or an unreasonable restriction on the franchisee's ability to exit.","what_lenders_check":"Lenders are cautious of complex or restrictive franchise agreements, as they can indicate potential eligibility issues or future operational difficulties for the borrower. They seek clarity and ensure full compliance with SBA guidelines before submitting the agreement for review.","required_facts":["Unusual clauses","Termination/transfer","SBA review","Undue franchisor control","Operational independence"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","13 CFR Part 121 - Small Business Size Regulations"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"13 CFR Part 121 - Small Business Size Regulations","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-121"}],"related_questions":[{"question":"What due diligence does the lender perform to ensure a franchise is eligible for SBA 7(a) financing?","url":"https://dealroom.so/sba-7a/questions/what-due-diligence-does-the-lender-perform-to-ensure-a-franchise-is-eligible-for-sba-7-a-f"},{"question":"What are the requirements for a franchisor to be listed on the SBA Franchise Directory?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-for-a-franchisor-to-be-listed-on-the-sba-franchise-directory"},{"question":"What is the typical down payment (equity injection) percentage for a franchise acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-typical-down-payment-equity-injection-percentage-for-a-franchise-acquisition"},{"question":"Are there minimum operating history requirements for a franchise system to be eligible for SBA loans?","url":"https://dealroom.so/sba-7a/questions/are-there-minimum-operating-history-requirements-for-a-franchise-system-to-be-eligible-for"},{"question":"Does the franchisor's financial strength and stability impact my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/does-the-franchisor-s-financial-strength-and-stability-impact-my-sba-7-a-loan-approval"},{"question":"Can I use an SBA 7(a) loan to finance a franchise acquisition not listed on the SBA Franchise Directory?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-finance-a-franchise-acquisition-not-listed-on-the-sba-franchi"}],"related_terms":[{"term":"Termination Clauses","url":"https://dealroom.so/glossary/termination-clauses"},{"term":"SBA compliance","url":"https://dealroom.so/glossary/sba-compliance"},{"term":"Franchise Eligibility Review","url":"https://dealroom.so/glossary/franchise-eligibility-review"},{"term":"Franchise Review Portal","url":"https://dealroom.so/glossary/franchise-review-portal"},{"term":"SBA Franchise Team","url":"https://dealroom.so/glossary/sba-franchise-team"},{"term":"SBA Franchise Directory","url":"https://dealroom.so/glossary/sba-franchise-directory"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-review-franchise-agreements-for-compliance-if-there-are-unusual-clauses-r","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}