{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-a-lender-to-obtain-an-approved-franchise-agreement-","api_url":"https://dealroom.so/api/public/questions/what-are-the-specific-requirements-for-a-lender-to-obtain-an-approved-franchise-agreement-","question":"What are the specific requirements for a lender to obtain an approved franchise agreement for a 7(a) loan when the franchise is not listed on the SBA Franchise Directory?","topic":"Franchise eligibility","audience":"lender","bot_mode":"lender","short_answer":"If a franchise is not on the SBA Franchise Directory, the lender must submit the franchise agreement and all related documents for SBA review to determine eligibility. The SBA will assess the agreement for clauses that grant the franchisor undue control over the franchisee, which would render it ineligible.","rule":"The SBA maintains a Franchise Directory of approved franchise and other similar agreements. If a franchise is not listed, the lender must submit a complete copy of the proposed franchise agreement and all exhibits/addenda to the SBA for review. The SBA then determines eligibility by ensuring the agreement does not contain any provisions that would give the franchisor undue control over the franchisee's management or operations, or impose terms inconsistent with SBA requirements.","example":"A lender receives an application for a 7(a) loan to acquire a new concept restaurant franchise not on the SBA Directory. The lender collects the full franchise agreement, disclosure document, and operating manual, then submits them to the SBA for review. The SBA's review ensures no 'undue control' clauses exist before the loan can proceed.","what_lenders_check":"Lenders must proactively identify non-listed franchises and submit agreements for review early in the process. Failure to obtain SBA approval for the franchise agreement will result in an ineligible loan and potential guaranty denial.","required_facts":["Franchise not listed","Franchise agreement submission","SBA review","Undue control","Eligibility"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"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"}],"related_questions":[{"question":"What are the specific criteria for a new franchise model to be included on the SBA Franchise Directory?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-criteria-for-a-new-franchise-model-to-be-included-on-the-sba-franchi"},{"question":"How does a lender determine if a franchise agreement contains impermissible control provisions not listed on the Directory?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-determine-if-a-franchise-agreement-contains-impermissible-control-provis"},{"question":"Which specific provisions in a franchise agreement raise red flags for undue franchisor control, making it ineligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/which-specific-provisions-in-a-franchise-agreement-raise-red-flags-for-undue-franchisor-co"},{"question":"Can an existing franchise location that is not currently listed on the SBA Franchise Directory be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-an-existing-franchise-location-that-is-not-currently-listed-on-the-sba-franchise-direc"},{"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":"Can a franchise system with a foreign-based franchisor be eligible for a 7(a) loan if the business operates in the U.S.?","url":"https://dealroom.so/for-lenders/questions/can-a-franchise-system-with-a-foreign-based-franchisor-be-eligible-for-a-7-a-loan-if-the-b"}],"related_terms":[{"term":"Approved lender","url":"https://dealroom.so/glossary/approved-lender"},{"term":"Franchise Agreement Addendum","url":"https://dealroom.so/glossary/franchise-agreement-addendum"},{"term":"Approved SBA Lender","url":"https://dealroom.so/glossary/approved-sba-lender"},{"term":"SBA-approved lender","url":"https://dealroom.so/glossary/sba-approved-lender"},{"term":"Franchise eligibility requirements","url":"https://dealroom.so/glossary/franchise-eligibility-requirements"},{"term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-a-lender-to-obtain-an-approved-franchise-agreement-","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."]}