{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-constitutes-a-material-change-to-a-franchise-agreement-that-necessitates-re-review-by","api_url":"https://dealroom.so/api/public/questions/what-constitutes-a-material-change-to-a-franchise-agreement-that-necessitates-re-review-by","question":"What constitutes a \"material change\" to a franchise agreement that necessitates re-review by the SBA for eligibility?","topic":"Franchise eligibility","audience":"lender","bot_mode":"lender","short_answer":"A \"material change\" to a franchise agreement is any modification that could impact the franchisee's control over operations, financial obligations, or the franchisor-franchisee relationship, requiring SBA re-review.","rule":"If a franchise agreement, previously reviewed and approved by the SBA (or listed on the directory), undergoes a material change, the revised agreement must be resubmitted to the SBA for a new eligibility determination. Changes related to operational control, financial terms, ownership structure, or any terms that might alter the arm's-length nature of the relationship are considered material.","example":"A franchise listed on the SBA directory revises its standard agreement to include a new clause that gives the franchisor approval rights over the franchisee's local marketing budget. This is a material change, and the updated agreement must be submitted to the SBA for re-review to ensure continued eligibility.","what_lenders_check":"Lenders should exercise caution with older or revised franchise agreements. It's imperative to ensure that the current version of the agreement is on file and, if material changes have occurred, that it has been re-reviewed by the SBA to avoid eligibility issues.","required_facts":["Material change","Franchise agreement","Operational control","Financial obligations","SBA re-review"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"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":"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?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-a-lender-to-obtain-an-approved-franchise-agreement-"},{"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"}],"related_terms":[{"term":"Material Change","url":"https://dealroom.so/glossary/material-change"},{"term":"Material adverse change","url":"https://dealroom.so/glossary/material-adverse-change"},{"term":"Franchise agreement","url":"https://dealroom.so/glossary/franchise-agreement"},{"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":"Re-underwriting","url":"https://dealroom.so/glossary/re-underwriting"}],"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-constitutes-a-material-change-to-a-franchise-agreement-that-necessitates-re-review-by","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."]}