{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/what-happens-if-a-franchise-i-want-to-buy-is-not-on-the-sba-s-approved-list","api_url":"https://dealroom.so/api/public/questions/what-happens-if-a-franchise-i-want-to-buy-is-not-on-the-sba-s-approved-list","question":"What happens if a franchise I want to buy is not on the SBA's approved list?","topic":"Franchises","audience":"new","bot_mode":"buyer","short_answer":"If a franchise is not on the SBA's Franchise Directory, it doesn't mean it's automatically ineligible. The lender can submit the franchise agreement to the SBA for review and determination of eligibility.","rule":"Franchises are generally eligible for SBA financing, but the franchise agreement must comply with SBA's specific terms regarding undue control. The SBA maintains a Franchise Directory for systems that have already been reviewed and approved. If a franchise is not listed, the lender must submit the franchise agreement and other relevant documents to the SBA's Franchise Review Unit for individual review. This process determines if the franchisor exerts \"undue control\" over the franchisee, which would render the franchise ineligible.","example":"Sarah wants to buy a new smoothie franchise that isn't on the SBA directory. Her lender collects the franchise agreement and submits it to the SBA for review. If the SBA determines the agreement does not contain \"undue control\" clauses, the franchise becomes eligible for the loan.","what_lenders_check":"Lenders must ensure the franchise agreement meets SBA requirements, particularly regarding control. Failure to get an unlisted franchise approved by the SBA can jeopardize the guaranty. They manage the submission and communication with the SBA's Franchise Review Unit.","required_facts":["Not automatically ineligible","Lender submits for review","SBA evaluates \"undue control\"","Franchise Directory"],"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","FAQ Related to Recent SBA Procedural Notices"],"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"},{"title":"FAQ Related to Recent SBA Procedural Notices","url":"https://www.sba.gov/sites/default/files/2026-04/Info%20Notice%20-%20Guidance%20for%20Frequently%20Asked%20Questions%20Related%20to%20Recent%20Procedural%20Notices%20%28FINA.pdf"}],"related_questions":[],"related_terms":[{"term":"SBA's Franchise Directory","url":"https://dealroom.so/glossary/sba-s-franchise-directory"},{"term":"Claim on the SBA Guarantee","url":"https://dealroom.so/glossary/claim-on-the-sba-guarantee"},{"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":"Call on the guaranty","url":"https://dealroom.so/glossary/call-on-the-guaranty"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"}],"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-loans/basics/what-happens-if-a-franchise-i-want-to-buy-is-not-on-the-sba-s-approved-list","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."]}