{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-if-a-franchise-system-is-not-listed-on-the-sba-franchise-directory-but-the-agreement-","api_url":"https://dealroom.so/api/public/questions/what-if-a-franchise-system-is-not-listed-on-the-sba-franchise-directory-but-the-agreement-","question":"What if a franchise system is not listed on the SBA Franchise Directory but the agreement is SBA-compliant?","topic":"Franchise eligibility","audience":"lender","bot_mode":"lender","short_answer":"If a franchise system is not on the SBA Franchise Directory, the lender must submit the franchise agreement and all related documents for a full SBA review to determine its eligibility and compliance with SBA franchise requirements.","rule":"Franchise systems must comply with specific SBA requirements to be eligible for 7(a) financing, primarily concerning the independence of the franchisee. The Franchise Directory lists systems that have already been reviewed and deemed compliant. If a system is not listed, the lender cannot assume eligibility. They must submit the franchise agreement, disclosure document (FDD), and any other relevant agreements to the SBA for a manual review to confirm compliance.","example":"A borrower seeks a $700,000 7(a) loan to open a new location for 'Gourmet Grillz,' a regional fast-casual franchise. The lender checks the SBA Franchise Directory and 'Gourmet Grillz' is not listed. The lender then obtains the full franchise agreement and FDD and submits them to the SBA for a specific eligibility review before proceeding with the loan application.","what_lenders_check":"Lenders are concerned about the eligibility of the franchise system. Proceeding with a loan for an unlisted franchise without a prior SBA review could lead to a non-eligible loan and a potential guaranty repair or denial.","required_facts":["Franchise Directory","SBA compliance","Franchise agreement review","FDD submission","Manual eligibility review"],"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":"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":"SBA Franchise Directory","url":"https://dealroom.so/glossary/sba-franchise-directory"},{"term":"Franchise Directory","url":"https://dealroom.so/glossary/franchise-directory"},{"term":"SBA's Franchise Directory","url":"https://dealroom.so/glossary/sba-s-franchise-directory"},{"term":"Franchise system","url":"https://dealroom.so/glossary/franchise-system"},{"term":"Claim on the SBA Guarantee","url":"https://dealroom.so/glossary/claim-on-the-sba-guarantee"},{"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-if-a-franchise-system-is-not-listed-on-the-sba-franchise-directory-but-the-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."]}