For SBA lenders
Short answer
Lenders must carefully review the franchise agreement for unlisted franchises against SBA guidelines, identifying provisions that grant the franchisor excessive control over the franchisee's operations, finances, or management.
If a franchise is not on the SBA Franchise Directory, the lender must conduct a thorough, independent review of the franchise agreement. They look for specific clauses that, for instance, dictate pricing, suppliers, operating hours, marketing campaigns, or financial management to an extent that the franchisee does not retain control over its daily business operations. Such impermissible control provisions would render the franchisee ineligible.
A lender reviews an unlisted franchise agreement that states the franchisor must approve all local pricing decisions and dictates all suppliers, even if local options are cheaper. The lender would identify these as impermissible control provisions, making the franchisee ineligible for a 7(a) loan.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on franchise eligibility
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