For SBA lenders
Short answer
The lender must review the addendum or rider to ensure it does not alter the franchise relationship in a way that would make it ineligible for SBA financing.
Even if the base franchise agreement is on the SBA Franchise Directory, any addenda or riders, particularly those that modify control, ownership, or financial terms, must be scrutinized. The lender must ensure these modifications do not introduce terms that violate SBA's affiliation rules or 'undue control' provisions.
A listed franchise agreement has an addendum that grants the franchisor significant approval rights over the borrower's financing and operational decisions, beyond what's typical. The lender must analyze if these terms constitute 'undue control' by the franchisor, which could render the business ineligible for a 7(a) loan.
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
13 CFR Part 121 - Small Business Size Regulations
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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