For SBA lenders
Short answer
If a franchise is not on the SBA Franchise Directory, the lender must submit the franchise agreement and all related documents for SBA review to determine eligibility. The SBA will assess the agreement for clauses that grant the franchisor undue control over the franchisee, which would render it ineligible.
The SBA maintains a Franchise Directory of approved franchise and other similar agreements. If a franchise is not listed, the lender must submit a complete copy of the proposed franchise agreement and all exhibits/addenda to the SBA for review. The SBA then determines eligibility by ensuring the agreement does not contain any provisions that would give the franchisor undue control over the franchisee's management or operations, or impose terms inconsistent with SBA requirements.
A lender receives an application for a 7(a) loan to acquire a new concept restaurant franchise not on the SBA Directory. The lender collects the full franchise agreement, disclosure document, and operating manual, then submits them to the SBA for review. The SBA's review ensures no 'undue control' clauses exist before the loan can proceed.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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