For SBA lenders
Short answer
A "material change" to a franchise agreement is any modification that could impact the franchisee's control over operations, financial obligations, or the franchisor-franchisee relationship, requiring SBA re-review.
If a franchise agreement, previously reviewed and approved by the SBA (or listed on the directory), undergoes a material change, the revised agreement must be resubmitted to the SBA for a new eligibility determination. Changes related to operational control, financial terms, ownership structure, or any terms that might alter the arm's-length nature of the relationship are considered material.
A franchise listed on the SBA directory revises its standard agreement to include a new clause that gives the franchisor approval rights over the franchisee's local marketing budget. This is a material change, and the updated agreement must be submitted to the SBA for re-review to ensure continued eligibility.
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
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day