Glossary · Reading the business
In short
A franchise system is a business model where a franchisor grants a franchisee the right to operate a business using their established brand, products, and operating procedures in exchange for fees.
If you're buying a franchise, the SBA has specific rules. The franchise system must be listed on the SBA Franchise Directory or have an approved addendum. Lenders will verify the franchise agreement and ensure it complies with SBA eligibility, especially regarding negative control or affiliation.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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