Audio for Franchise ApprovalArticle by Roger Schlueter
SBA, Small Business Administration will finance franchise businesses. The only requirement is that the Franchise agreement must have certain Language that SBA approves of, in case the SBA ends up owning the Collateral. The SBA has a List of Approved Franchises. The franchises on this list have an easy time being approved for a SBA Loan if they are buying or expanding a Franchise. The Franchise Registry provides a list of most of the Approved Franchises for SBA Financing. The Franchise Registry can be found at: http://www.franchiseregistry.com/registry/ .
Lenders and potential Franchises will have to sign in with their Email and create a password to search the registry. The Individual can search under Business Development after signing in with their created password. I searched for Domino’s Pizza and found that the franchise is SBA Eligible. This means that SBA has approved their franchise agreement. You can click on the Name of the Franchise and find out more info on the Franchise if the Franchise wants to give it to you.
Let’s say your franchise is not on the Franchise Registry. SBA states on their website that, “SBA Eligibility Reviews on the Registry means that the franchise agreement does not impose unacceptable control provisions on a franchisee or potential franchisee (which could result in affiliation with a franchisor). The lender and/or SBA must still consider and evaluate, with respect to each application for SBA financing, factors such as general eligibility, conflicts of interest, creditworthiness, use of proceeds, and discrimination. It is important to be aware that SBA does not finance operations covered by a development agreement, and no development agreement may be eligible through this process.”
SBA will reveiw changes that the Franchisor make to it’s Franchise Agreement to deem it eligible. I have done this and it is a painless process except for the fact that it must be approved by a SBA Attorney. The bank or SBA Packager that the bank may use can take care of this for you.
Please address any questions to this blog or to roger@rogerschlueter.com or to www.schlueterfinancial.com for additional contact information.