Starting a business is a challenging endeavor. However, franchising can be an excellent way to mitigate those challenges. Franchising offers entrepreneurs an established business model, a recognized brand, and support from a larger organization. The Small Business Administration (SBA) offers a Franchise Registry to help entrepreneurs with financing and other resources. If you are considering franchising, it is essential to understand the SBA executed franchise agreement.
What is an SBA executed franchise agreement?
Under the SBA’s Franchise Registry, a franchisor can receive SBA approval for its franchise agreement. When the SBA approves a franchise agreement, it means that the SBA has evaluated the agreement and found it to be in compliance with the SBA’s rules and regulations. Once the SBA approves a franchise agreement, it is known as an SBA executed franchise agreement.
Why is an SBA executed franchise agreement important?
An SBA executed franchise agreement is important because it can make it easier for franchisees to obtain financing. Many lenders and financial institutions prefer to work with franchisees whose franchise agreements have been SBA approved. In addition, an SBA executed franchise agreement can provide additional benefits to franchisees, such as access to SBA loans, support, and training.
How to obtain an SBA executed franchise agreement?
Franchisors can apply for an SBA executed franchise agreement through the SBA Franchise Registry. The franchisor must submit the franchise agreement, along with other required information and documentation, to the Registry. Once the SBA approves the franchise agreement, it becomes an SBA executed franchise agreement.
What should franchisees look for in an SBA executed franchise agreement?
Franchisees should review the SBA executed franchise agreement carefully. They should ensure that the agreement provides the necessary support and resources to help them succeed. Franchisees should also review the financial obligations and restrictions in the agreement to ensure that they are reasonable and fair.
In conclusion, an SBA executed franchise agreement can offer numerous benefits to franchisors and franchisees. It can make it easier to obtain financing and provide additional resources and support. Franchisees should carefully review the agreement to ensure that it meets their needs and expectations. If you are considering franchising, consult with a business attorney or a trusted advisor to help you understand the SBA executed franchise agreement and your rights and obligations.