Friday, February 24, 2017

Don't Forget about SBA Franchise Registry

The Franchise Registry is an important tool for franchisees and franchisors - eligibility information is available here with a click.

As noted on the Franchise Registry site (powered by FranData): "The Franchise Registry lists franchise systems whose franchisees enjoy the benefits of a streamlined review process for U.S. Small Business Administration (SBA) financing. Loan applications for franchises on the Franchise Registry can be reviewed and processed faster and more efficiently by the SBA and its lenders because the respective franchise agreements do not need to be reviewed in each individual franchisee situation." 

And, for current FDDs and Franchise Agreements it is important to remember that a new Addendum to Franchise Agreements is available. Initially, the new Addendum (one-size fits all) was made mandatory by the Small Business Administration (SBA) but a recent change allows franchisors to use their previously-approved 2015 or 2016 SBA Addendum. You can find the updated policy here. It is important however to let FranData know which option you will use so lenders can be alerted to the choice.

After reviewing the new Addendum and comparing it to some of my clients' previously-approved 2015 or 2016 SBA Addenda, the Addendum seems far simpler with little-to-no downside. But, each franchise system needs to review this choice with franchise counsel.

Good luck with your SBA financing!


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