What, is the SBA Franchise Registry Back?

Yes.  It is back.  The Small Business Administration franchise registry is back.  Franchisors must be on it in order for your prospective franchisee to get funding.  Wait, I miss spoke.  It is an SBA franchise directory, not the registry, the Directory.
The Directory is not optional.  Unlike in the past, where franchises could be approved as part of the franchisee loan process, franchises must be pre-registered.

Under these changes, Lenders and CDCs will no longer have to review franchise or other brand documentation for affiliation or eligibility.

The criteria for being in the Directory is very straightforward. To be in the Directory, Franchises must meet the FTC definition of a franchise. The Directory does not replace the need for the standard of SBA Addendum.  Franchisors will still be asked to the sign the Standard SBA Addendum.
The Directory will contain the following information:

  • Whether the brand meets the FTC definition of a franchise;
  • An SBA Franchise Identifier Code, if applicable;
  • Whether an addendum to the franchise agreement is needed; and
  • Whether there are additional issues the SBA Lender must consider with respect to the brand.

The Directory will be administered by FRANdata and found on the SBA website at www.sba.gov/for-lenders.  Franchisors will be required to register on the Directory annually.  The Directory requirement won’t go into effect until January 1, 2018, but franchisors can register now.
SBA notice regarding the directory can be found at http://www.frandata.com/wp-content/uploads/2017/10/5000-17009.pdf.

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