THE SBA FRANCHISE DIRECTORY – Changes for 2018

First Financial Franchise News, SBA Loan

Points of Interest:

  • NO-FEE for listing on the Directory
  • Work directly with SBA’s counsel on eligibility issues and/or addendum negotiations
  • Directory is open for ALL BUSINESSES TO SEE – No Bait and Switch
  • Beat the January 1st start date and Apply Now!!!!! at franchise@sba.gov
  • If further clarification is needed please reach out to Stephen Olear’s office:

 

Stephen J. Olear

Chief Franchise Counsel

Office of the General Counsel

Financial Law and Lender Oversight

818 552-3307

Fax  (202)   481-5666

 

THE SBA FRANCHISE DIRECTORY

 

The U.S. Small Business Administration (SBA) has announced a revision to its franchise policy which includes the establishment of a new SBA Franchise Directory.  The Directory will list brands that have been reviewed by SBA that meet both SBA’s affiliation and business eligibility requirements.  Effective January 1, 2018 SBA will require that all agreements that meet the Federal Trade Commission (FTC) definition of a franchise be listed on the SBA Franchise Directory in order to qualify for SBA financing.

The Directory will be organized by brands and will determine if the brand meets the definition of an FTC franchise, whether an addendum is required and if so whether the brand will utilize the SBA Standard Addendum (SBA Form 2462) or its own addendum negotiated with the SBA in 2015 or 2016 (SBA Negotiated Addendum).

While not effective until January 1, 2018, the SBA Directory already has over 2000 approved brands. Franchisors can check to see if their brand is listed correctly by going logging on to: https://www.sba.gov/document/support-object-object-sba-franchise-directory.

SBA is pleased to announce that there is NO CHARGE for listing on the Directory and strongly encourages all franchise brands that are not currently listed on the Directory to apply for a listing on the Directory prior to the January 1, 2018 effective date.

Franchisors not currently listed may apply to be on the Directory by sending the following information to SBA at franchise@sba.gov:  1. Franchise Disclosure Document (FDD); 2. Agreement; 3. Any additional documents that the franchisor will require the franchisee to execute.  SBA will review the documentation for eligibility.  If the Franchisor is using the SBA Standard Addendum (SBA Form 2462), no further review for affiliation will be conducted.  If an addendum is needed and the franchisor would like to negotiate an addendum the SBA will work with the franchisor to create a Negotiated Addendum.  Upon completion of SBA’s review and a determination by SBA that the brand is eligible, SBA will list the brand on the Directory and determine which addendum (if any) are required.

SBA will also allow currently listed Brands to re-negotiate a previously Negotiated Addendum or switch from the SBA Standard Addendum to a Negotiated Addendum.

Effective January 1, 2018 SBA will no longer require a Franchisor Certification (SBA Form 2463) on a loan by loan basis with the use of the SBA Negotiated Addendum.  To remain on the SBA Directory using either an SBA Negotiated Addendum or no addendum a franchisor will have to provide a yearly certification (SBA Form 2464) stating that their current year franchise agreement can continue using the SBA Negotiated Addendum or still does not need an addendum.

SBA is currently accepting 2018 Certifications for brands that are currently listed on the directory using an SBA Negotiated Addendum or no addendum.

If franchisors have any questions they can contact SBA directly at franchise@sba.gov.