Category Archives: General

SBA-Backed Franchise Lending Today

The U.S. Small Business Association’s loan guaranty program has gone through a number of changes in recent years. The current rule became effective January 1, 2018, and supersedes changes described in my blog postings in December 2014 and 2016. A franchisor that wants its franchisees to be able to obtain SBA-backed loans to finance their franchised businesses must be listed on the SBA Franchise Directory. The directory, which is maintained on the SBA’s website, shows to franchisees and lending banks the franchise systems that qualify for SBA-backed lending. To be listed on the SBA Franchise Directory, a franchisor must submit to the SBA …

[ CONTINUE READING ]

Posted in Franchise agreements, General \ Comments Off on SBA-Backed Franchise Lending Today

The New SBA Addendum

Effective January 1, 2017, any franchisor that wants to offer SBA guaranteed financing for its franchisees will use a single, two-page form addendum.   In a notice issued just before Thanksgiving, the SBA announced that it will no longer review franchise agreements to determine whether affiliation exists between the franchisor and franchisee in any specific franchise system.  Previously negotiated SBA addenda will no longer be accepted. SBA loans are only available to independent small businesses as defined in the SBA regulations.  Some franchisors impose a level of control in the franchise agreements that the SBA considers to create “affiliation” between the franchisor and …

[ CONTINUE READING ]

Welcome to Franchise Alchemy

Welcome to Franchise Alchemy, a blog that magically transforms franchise business and law news into golden concepts.  Of course, we make no promises about the gold or the magic.  But we’ll do our best. We are lawyers at the national law firm of LeClairRyan.  We hope to make real contributions to the conversation with franchisors, franchisees and franchise consultants, and with legislators, judges, franchise law administrators and individuals and businesses considering franchising.  In sum, our audience is comprised of people in the franchise business and those who deal with franchise companies or simply have an interest in the subject. Why …

[ CONTINUE READING ]

Posted in General \ Leave a comment