Do license or dealer agreements count as SBA franchises?
Short answer
They can. SBA treats any relationship that meets the Federal Trade Commission (FTC) definition as a franchise, whatever its label. Gas stations covered by the Petroleum Marketing Practices Act and new car dealers under qualifying manufacturer agreements are named. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. G.
Yes, if the relationship meets the FTC definition in 16 CFR ยง 436. SOP 50 10 8.1, Sec. A, Ch. 1, Para. G looks at substance, not the title on the contract.
Agreements that can qualify
- License, jobber, dealer or similar agreements, when SBA determines they meet the FTC definition.
- Agreements covered by the Petroleum Marketing Practices Act, such as gas stations with distributor, fuel supply, dealer or jobber agreements. They count even though exempt from FTC disclosure rules.
- A dealer agreement with a new car manufacturer that meets the FTC definition.
Whose agreements count
SBA considers only the applicant's own agreements, not those of another franchisee or licensee that it owns or controls.
If you have more than one agreement
Every agreement that meets the definition must be on the Directory. If any one is not, the application cannot proceed. If SBA has found one brand ineligible, the loan cannot be processed, even if that brand is not a franchise.
A single agreement producing 50% or less of revenue must still be on the Directory if it meets the definition. The SOP's example is an auto body shop that rents trucks and trailers under an agreement for 10% of revenue.
Practical step
Give your lender every agreement you have signed with a brand or supplier.
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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