Imagine this scenario: After months of work, you have a candidate to award one of your first franchises to. They say they are ready to move forward, but everything stops as bad news, your brand isn’t listed on the SBA Franchise Directory. By the time the SBA lender learns of the show-stopper issue and lets your candidate know, your franchisee candidate has lost momentum, run out of patience, and possibly moved forward with a brand that was funding-ready on day one.
This is an unforced error that can catch many emerging founders off guard. You spend months working with lawyers, refining your operations, and writing your Franchise Disclosure Document. You file your paperwork and receive your state registrations. But while filing your FDD makes you legally compliant to sell a franchise, it doesn’t make you financially accessible to your franchisees.
A dangerous misconception among new franchisors is that getting listed on the SBA Directory can wait until a candidate is ready for financing. Under the SBA’s rules, lenders are strictly prohibited from closing a loan for a franchise brand unless it is actively published on the SBA Directory. Because the SBA reviews new submissions sequentially, waiting until a candidate signs your franchise agreement to start the process creates an immediate, multi-week freeze. And as anyone in franchise development knows: time kills deals. When you apply, the SBA doesn’t assess a brand’s business model; they are only looking for excessive control or financial commingling written into the FDD. Essentially, the SBA reviews your contract to ensure it doesn’t strip the franchisee of independent ownership. They want to ensure your franchisee is a true business owner and not an employee. Preventing this multi-month headache costs absolutely nothing but minutes of your time. It simply needs to be baked into your immediate launch checklist:
- As soon as your state filings are effective, compile clean PDF copies of your full FDD, standard Franchise Agreement, and all required ancillary agreements.
- Email your complete document package directly to fr*******@*ba.gov, explicitly requesting inclusion in the SBA Franchise Directory.
- Once the SBA verifies your agreement lacks excessive control provisions, sign and return the standardized Franchisor Certification confirming you will respect the franchisee’s operational independence.
One of your greatest assets as an emerging brand is your ability to move fast and capitalize on early interest. Don’t let an entirely predictable review backlog jeopardize your franchise sales. File your SBA Directory application the exact same day your FDD goes live.
With your brand on the Directory, BoeFly can keep your franchisee’s funding process moving forward. Speak to one of our funding specialists today! BoeFly.com/Contact
