Business View - August 2015 93
The International Franchise Association, the world’s
largest organization representing franchise owners
across 300 different business formats, has submitted
written comments to the U.S. Small Business Adminis-
tration (SBA) in an effort to help franchised businesses
obtain SBA loans and to advise the agency on ways to
improve how its loan programs can be used more ef-
ficiently.
“Franchise businesses are small businesses that pro-
vide $890 billion in economic activity in communities
across the country,” said IFA President & CEO Steve
Caldeira, CFE. “Existing and prospective franchisees
deserve equal access to the SBA resources available to
other small business owners, particularly as the fran-
chise industry has continued to grow at a higher rate
than non-franchised businesses each of the last five
years following the recession.”
The SBA issued a Request for Comment Dec. 8, 2014
on several issues relating to SBA’s procedures and con-
siderations for assessing the franchise relationship.
The SBA is reviewing their procedures used to deter-
mine if franchisees are eligible or ineligible for financial
assistance through the SBA’s various loan programs.
In 2014 alone, SBA lending programs were used in the
financing of nearly 30,000 new franchise units and
guaranteed an estimated $6 billion in loans to fran-
chisees. As IFA stated in its comments, for every $1
million in lending to a franchise, an estimated 40 new
direct and indirect jobs are created.
IFA’s comments to the SBA seek to clarify the nature
of the franchisor/franchisee relationship for the pur-
poses of determining loan eligibility for franchise small
businesses. IFA stated that franchisors and franchi-
sees should not be considered “affiliated” simply by
virtue of the contractual rights and obligations to which
they agree to in their franchise contracts – essentially,
a continuation of existing regulations. IFA encouraged
the SBA to develop reasonable standards in order to
alleviate any confusion or uncertainty for existing or
prospective franchisees seeking SBA loans.
“IFA hopes to continue our collaborative and successful
FRANCHISE
