BoeFly Webinar Tackles Issues Around New SBA Rule
All the gnashing of teeth over the SBA Registry rule change may be for naught, since the four points the SBA has pulled out into an addendum are best practices most franchisors are already doing. Or so said a panel of franchisors and lenders that discussed the rule change on a webinar today presented by BoeFly, a national online marketplace that connects small business borrowers with banks and lenders.
About 200 people listened in as the panel of experts gave advice on the best way for franchisors to deal with this new wrinkle in the SBA loan process.
As Franchise Times covered in an earlier blog in November, the SBA issued a rule change that will no longer require franchisors to submit their franchise agreement for SBA review, or require them to be listed on the Franchise Registry.
Under the new rule, both the franchisee and franchisor sign a two-page addendum to the franchise agreement that covers four provisions: change of ownership; forced sale of assets; covenants; and employment.
The panel explained these four provisions aren’t materially different from the way the SBA looked at the documents before the rule change. The reason for the concern on the franchisor’s part is that it is one more piece of paper to sign outlining what the franchisor will or won’t do.
If a brand was on the registry prior to the rule change, then “most brands will feel comfortable signing the addendum,” said Nancy Broudo, senior vice president of BoeFly.
In fact, said Tom Spadea, partner with law firm Spadea Lignana, “For most of our franchisor clients, this is one of those standard blocking and tackling” issues.
“They should have a quick conversation with their attorney,” he added. “Are we doing these four things, and if not, should we be?”
One franchisor on the panel said his discussion with his in-house counsel on the subject was indeed speedy. Tropical Smoothie Café’s chief development officer had scheduled two hours for the meeting, but was out in 10 minutes. “It was a pretty easy decision for us,” he said. “We already do those four things.”
BoeFly President Mike Rozman conducted a poll of the franchisors listening in and “for those brands who have already made a decision about whether to sign the new SBA addendum, 96.7 percent intend to sign it,” he reported, “versus 3.3 percent who intend not to sign."