Franchise Financing Improvement Act of 2014

To amend the Small Business Act to establish rules for franchisee eligibility for financial assistance under certain small business programs. 1. Short title This Act may be cited as the Franchise Financing Improvement Act of 2014 2. Eligibility for financial assistance Section 2 of the Small Business Act ( 15 U.S.C. 631 (k) The Administrator shall make financial assistance available to franchisees under this Act or titles III and V of the Small Business Investment Act of 1958 if the franchisee is not affiliated with the franchisor pursuant to section 3 of this Act. . 3. Affiliation rules for franchisees Section 3(a)(5) of the Small Business Act ( 15 U.S.C. 632(a)(5) (C) Eligibility of franchisees For purposes of determining eligibility of franchisees for financial assistance under this Act or titles III and V of the Small Business Act, a franchisee shall not be considered affiliated with the franchisor if— (i) the franchisor has filed a disclosure document pursuant to— (I) part 436 of title 16, Code of Federal Regulations (or any successor regulation); or (II) any law or regulation of a State or territory that mandates disclosure of information to a franchisee; and (ii) the franchisee, upon default on a loan (whether guaranteed by the Administrator or not) has no ability to obtain financial assistance from the franchisor to repay such loan. For purposes of this clause, a franchisor’s authority to repurchase the franchise for failure to comply with the terms and conditions of the franchise agreement or have the right of first refusal to purchase the franchise from the franchisee shall not be considered financial assistance to repay loans issued to the franchisee. (D) Definitions For the purposes of subparagraph (C), the terms franchisor franchisee section 436.1 . 4. Issuance of regulations (a) The Administrator, after the opportunity for notice and comment, shall issue regulations to implement this Act within 120 days of enactment. (b) If the Administrator fails to promulgate such regulations, the Administrator shall, unless there is clear and convincing evidence of fraud, honor the terms and conditions of any guarantee issued by the Administrator pursuant to the Small Business Act ( 15 U.S.C. 631 et seq. 15 U.S.C. 661 et seq. (c) For purposes of subsection (b), the term Standard Operating Procedure SOPs section 120.10

Summary: Franchise Financing Improvement Act of 2014 - Amends the Small Business Act to direct the Administrator of the Small Business Administration (SBA) to make financial assistance available to franchisees under the Act or the Small Business Investment Act of 1958 if the franchisee is not affiliated with the franchisor. Declares that a franchisee shall not be considered affiliated with the franchisor if: the franchisor has filed a disclosure document pursuant to specified federal regulations; and the franchisee, upon default on a loan (whether guaranteed by the SBA or not), has no ability to obtain financial assistance from the franchisor to repay the loan. Declares further that a franchisor's authority to repurchase the franchise for noncompliance with its terms and conditions, or to have the right of first refusal to purchase it from the franchisee, shall not be considered financial assistance to repay loans issued to the franchisee.