I 
113TH CONGRESS 
2D SESSION 
H. R. 5600 
To amend the Small Business Act to establish rules for franchisee eligibility 
for financial assistance under certain small business programs. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 18, 2014 
Mr. GRAVES of Missouri introduced the following bill; which was referred to 
the Committee on Small Business 
A BILL 
To amend the Small Business Act to establish rules for 
franchisee eligibility for financial assistance under certain 
small business programs. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Franchise Financing 
Improvement Act of 2014’’. 
SEC. 2. ELIGIBILITY FOR FINANCIAL ASSISTANCE. 
Section 2 of the Small Business Act (15 U.S.C. 631) 
is amended by adding at the end the following new sub-
section: 
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‘‘(k) The Administrator shall make financial assist-
ance 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 pursu-
ant to section 3 of this Act.’’. 
SEC. 3. AFFILIATION RULES FOR FRANCHISEES. 
Section 3(a)(5) of the Small Business Act (15 U.S.C. 
632(a)(5)) is amended by adding at the end the following 
new subparagraphs: 
‘‘(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 affili-
ated with the franchisor if— 
‘‘(i) the franchisor has filed a disclo-
sure 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 dis-
closure of information to a franchisee; 
and 
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‘‘(ii) the franchisee, upon default on a 
loan (whether guaranteed by the Adminis-
trator or not) has no ability to obtain fi-
nancial assistance from the franchisor to 
repay such loan. For purposes of this 
clause, a franchisor’s authority to repur-
chase the franchise for failure to comply 
with the terms and conditions of the fran-
chise 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’ and 
‘franchisee’ have the meaning given those terms 
in section 436.1 of title 16, Code of Federal 
Regulations as of January 1, 2014, or any suc-
cessor regulation.’’. 
SEC. 4. ISSUANCE OF REGULATIONS. 
(a) The Administrator, after the opportunity for no-
tice and comment, shall issue regulations to implement 
this Act within 120 days of enactment. 
(b) If the Administrator fails to promulgate such reg-
ulations, the Administrator shall, unless there is clear and 
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