Under the FTC Franchise Rule, a franchisor must give you its Franchise Disclosure Document at least 14 calendar days before you sign or pay anything. SBA 7(a) loans top out at $5 million, and anyone owning 20% or more must personally guarantee. Parisi Law Firm reviews franchise and loan documents for buyers across Northeast Georgia.
Buying into a franchise, whether it's a restoration brand, a home-services concept, or a lawn and pest route, can look like a shortcut: a proven system, a known name, and a lender willing to finance it with SBA backing. What it also comes with is a stack of documents written by the franchisor's lawyers and the bank's lawyers. The Franchise Disclosure Document runs hundreds of pages. The franchise agreement controls your territory, fees, renewal, and what happens if you ever want out. The loan package almost always includes a personal guaranty that reaches your house and savings.
Parisi Law Firm represents franchisees and borrowers. We do not represent franchisors, and we do not prepare or register franchise offerings. Our job is to read the documents from your side of the table, explain in plain English what they commit you to, flag the terms worth pushing back on, and help you go in with your eyes open. Jerry Parisi works directly with owners in Jefferson, Athens, Gainesville, Winder, and across Northeast Georgia and metro Atlanta.
The FDD and the 14-day rule
The FTC Franchise Rule (16 C.F.R. Part 436) makes it an unfair or deceptive practice for a franchisor to fail to give a prospective franchisee its current disclosure document at least 14 calendar days before the franchisee signs a binding agreement with, or makes any payment to, the franchisor or an affiliate. If the franchisor unilaterally and materially changes the agreements, you must receive the revised versions at least 7 calendar days before you sign.
Those 14 days are your review window. Use them. The FDD discloses the franchisor's background, litigation history, the fees you will pay, your estimated initial investment, any financial performance representations it chooses to make, and the franchise system's current and former outlets. The attached franchise agreement is the contract that will actually govern you. We read both together, because a reassuring statement in the disclosure does not help you if the agreement says otherwise.
Franchise agreement terms to scrutinize
Many franchisors say their agreement is non-negotiable, and some mean it. Even so, you need to know exactly what you are signing, and there is sometimes room on addenda, territory definitions, development schedules, or start dates. These are the provisions we look at hardest:
- Territory: whether it is truly exclusive, how it is drawn (ZIP codes, population, map), and whether the franchisor or other franchisees can sell into it, including online or through national accounts
- Fees and royalties: the initial fee, ongoing royalties, marketing or brand-fund contributions, technology fees, required vendors, and whether the franchisor can raise any of them
- Term and renewal: how long the agreement runs, the conditions for renewal, and whether renewal requires signing the franchisor's then-current (possibly very different) agreement
- Transfer: what approval you need to sell your franchise later, transfer fees, and any right of first refusal that could chill a buyer
- Termination and default: what counts as a default, cure periods, cross-default with other agreements, and what you owe if the agreement ends early
- Post-term non-compete and non-solicitation: how long, how far, and what kind of work it would bar you from doing if you leave the system
- Personal guaranty of the franchise agreement itself, which many franchisors require from owners and sometimes spouses
- Dispute resolution: forum selection, arbitration, and governing-law clauses that could require you to litigate far from Georgia
Georgia law: no franchise registration, and the business-opportunity statute
Georgia has no franchise registration or franchise disclosure statute of its own, so the FTC Franchise Rule supplies the main disclosure protection for franchise buyers here. What Georgia does have is a business-opportunity law, O.C.G.A. §§ 10-1-410 through 10-1-417, which requires disclosures, a written contract, and in some cases a bond or escrow from sellers of certain business opportunities.
Most franchises fall outside that Georgia statute because of a carve-out: the definition that covers sales or marketing programs does not apply when the program is sold in conjunction with the licensing of a registered trademark or service mark. That is a specific exclusion, not a blanket exemption for anyone who follows the FTC rule. If a so-called franchise or 'business in a box' lacks a registered mark, the Georgia law may apply. When it does, a seller may use its FTC disclosure document in place of most Georgia disclosure items, but must still attach a separate cover sheet titled 'DISCLOSURES REQUIRED BY GEORGIA LAW' and deliver it at least 48 hours before you sign or pay, whichever comes first. A purchaser can void a contract that violates the statute within one year and recover what was paid.
Post-term non-competes for franchisees in Georgia
Georgia's Restrictive Covenants Act covers covenants that bind franchisees, dealers, and distributors. For a restraint that applies after the relationship ends, the Act presumes a duration of 3 years or less reasonable in time. Reasonableness still depends on the geographic area and the scope of activity restricted, and Georgia courts may modify an overbroad covenant rather than throw it out.
For a trade contractor, this matters. If you already run a restoration, HVAC, or pest control business and convert it into a franchise, a broad post-term covenant could keep you out of your own line of work in your own county if the franchise ends. Read that clause before you sign, not after. For more on how Georgia treats these covenants, see our non-compete and NDA page.
SBA 7(a) and 504 loans: the rules that matter to borrowers
Many franchise purchases and business acquisitions are financed with SBA-guaranteed loans. SBA's updated rules (SOP 50 10 8.1, effective October 1, 2026) govern these loans. The maximum for a standard 7(a) loan is $5 million. For 504 loans, SBA lists a maximum of $5.5 million; the SBA debenture is capped at $5 million per small business in aggregate, and at $5.5 million per project for small manufacturers and eligible energy public-policy projects.
- Ownership eligibility: beginning March 1, 2026, SBA financing is limited to businesses that are 100% owned by U.S. citizens or U.S. nationals, and the SBA-required guarantors must meet the same test with a principal residence in the United States. Lawful permanent residents are no longer eligible owners
- Personal guaranty: any individual who owns 20% or more of the borrower, directly or indirectly, must give an unlimited full guaranty. Entities and trusts owning 20% or more must also guarantee, and a spouse must guarantee when combined family ownership reaches 20%
- Equity injection for start-ups: 7(a) loans to a start-up business (operating one year or less) require a 10% equity injection based on the project cost. Most new franchise units fall in this category
- Equity injection for a change of ownership: buying an existing business or franchise resale outright generally requires 10%, and for an initial acquisition that requirement cannot be reduced or eliminated
- Seller notes: seller financing counts toward the equity injection only if it is subordinated to the lender and on full standby, meaning no principal or interest payments for the term of the 7(a) loan, and it may provide no more than half of the required injection. Seller earnouts are prohibited
- Seller transition: in an initial acquisition, the seller may stay on only as a consultant, for up to 24 months
Reviewing loan documents and personal guaranties
The SBA sets the floor, but your lender's documents set the details: the note, the loan agreement, the security agreement, and the guaranty. Under Georgia law, a promise to answer for another's debt must be in writing and signed to be binding (O.C.G.A. § 13-5-30), and lenders make sure it is. An unlimited guaranty means your personal assets stand behind the business debt if the business cannot pay.
We review the loan package for what the guaranty actually covers, the collateral you are pledging (including any lien on your home), default triggers and reporting covenants, prepayment terms, and how the loan documents interact with your franchise agreement and your commercial lease. If the deal is an acquisition, we coordinate with your accountant on the numbers and with the lender on closing conditions. We do not prepare tax returns or give immigration advice; when an eligibility question turns on either, we point you to the right professional.
How Parisi Law Firm helps franchise buyers and borrowers
The best time to call is when you first receive the FDD or a loan term sheet, before the clock runs and before you sign. Call (404) 594-5130 or visit our office at 218 Athens Street in Jefferson to schedule a consultation.
- Read the FDD and franchise agreement within your 14-day window and give you a plain-English summary of the risks
- Identify terms worth negotiating or clarifying, and draft addendum requests to the franchisor
- Check whether the offering could fall under Georgia's business-opportunity statute
- Form or restructure your entity before signing, and align ownership with SBA eligibility and guaranty rules
- Review the SBA loan documents, personal guaranties, and seller-note terms before closing
- Review the commercial lease for your location so it lines up with the franchise term and territory
SBA 7(a) vs. 504 loans at a glance (SOP 50 10 8.1, effective October 1, 2026)
| Feature | SBA 7(a) | SBA 504 |
|---|---|---|
| Maximum amount | $5 million per standard 7(a) loan | $5.5 million maximum loan amount per SBA |
| How the cap works | $5,000,000 for any one standard 7(a) loan | SBA debenture capped at $5 million per small business in aggregate; $5.5 million per project for small manufacturers and eligible energy public-policy projects |
| Owner eligibility (from March 1, 2026) | 100% ownership by U.S. citizens or U.S. nationals | 100% ownership by U.S. citizens or U.S. nationals |
| Start-up equity injection | 10% of project cost | Separate 504 rules; confirm with your lender and CDC |
| Seller note as equity | Only on full standby for the loan term, and no more than half of the required injection | Separate 504 rules; confirm with your lender and CDC |
Frequently Asked Questions
How long do I have to review a franchise disclosure document?
Under the FTC Franchise Rule, the franchisor must give you its current FDD at least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate. If it materially changes the agreement on its own, you get 7 calendar days with the revised version. Use that time to have a lawyer review it.
Does Georgia require franchises to be registered?
No. Georgia has no franchise registration or disclosure statute, so the FTC Franchise Rule is the main disclosure protection. Georgia does have a business-opportunity law, O.C.G.A. §§ 10-1-410 to 10-1-417, but most franchises fall outside it because of a carve-out for programs sold with a registered trademark or service mark.
Do you represent franchisors?
No. Parisi Law Firm represents franchisees and borrowers. We do not prepare FDDs or register franchise offerings. We read the franchisor's and lender's documents from the buyer's side, explain the risks in plain English, and help you negotiate what can be negotiated before you commit.
Can I negotiate a franchise agreement?
Sometimes. Many franchisors resist changes to the core agreement, but territory definitions, development schedules, opening deadlines, and some fees or guaranty terms can occasionally be adjusted through an addendum. Even when nothing changes, knowing exactly what the renewal, transfer, termination, and non-compete clauses say is worth the review.
What is the maximum SBA 7(a) loan?
The maximum for a standard SBA 7(a) loan is $5 million. For 504 loans, SBA lists a maximum of $5.5 million, with the SBA debenture capped at $5 million per small business in aggregate and $5.5 million per project for small manufacturers and eligible energy projects.
Do I have to personally guarantee an SBA loan?
Yes, if you own 20% or more. Under SBA's rules, any individual with 20% or more direct or indirect ownership must give an unlimited full guaranty. Entities and trusts owning 20% or more must guarantee too, and spouses must guarantee when combined family ownership reaches 20%.
How much cash do I need to put into an SBA-financed franchise?
For a 7(a) loan to a start-up business, SBA requires a 10% equity injection based on the project cost. Buying an existing business generally requires 10% as well. A seller note can count toward it only if it is on full standby for the loan term, and it can supply no more than half.
Can a green-card holder get an SBA loan?
Not as an owner, under current rules. Beginning March 1, 2026, SBA financing is limited to businesses 100% owned by U.S. citizens or U.S. nationals, and SBA-required guarantors must meet the same test. If this affects your deal, talk to your lender early and consult an immigration attorney on any status questions.