Tag Archives: SBA OHA decisions

Franchise Agreement Terms Sink Company’s SDVOSB Application

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It’s a refrain that my colleagues and I have often heard: if you’re a franchisee, it can be really, really hard–perhaps almost impossible–to be verified as a service-disabled veteran-owned small business.

A recent case demonstrates the difficulties in obtaining SDVOSB status as a franchisee. In the case, the SBA’s Office of Hearings and Appeals held that the Center for Verification and Eligibility had correctly denied a company’s SDVOSB application because, in the eyes of the CVE and SBA, the terms of the franchise agreement impeded the veteran’s control of the company.

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SBA’s SDVOSB “Normal Business Hours” Rule Needs Fixing–Here’s How

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SBA’s regulations for service-disabled veteran-owned small businesses create a rebuttable presumption that a service-disabled veteran doesn’t control the company if the veteran is unable to work normal business hours in the company’s industry.

The rule sounds reasonable at first blush, but as a recent SBA Office of Hearings and Appeals case demonstrates, the SBA may apply the presumption even to a one-person start-up with no contracts. Not many people can afford to quit their day jobs before their businesses truly get off the ground–creating a real conundrum for SDVOSB start-ups.

For the sake of fairness, the SBA’s Normal Business Hours rule needs fixing, pronto. Here’s how to do it.

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