Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting.

👨‍💼 Owner Labor & Replacement Risk

• Is the owner working full-time at the front counter or in operations?
• Has a fair market wage been applied to replace the owner’s labor?
• Are there documented staff roles or a manager in place?
• Is the business reliant on the owner for key customer relationships or services?

🏷️ Franchise & Fee Structure

• What are the franchise royalty, national marketing, and local co-op fees?
• Are pricing or promotions restricted by franchise brand policy?
• Is there a valid franchise transfer agreement and fee disclosure?
• Are franchise terms included in normalized earnings?

📊 Addbacks & Equipment

• Are addbacks tied to personal vehicle use, vague marketing, or unverified expenses?
• Are print/copy machines, POS systems, and shipping kiosks owned or leased?
• Have recent CapEx needs or service contracts been accounted for?
• Are depreciation and equipment reserves aligned with useful life?

📄 Lease & Staffing Considerations

• Is the lease transferable and aligned with franchise location requirements?
• Is there documented staff tenure and payroll history?
• Has staff turnover or reliance on family labor been disclosed?
• Are employee roles cross-trained or dependent on the owner?

🚩 Red Flags

• Owner works full-time without applying a wage adjustment
• Addbacks include marketing, vehicle, or unclear personal expenses
• No documentation of franchise transfer fees or renewal obligations
• Outdated equipment or no CapEx reserves for printers or kiosks

📌 SBA SOP Tip

Valuations for franchise copy shops and service centers must adjust for owner labor, normalize royalty/marketing fees, and evaluate CapEx for equipment-heavy operations. Franchise limitations on pricing and location can materially impact free cash flow and enterprise value.