Small Business & Franchise — 2026-08-31

Key Highlights

• Moe's Southwest Grill Enters Twin Cities: The brand opened its first traditional brick-and-mortar location in the Twin Cities area, marking a significant regional footprint expansion for the fast-casual chain.
• Mokas Coffee & Eatery Signs Nine-Unit Deal: Mokas Coffee & Eatery has signed a nine-unit franchise development deal to expand across Kansas City, signaling continued growth for the breakfast and lunch-focused brand.
• REMAX Expands via Brokerage Conversions: REMAX announced an expansion of its brand footprint through the conversion of two brokerages, including one of Royal LePage’s largest independent franchises, highlighting ongoing consolidation in real estate franchising.
• SBA Size Standards Proposal Draws Criticism: Proposed new SBA rules governing size standards would make more than 114,000 additional businesses eligible for federal programs, a move that lenders support but many small firms oppose due to increased competition.
• Franchise M&A Optimism Remains High: Despite economic caveats, franchise M&A optimism prevails for 2026, with major multi-brand franchisees like Flynn Group continuing acquisitions of brands such as Pizza Hut, bringing their unit counts to over 1,000.

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Policy & Funding Watch

• SBA Proposes New Size Standards: The SBA is proposing new size standards for 338 industry groups to better reflect market nature. This change aims to expand eligibility for loans and contracting but faces criticism from existing small businesses who fear dilution of federal benefits.
• Lender Interest in Expanded Eligibility: While small firms express concern, lenders are intrigued by the SBA's proposed size standards overhaul, which could push small business lending into the middle market by allowing growing firms to retain eligibility longer.
• SBA Loan Requirements Clarified: Current SBA loan requirements for 7(a), 504, Express, and Microloan programs continue to emphasize FICO scores, revenue, time-in-business, and collateral, with the 1.15× debt-service coverage test being a decisive factor for most applications.

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Franchise Spotlight

• Moe's Southwest Grill: This week’s standout development is Moe's Southwest Grill opening its first traditional brick-and-mortar location in the Twin Cities area. This move signifies a strategic shift in regional penetration for the brand, moving beyond potential non-traditional or limited formats to full-scale restaurant operations in a key Midwest market.
• Mokas Coffee & Eatery: The brand is expanding its footprint in Kansas City with a newly signed nine-unit development deal. Mokas is known for breakfast and lunch offerings, freshly baked pastries, and signature coffee, appealing to operators looking for established daypart revenue streams in competitive urban markets.

Owner Success Stories

• Flynn Group's Continued Acquisition Strategy: Flynn Group, the world's largest multi-brand franchisee, continues to demonstrate successful scaling strategies by acquiring additional Pizza Hut units, bringing their total count in that brand alone to more than 1,000 units. This milestone highlights the viability of large-scale multi-unit franchising models even in mature markets.

Market & Capital Pulse

The funding environment for small businesses is currently defined by regulatory uncertainty and structural shifts. The SBA's proposal to revise size standards is the dominant topic, with lenders viewing it as an opportunity to expand their addressable market into the middle tier, while traditional small businesses worry about increased competition for federal contracting and loans. Meanwhile, franchise financing remains active, with M&A experts noting that despite broader economic caveats, dealmaking optimism for 2026 remains high, particularly for multi-unit operators and take-private deals.

What to Watch Next

• Public Comments on SBA Size Standards: Stakeholders should monitor the comment period and subsequent final rule for the proposed changes to size standards for 338 industry groups, as this will directly impact eligibility for SBA loans and federal contracts.
• Franchise FDD Filings: As is standard for this time of year, prospective buyers should watch for updated Franchise Disclosure Documents (FDDs) from major brands, particularly those like Moe's Southwest Grill and Mokas Coffee & Eatery that are actively expanding.
• Regulatory Agenda Updates: Keep an eye on the SBA's Regulatory Agenda for further details on how the agency plans to implement the revised size standards methodology and any additional rulemakings affecting small business lending.

Reader Action Items

• Review SBA Size Standard Changes: If you operate near the upper limit of your current SBA size standard, review the proposed changes for your specific NAICS code to determine if you might gain or lose eligibility for federal programs.
• Assess Debt Service Coverage: If you are seeking an SBA loan, ensure your financials meet the 1.15× debt-service coverage test, as this is a primary decision factor for lenders under current requirements.
• Evaluate Multi-Unit Opportunities: For existing franchisees, consider evaluating multi-unit development deals similar to the recent Mokas Coffee & Eatery nine-unit agreement to leverage brand momentum in specific geographic clusters.