15 Worst Franchises

I'd also like to see a comparable list of the worst franchises with the differences and similarities between the best and worst.

I can't come up with nine but based on the posts at this site I've already got several on my list:
1. Quiznos
2. Stone Cold Creamery
3. UPS Store
4. 123 Fitness
5. Smash Burgers
6. Dunkin Donuts

Anyone see a pattern? 3 on the list; Quiznos, 123 Fitness, and Smash Burgers, are owned and operated by the same group of misfits - to the detriment of anyone who invested their hard earned money. The others use the same tactics, and except for Dunkin Donuts, are devoid of any strong multi-unit franchisees.

DO NOT EVEN CONSIDER BUYING INTO LADY OF AMERICA. THEY ARE THE BIGGIEST RIP OFF. ALL OF THEIR LADY OF AMERICA AND LADIES WORKOUT EXPRESS CENTERS IN THE COUNTRY WILL ALL BE OF BUSINESS SHORTLY. THEY ARE THE BIGGEST LIARS AND CHEATS I HAVE EVER COME ACROSS. THE LEADERS WERE ROGER WHITTENBRENS AND CHUCK COVOTO. THEY HAVE MOVED ON AND IS NOW TRYING TO RIP MORE INVESTORS OFF WITH SELLING ANOTHER FITNESS FRANCHISE CALLED ZOO FITNESS. DON'T BUY, YOU WILL BE SORRY. THEY ARE IN THE BUSINESS TO RIP OFF. NEVER EVER, EVER TRUST ROGER. AND NEVER TRUST ANY FRANCHISE LOCATED IN FLORIDA. THEY HAVE SOME WEIRD LAWS TO PROTECT A FRANCHISOR.

JUST A WORD FROM THE MUCH WISER NOW.

Very nice work! Looking forward to the tool.

Michael Webster PhD LLB Psychology of Compliance and Due Diligence Law www.bizop.ca

Does the list that you have provide the number of failed loans rather than the percentage for each franchise? Could you provide that information? I'm particularly interested in Quiznos and I would like to see how they compared to the top 15 franchises on the this list.

This is an interesting report.  However, it is based solely on SBA Gauranteed loans and not necessarily indicative of the franchise concept.  See more of my thoughts and how to interpret this type of data here. 

Believe & Succeed,

FranSynergy
Synergizing Franchising 1 Franchisee at a time!
www.fransynergy.com

It is not advised that someone should ONLY use the list and its numbers in their consideration to buy a franchise.  The following is insightful.

"The table and the proposed tool should only be seen and used as additional information for the evaluation of a concept.  One must drill down into this data like any other data, to get a better understanding of what it actually means." -- FranSynergy

It was noted that the list is limited to only SBA loans. Information on non-SBA loans are not known. Second, although the source is the Small Business Administration, the reader cannot know for certain how accurate the SBA data is. There is no mention of a third party audit certifying the accuracy of the information on the document. The list is simply one set of data among many that might be considered.

Don Sniegowski

Interesting report on franchisor failure and what the effect is on franchisees:

When the Franchisor Fails (pdf)

--Paul Steinberg, pwsteinberg@msn.com

For those who may not be keeping up with the discussion on THE TABLE over at the FranSynergy Blog (Deal Killer?).  I've been challenged by our esteemed colleague Dr. Webster to pick a FRANCHISOR from the list and PROVE why they remain a viable investment.  I've selected BLIMPIE'S, and made my case.  HOWEVER, I've also invited Mr. Mark A. Mears CMO for Blimpie's to respond.   

Believe & Succeed,

FranSynergy
Synergizing Franchising 1 Franchisee at a time!
www.fransynergy.com

Very intersting! Have any of these systems continued to grow? Do other franchise lenders share the same kind of information? Have you tried to obtain comments from Senior management, at each of these franchises, for explainations about these "failure" rates?

Our industry requires that we hold ourselves to a higher standard! 

Dear Mr. Blue: Based on your experience...do you think this is the "tip of the iceberg"?

Jeff Johnson, FranSurvey.com

I think getting your hands on this document is very interesting.  However, I don’t think it really provides the right type of insight to a potential franchise buyer.  Yes, this shows business failures and loan defaults.  However the real problem might be in the franchise sales practices of the listed companies.

Having worked with a lot of franchisor’s during the past 30 years, and even having created a lot of businesses from scratch, I can tell you that you can have or create the best business model but if you sell the franchise to the wrong type of person, i.e., with the wrong competencies; value systems and behavior, there are going to be lot’s of problems, many of which could end up in business failures.

Franchisees, for the most part, know very little about what they are good at or what type of business is best for them.  Franchisor’s who aren’t careful or don’t really know what type of profile they should be looking for are really doing their own company a huge disservice, as we see in this list.

For example, one of our clients had an attrition rate as high as 60% before we came in with the Franchise Navigator.  Their franchisees were not bad people.  They just were not the right profile for the franchise model.  They were sales people (Emulator/Influencers) and the model called for business people (Achiever/Accomplishers).  

Business, as in life, is cause and effect.  Most people and most franchisors live their lives in the effect – without realizing they are part of the cause.

As we see in this list, this is a horrible effect.

Craig Slavin
Franchise Architects
Franchise Navigator

How do we delete our own post?  I had asked a question and then found the answer all of two minutes later.  Tried to delete it but it only allowed me to delete the text, leaving a comment empty.

The default rate on these 15 franchisees only reflects defaults on SBA loans and doesn't take into consideration those complete failures that are obscured in Item 20 of the UFOC's.

The failure rate of some of these franchises on the SBA Registry and eligible for SBA Loans must be well over 50% if the truth were known but I'm sure these franchisors will blame the high failure rate on the franchisees and not on their flawed but "proven" business plans and intellectual material provided to the franchisees.

How can you NOT SEE that Item 20 is a DEAL and that the Rule and the UFOC's are actually a subsidy for the franchisors that premeditates the sacrifice of inexperienced and hopeful "entrepreneurs" to the fires of development in the economy?

All of the "due diligence" failure of inexperienced and naive franchisee prospects doesn't excuse the failure of the FTC to inform franchisees and to require franchisors to disclose REAL information upon which the risk and odds of success or failure of the franchise can be ascertained.

Franchising needs to be regulated at least as well as securities are regulated by the FTC.

This comment has been moved here.

I was an All-Tune and Lube franchisee until about a year ago. I did not have a SBA loan but I can attest to the fact that while All-Tune kept the letter of the franchise agreement, I don't feel they spirit of te agreement. Their philosophy seems to be to sign up anyone and everyone and just see who sticks. So some units are successful but it seems very few. In my geograpic area, about 10 of the 14 stores have closed in the last two years. The bottom line is they are stuck in a business model that is not likely to work. Might have worked 20 years ago but not now. I see the real key is that the franchise must have a strong brand image and I think you will find that most, if not all, of the franchises on the list do not have a strong program developing a strong brand image such as Midas and Meineke in the auto repair arena. So I would warn would be franchisees to think two or three times about All-Tune and any company on the list.