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15 Worst Franchises

EXCLUSIVE - Here are the worst 15 performing franchises in regard to having the highest Small Business Administration (SBA) loan failure rates. The list is dotted with sub sandwich shops, fitness centers and car shops.

  WORST FRANCHISE LOAN FAILURES Failure  %
1  OBEE'S SOUP SALAD SUBS 55.56%
2  LADY OF AMERICA 41.94%
3  COUNTRY CLUTTER (BED & BREAKFAST) 41.18%
4  COPY CLUB 36.36%
5  ALL TUNE AND LUBE 35.71%
6  PICKERMAN'S 35.71%
7  PHILLY CONNECTION 35.59%
8  ROLY POLY ROLLED SANDWICHES 34.78%
9  COTTMAN TRANSMISSION 34.48%
10  HAIR COLOR EXPRESS 33.33%
11  LEE MYLES AUTOMOTIVE TRANSMISSIONS 33.33%
12  GODFATHER'S PIZZA 33.33%
13  SMOOTHIE FACTORY 33.33%
14  BLIMPIE 31.39%
15  GOLF U.S.A. (RETAIL GOLF EQUIP.) 30.77%

Source: Small Business Administration, SBA Loan Performance Within Franchise Code for the Period of FY 2001 - 2005

Blue MauMau was able to obtain this highly guarded document. It is a list that the SBA gives out to lenders to help them ascertain the business risk of various franchise systems. When a failure rate for paying back a loan is high, a banker typically requests additional capital injection from the would-be franchise owner -- even if the franchiser is listed on the franchise registry.

It should be noted that this is ONLY a list of franchises that have received SBA loans. It does not account for non-SBA loans. The SBA notes that the failure rate equals the number of liquidations, plus number charged off, divided by total number disbursed.

Franchise networks that have received less than 10 disbursements (small business loans) have been removed, leaving a list of some 365 franchise systems during the period of October 1, 2000 to September 30, 2005.

Here is Blue MauMau's failure rate tool

Readers can search these various franchise systems for failure rate, number of loans, and loan amount.

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