SbA in business of Guaranteeing Loans with High Failure Rates

SbA in business of Guaranteeing Loans with High Failure Rates

Submitted by Guest on Thu, 2007/11/01 - 13:58.

It is obvious that the SBA is in the business of guaranteeing loans on franchises with high failure rates that are not known to the SBA or FranData, the SBA's agent, who administers the SBA Franchise Registry for the SBA.

What steps has the SBA taken to correct the mistaken impression that the FranData "Snapshots" give to prospective franchnise investors who purchase "Snapshots" from FranData in the process of their due diligence? I'm sure that general attorneys also purchase these Snapshots from FranData, as well. when advising their clients. Experienced franchise attorneys know better, we assume!

While these "Snapshots" that are for sale may not endanger the SBA in any manner because they maintain their own default statistics on the loans they guarantee, they do endanger franchisee investors who are not made aware of the real failure rate of the franchise that can and has been obscured in the State UFOC's.

Isn't this "constructive" fraud committed against franchise consumers? Do the SBA and the FTC have an obligation under the law to examine their practices to determine if these practices amount to "constructive" fraud against consumers of franchises?

Small Business Administration By: Mr. Blue MauMau (59 replies) Mon, 2007/07/02 - 12:59