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WASHINGTON — The Small Business Administration today released to Blue MauMau its newest list of loan failure rates of franchisees.
In an industry in which franchisee performance at a unit level is typically hidden, this list gives a sense to bankers and now to franchise buyers how well franchise owner-operators in a chain are doing. The SBA provides this list to loan officers of its most trusted lenders and banks throughout the country.
Franchisee loan pay-back rates are tracked by brand for the nine-year period from October 1, 2001 to September 30, 2010. The list runs from the worst failure rates to the best.
Ideally, to be informed about where to put one's money, a franchise buyer should look at the profit of a brand's average store and compare the rate of return on the investment with all other brands' returns on investments. But unfortunately, few in the industry are willing to give an earnings claim. And the lists of best franchises to buy in the various media do not consider their profitability.
One of the better options is to use the list as a tip sheet on how to bet at the franchise races. It should also be noted that less than 585 franchise brands out of 3,500 in North America are on the list.
The Administration instructs Blue MauMau of the following limitations regarding this list.
Attached is an excel spreadsheet analysis of the performance of all 7(a) and 504 business loans which were identified as being made to a franchise, and which were disbursed between October 1, 2001 and September 30, 2010, and which included a statistical sample of at least ten (10) individual loans for any given franchise. We wish to point out, however, that it may not include all of the companies which are part of a franchise. This is because the lenders are not required to provide information as to whether a borrower is or is not a franchisee. The Agency does not certify as to the accuracy of this information because the identification of any given loan as belonging to a particular franchise is the responsibility of the lender, not SBA, and is entirely voluntary.
Click on the column heading to sort from high to low or low to high. Clicking on the header also allows the column to filter values. For example, disbursements of loans below 50 can be filtered out, leaving only those brands with 50 or more visible.
Dollar amounts for disbursements are in thousands (x $1000). These amounts reflect combined SBA 7(a) & 504 Loan performance by franchise brand. Data based on loans approved from 10/01/01 to 09/30/10, which were assigned to a franchise brand and subsequently disbursed, are limited to 10 or more disbursed loans for that nine-year period.