WSJ's Worst and Best Franchise Brands by SBA Loan Performance

The Wall Street Journal published a ranking of the worst franchisors and best by listing the failure rates of their franchise owners in paying back SBA-backed loans from October 1, 2000 to September 30, 2007. The journal says the ranking is an indicator of the relative health of 500 franchisees.

Thomas W. Burke, senior vice president of Wells Fargo Bank, adds "high delinquencies [in the list] will cause us to avoid a particular franchiser."

The list below is derived from the same SBA list that Blue MauMau published, except that the Wall Street Journal (pdf, 2 pgs) obtained its list from Coleman Publishing. Blue MauMau obtained the list from within the SBA. The two lists of leaders and trailers are remarkably similar wtih two important differences. The Blue MauMau list used 50 loan disbursements as the cut off in order to list a franchise brand. The WSJ uses 60. Finally, the Journal selected a diversity of sectors while we just listed purely the top fourteen (those only had a 0 & 1% failure rate) and 25 bottom performers.

The list isn't perfect.

Bankers may not always list franchise loans because they aren't required to. There are also only some 500 franchise brands listed that have enough disbursements or data out of an estimated three to four thousand that exist.

Still, bankers use the list. And it is a rare view that measures solely franchise level financial viability rather than a franchisor perspective that is typical of best-buy lists. These list franchisor wealth building activities as a reason to buy a franchise unit such as system-wide sales or fastest franchise unit growth.

Both lists show sub shops and car service franchises as worst performers. However, the quick printers, such as Alphagraphics, Minuteman Press and Sir Speedy, are just under the nine brand cut-off for the WSJ report card. But these are shown on Blue MauMau's list of 25 worst trailing brands. Blue MauMau was the first to track down the SBA list, publishing it in early 2006. The WSJ published this current 2007 list back in July of 2008, before we issued our 2007 SBA listing but after we published the 2005 listing.

Here's Blue MauMau best and worst list, 2007

Reviews by Blue MauMau of Best-Franchise-to-Buy Lists

• SBA's List of Franchise Loan Performance, a Tip Sheet at the Races
• Bank Rankings of Franchises Not for Buyers
• Blue MauMau's Listing of Franchise Brands by Franchisee Failure to Pay Back SBA Loans, 2000 - 2007
• Blue MauMau's Franchise Brands by Franchisee Failure to Pay Back SBA Loans, 2000 - 2005 (Sortable)
• 15 Worst Franchises, 2005
• SBA Loans Sink