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Best and Worst Franchise Default Rates: Popular Franchises and How They Measure Up with Failure and Success Rates
In a recent article by Catherine Clifford at CNN Money, Ms. Clifford reports the most popular franchise brands over the past decade and the rate by which their franchisees repaid their Small Business Administration loan obligations. Significantly, prospective franchisees should evaluate this list and give consideration to the “default rate” by which each brands failed to repay their SBA loan obligations. Failed SBA loan repayment equals a failed business and some franchisee hardship.Need information on buying a franchise? We recommend reading
"An Entrepreneurs Guide to Purchasing a Business or Franchise"
"An Entrepreneurs Guide to Purchasing a Business or Franchise"
Some of these default rates should be raising a red flag – the list follows:
- Subway Reported SBA Default Rate: 7%
Reported Number of SBA Loans: 2,292
Reported Total Amount Dispersed: $391.8 million
Reported Average Loan Size: $170,928 - Quiznos Reported SBA Default Rate: 25%
Reported Number of SBA Loans: 2,019
Reported Total Amount Dispersed: $291.7 million
Reported Average Loan Size: $144,458 - The UPS Store Reported SBA Default Rate: 12%
Reported Number of SBA Loans: 1,085
Reported Total Amount Dispersed: $159.4 million
Reported Average Loan Size: $146,943 - Cold Stone Creamery Reported SBA Default Rate: 31%
Reported Number of SBA Loans: 774
Reported Total Amount Dispersed: $180.9 million
Reported Average Loan Size: $233,687 - Dairy Queen Reported SBA Default Rate: 8%
Reported Number of SBA Loans: 478
Reported Total Amount Dispersed: $157 million
Reported Average Loan Size: $328,383 - Dunkin' Donuts Reported SBA Default Rate: 8%
Reported Number of SBA Loans: 464
Reported Total Amount Dispersed: $270.4 million
Reported Average Loan Size: $582,726 - Super 8 Motel Reported SBA Default Rate: 4%
Reported Number of SBA Loans: 456
Reported Total Amount Dispersed: $415.2
Reported Average Loan Size: $910,476 - Days Inn Reported SBA Default Rate: 6%
Reported Number of SBA Loans: 390
Reported Total Amount Dispersed: $399.2
Reported Average Loan Size: $1,023,690 - Curves For Women Reported SBA Default Rate: 16%
Reported Number of SBA Loans: 371
Reported Total Amount Dispersed: $36.4
Reported Average Loan Size: $98,094 - Matco Tools Reported SBA Default Rate: 36%
Reported Number of SBA Loans: 321
Reported Total Amount Dispersed: $28.9
Reported Average Loan Size: $90,131
When considering the purchase of a franchise give some consideration to franchise failure and why some who precede you may have not succeeded.
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1 Comments to "Best and Worst Franchise Default Rates: Popular Franchises and How They Measure Up with Failure and Success Rates"
It's interesting to see the default rates for a lot of major franchises in one place, as well as a reminder that even major franchises can fail. Always do your research long before you decide to become a franchisee. I would recommend sites like http://www.franchiseexpo.com/ to browse through franchise opportunities.
Posted by Rick Cruz
on October 5, 2010 at 11:19 AM
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