skip to content

Best and Worst Franchise Default Rates: Popular Franchises and How They Measure Up with Failure and Success Rates

blog home Buy a Franchise 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.

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

Learn More and Increase Your Chances of Franchise Success

To learn more about franchising‚ what it means to become a franchisee‚ how to negotiate your franchise agreement and critical mistakes that you must avoid:

  1. Order a complementary copy of Charles N. Internicola‚ Esq.'s book "An Entrepreneurs Guide to Buying a Franchise"; and 
  2. Visit Franchisee University and watch our complimentary videos about buying a franchise.

Related Articles:

By Charles Internicola April 23, 2010

Franchise Channel

What Our Clients Say About The Internicola Law Firm

Categories

Recent Posts

Franchising Guides

The Ultimate Guide to Franchising Your Business

New to franchising? Do you want to learn more about franchising your business, where to start, the steps, and how to know if you are doing it right?

Learn More

Is Your Business Franchisable and Should You Franchise?

Franchising may be the next big step for your business and represents an opportunity to grow your brand. So, how do you know if franchising is right for you? How do you know if your business is franchisable and, if it is, whether or not you should franchise your business? To answer these questions you must evaluate whether or not your business is franchisable and, if it is, whether or not your individual goals and your business goals align with franchising and establishing a franchise organization responsible for on-boarding, training, and supporting franchisees.

Learn More

Licensing Vs. Franchising

When considering expanding a business both franchising and licensing are possible options. Each option however comes with different rules and regulations. Prior to moving forward with franchising a business or licensing a business it is important to understand the differences and how each may have an affect on you.

Franchise Lawyer Charles N. Internicola wrote “Licensing versus Franchising” for the very purpose of allowing successful business owners to understand the difference between licensing a business and franchising a business.

Learn More

Guide to Selecting a Franchise Lawyer

If you have questions about franchise lawyers, what they do, how they can help, the cost, and how to select the right franchise lawyer for you, then this guide will help.

Franchise lawyers advise and represent individuals and businesses on legal issues that involve franchising a business, preparing an FDD, filing and renewing FDD registrations, buying a franchise, and litigation involving the franchisor and franchisee relationship. The role of a franchise lawyer varies depending on whether he or she represents the franchisor or the franchisee.

Learn More

Item 19 Financial Performance Representations

Check out our guide where we discuss how to plan and properly disclose Financial Performance Representations in your FDD.

Learn More

Franchise Sales Compliance Guide

Are you a franchisor or a part of a franchise sales team? Do you want to learn more about franchise sale compliance and ensure that your sales practices comply with franchise laws and are consistent with best practices? Then this guide is for you.

In this guide you’ll learn the fundamentals of franchise sales compliance including the franchise laws, regulations, and best practices that your team should have in place for every franchise sale.

Learn More
1/6
Close Overlay

Let’s Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.

Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.