When evaluating a prospective investment and purchase of a franchise one of the many due diligence factors that should be evaluated includes SBA loan default rates. A high SBA loan default rate should be viewed as a serious warning sign.
Below is a list of the best and worst fitness franchises “based upon” the 2011 SBA loan default rates. Franchises are listed from highest to lowest failure percentages (please keep in mind not all fitness franchisees are listed).
|Franchise Brand||Failure %|
|Velocity Sports Performance||57.89%|
|World Gym & Fitness Center||28.57%|
|Curves for Women||22.00%|
|Fitness for Life Franchise Corp||21.05%|
While a high default rate is a definite warning sign keep in mind that a low default rate (by itself) should not be relied upon as a basis for your franchise investment. Consider that a low rate may be attributed to the fact that the franchise is new or that the franchisees do not utilize or qualify for SBA loans.
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