Worst Franchises by SBA Loan Defaults


According to a review of SBA data by Investopedia, the recession has hit franchising hard.  After reviewing the  SBA report, Investopedia listed their 15 worst franchises list in terms of SBA loan defaults.  According to a post by Katie Adams of Investopedia:

The recession has hit franchise owners particularly hard, with the Small Business Administration (SBA) reporting record loan default rates for 2008-2009. According to the SBA, individuals who took on SBA loans to finance a franchise had a 43% higher failure rate than in 2007. In total, those franchise losses cost the SBA $93.3 million last year – nearly 170% higher than the year before. Since 2004, franchise loan defaults have increased by nearly 10% (from 3.1% to 13.4%), highlighting that franchise owners have had an increasingly difficult time making a successful go of their new ventures. Sorting through the 2009 Franchise Coleman Report we were able to determine the franchises that had the highest SBA loan failure rates in 2008.

According to Investopedia, the 15 franchises with the highest SBA loan failure rates in 2008 were:

1. Noble Roman’s Pizza
2. PJ’s Coffee and Tea Café
3. Super Suppers
4. Figaro’s Italian Pizza
5. New York NY Fresh Deli
6. Amazon Café
7. Simple Simon’s Pizza
8. Snip-Its
9. U Build It
10. Bellacino’s Pizza
11. Blockbuster Video
12. Pizza Factory
13. Pro Golf
14. Conoco Service Station
15. Keva Juice

However, the Infopedia listing has been challenged.  After reading the original report, here is our listing of the Worst 15 Franchises in terms of SBA loan defaults (2008):

1. TILDEN FOR BRAKES CAR CARE CENTER
2. EXECUTIVE TANS
3. PRO GOLF
4. LA PALETERA
5. BEAR ROCK CAFE
6. OBEE’S SOUP SALAD SUBS
7. SHAPEXPRESS
8. FRULLATI CAFE
9. MR. GOODCENTS SUB’ AND PASTA
10. WICKS ‘N’ STICKS
11. HAIR COLOR EXPRESS
12. WINGS-N-THINGS
13. NOBLE ROMAN PIZZA
14. SUPER SUPPERS
15. AMAZON CAFE

WHAT DO YOU THINK?  ARE YOU FAMILIAR WITH ANY OF THESE FRANCHISE OPPORTUNITIES?  SHARE YOUR THOUGHTS BELOW.

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