August 15, 2012
A&W Restaurants CEO Kevin Bazner responds to UnhappyFranchisee.com, explains the reason for A&W Restaurants 22% SBA franchise loan default rate, and provides an update of the newly acquired franchise company.
Are you familiar with the A&W Restaurants franchise opportunity? Please share a comment below.
In our post A&W Restaurants Franchise Complaints, we reported that the Small Business Administration listed the default rate of A&W Restaurant franchisees for SBA-guaranteed loans was 22%.
We also reported that 167 A&W franchises (18%) had ceased operation or been terminated between 2008 and 2011, according to A&W’s 2012 franchise disclosure document (FDD).
UnhappyFranchisee.com invites franchisors and individuals to participate in out discussions, and to feel free to rebut, clarify or disprove statements made by us or our commenters.
A&W Restaurants President & CEO Kevin Bazner provided the following statement in response to our post:
As President and CEO of A&W Restaurants, I feel the need to respond to the recent article published on this site.
While SBA did cite data gathered by the Coleman Report, several key points were left out, which made it seem like the A&W Restaurants franchise as a whole has a high loan failure rate. That is simply not true.
The end of the article mentions that A&W Restaurants was purchased by a partnership of franchisees in 2011. It fails to note that the sale was not finalized until December 19th- quite literally the end of 2011. For the majority of the year, A&W was owned by YUM! Brands, who had purchased the company in 2002.
It is also not mentioned that the A&W system as a whole operates in several different arenas: as a base brand, and also co-branded, largely with KFC and Long John Silver’s. Once YUM! announced the plans to sell A&W, a portion of the co-branded restaurants dissolved, choosing to operate without the A&W component. Many of these restaurants had qualified for SBA- backed franchise loans, and are no longer a part of the A&W system, but were included in the data that indicated a 22% loan default rate.
Overall, the A&W Restaurant family is stronger than ever. We have successfully transitioned from YUM! ownership, and have enjoyed seeing positive sales results from our operators.
Our focus for 2012 is simple: to build profitable sales. We are not actively pushing to open more units without thoroughly researching the needs of the market beforehand.
We have an open dialogue with our operators, and have pledged to maintain complete transparency with our franchise partners. As a company, we are committed to providing our operators with all of the tools necessary to make their business profitable, including ongoing training, and marketing and operational support.
We are incredibly proud to be a part of this company, and look forward to growing this brand and increasing the profits of our franchise partners.
President & CEO
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Tags: A&W Restaurants,A&W Restaurants franchise, A&W franchise, restaurant franchise, A&W franchise failures, A&W franchise complaints, A&W franchise problems, YUM Brands, Kevin Bazner, SBA loans, SBA loan failure rates
August 2, 2012
A&W Restaurants franchise opportunity: Are you considering it?
You should be aware that data released by the Small Business Administration (SBA) indicates that A&W Restaurants franchise owners who qualified for SBA-backed franchise loans have a loan failure rate of 22%.
That qualifies A&W Restaurants for inclusion in UnhappyFranchisee.com’s list of WORST FRANCHISES IN AMERICA (by SBA loan defaults)
Are you familiar with the A&W Restaurants franchise opportunity? If so, please share your experience, opinions or insights with a comment below.
If you are a A&W Restaurants franchise representative or employee, please leave a comment or email us at UnhappyFranchisee[at]gmail.com.
A&W Restaurants franchise owners have a 22% SBA loan default rate.
The inability to repay an SBA-backed loan (or any franchise loan, for that matter) indicates a serious situation for the franchisee.
It’s likely that A&W Restaurants franchise owners who received SBA loans may have collateralized their franchise loan with their homes or other personal assets, and many were unable to repay those franchise loans… despite the serious incentive to do so.
|SBA loans granted since 2001:||43|
|SBA loan failure rate:||22%|
|Sources: Coleman report (SBA)|
According to A&W Restaurants’ Franchise Disclosure Document 2012, 167 A&W franchises (18% of the total franchises opened) were either terminated or ceased operation between 2009-2011.
A&W Restaurants terminated/closed 167 franchises (18%) between 2009-2011
The relatively high franchise termination rate of A&W Restaurants seems to be a franchise red flag.
|A&W Restaurants Franchises 2008-2011|
|Franchises open January 2009:||910|
|Franchises added 2009-2011:||31|
|Franchises terminated/closed 2009-2011||167|
|Franchises terminated/closed (%)||18%|
|Sources: A&W Franchise Disclosure Documents (FDDs)|
According to the 2012 FDD, A&W Restaurants would appear to have a termination/closure percentage of 18%, which (we believe) could reasonably be called a failure rate. (The 22% figure is a default on SBA loans since 2001, seems to reinforce that approximate failure rate.
What do you think of the A&W Restaurants franchise?
In 2011, A&W® was purchased by a partnership of domestic and international franchisees.
A&W® had previously been owned by YUM® Brands.
Are you familiar with the A&W Restaurants franchise opportunity?
What do you think accounts for the high SBA loan failure rate of A&W Restaurants franchise owners?
What steps should A&W Restaurants be taking to stop further franchise failures?
Has A&W Restaurants taken serious action to address the problems that led to these loan failures?
Please share a comment (anonymous is fine) or Contact UnhappyFranchisee.com.
ARE YOU FAMILIAR WITH THE A&W RESTAURANTS FRANCHISE OPPORTUNITY? ARE YOU A CURRENT OR FORMER A&W RESTAURANTS FRANCHISE OWNER? PLEASE SHARE A COMMENT BELOW.
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