August 15, 2012
UnhappyFranchisee.com’s list of the WORST FRANCHISES IN AMERICA (by SBA loan defaults) includes two franchise concepts that are part of United Franchise Group (UFG): EmbroidMe and SIGNARAMA.
In our post EMBROIDME Franchise Complaints, we reported that data released by the Small Business Administration (SBA) indicates that EmbroidMe franchise owners who qualified for SBA-backed franchise loans have an outrageously high loan default rate of 40%.
Additionally, we pointed out that the number of EmbroidMe franchise units declined by 125, or 33%, between 2008 – 2012.
In our post SIGNARAMA Franchise Complaints, we reported that the Small Business Administration (SBA) indicates that SIGNARAMA franchise owners who qualified for SBA-backed franchise loans have an disturbingly high loan failure rate of 26%.
The number of SIGNARAMA franchise units declined by 112, or 19%, between 2008 – 2011.
Message from Erin Crawford, Director of Franchise Development, United Franchise Group
Of all the referenced definitions listed below, including one defined by the Franchise Tax Board of California, for the phrases ‘ceased operations,’ ‘closed store,’ ‘out of business,’ and/or ‘terminations’ I have yet to find a one that includes the word ‘failure.’
I could keep going, but I think my point is clear. The fact that a business is no longer operating by no means does not mean it has failed.
In many instances a small business owner may decide to cease operations because he is retiring, moving, or not wanting to sell his business for other various personal reasons.
An article published by CNN Money in 2011 reported increases in small business failure rates by state listing the following top rates:
- California 69%
- Nevada 65%
- New Hampshire 38%
- Tennessee 36%
- Colorado 33%
The article also sites [sic] reasons for these failure rates because of real estate markets, tourism business, and manufacturing industries all hit by the recession. I couldn’t find one reason attributed to a franchisor.
Further, your interpretation of a failure rate for both EmbroidMe and SIGNARAMA actually make franchising look like a better option in comparison to the national failure rates of small business quoted by the article, “Across the United States, small business failure rates rose by 40% between 2007 and 2010.”
United Franchise Group and our family of brands took a proactive approach when signals for economic declines appeared in 2007. We shifted our focus and resources to help our existing stores with sustainability and scaled back on the sales of new stores. We invested our resources into top-notch marketing and training programs unparalleled in the industries we represent.
Thus in response to your questions:
[Question #1: Does UFG acknowledge 36%-37% as the EmbroidMe failure rate?]
#1- Absolutely not
[Question #2: Has UFG initiated a plan or coordinated effort specifically designed to stem these franchise failures?]
#2- See the answer to question 1.
Erin Crawford, MBA
Director of Franchise Development
United Franchise Group
ARE YOU A UNITED FRANCHISE GROUP FRANCHISE OWNER OR FORMER FRANCHISEE?
ARE YOU FAMILIAR WITH THE EMBROIDME FRANCHISE OPPORTUNITY OR THE SIGNARAMA FRANCHISE OPPORTUNITY?
PLEASE SHARE A COMMENT BELOW.
July 25, 2012
SIGNARAMA franchise opportunity: Are you familiar with it?
If so, please share your experience, opinions or insights with a comment below.
The SIGNARAMA franchise brand is part of the United Franchise Group (UFG).
According to the United Franchise Group website: “The experts at UFG have used their over 25 years of franchising experience to grow the franchising giant into a $500 million dollar success story with approx. 1400 franchise locations in 50 countries.
“The company includes franchise industry giants SIGNARAMA, the world’s largest sign franchise; EmbroidMe, the world’s largest embroidery franchise; Billboard Connection, an incredibly successful out-of-home advertising franchise; Transworld Business Advisors, for people to research business opportunities before investing and Plan Ahead Events, a home-based corporate event planning franchise.”
According to the SIGNARAMA website: “Your Success is Our Business – When you invest in SIGNARAMA, you gain access to one of the largest support staff in franchising, in addition to our resources and knowledge base… With nearly 1,000 stores in more than 50 countries, you can become part of an international brand that puts you ahead of the competition.”
However, data released by the Small Business Administration (SBA) indicates that SIGNARAMA franchise owners who qualified for SBA-backed franchise loans have an disturbingly high loan failure rate of 26%.
That qualifies SIGNARAMA for inclusion in UnhappyFranchisee.com’s list of WORST FRANCHISES IN AMERICA (by SBA loan defaults)
SIGNARAMA franchise owners have an alarming 26% SBA default rate.
The apparent drop in SIGNARAMA franchises in recent years is also a franchise red flag.
|SIGNARAMA U.S. franchises in 2008:||597|
|SIGNARAMA U.S. franchises in 2011:||485|
|Growth in franchise units 2008 – 2011 (#)||-112|
|Growth in franchise units 2008 – 2011 (%):||-19%|
|SBA loans granted since 2001:||107|
|SBA loan failure rate:||26%|
|Sources: Entrepreneur (growth), Coleman report (SBA)|
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 SIGNARAMA 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.
Are you familiar with the SIGNARAMA franchise opportunity?
What do you think accounts for the SBA loan failure rate of SIGNARAMA franchise owners?
What steps should SIGNARAMA be taking to stop further franchise failures?
Has SIGNARAMA taken serious action to address the problems that led to these loan failures?
Please share a comment (anonymous is fine) or Contact UnhappyFranchisee.com.
If you are a SIGNARAMA franchise representative or employee, please feel free to leave a comment or email us at UnhappyFranchisee[at]gmail.com.
ARE YOU FAMILIAR WITH THE SIGNARAMA FRANCHISE OPPORTUNITY? ARE YOU A CURRENT OR FORMER SIGNARAMA FRANCHISE OWNER? PLEASE SHARE A COMMENT BELOW.
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