The Rita’s Italian Ice franchise has a relatively high SBA loan default rate of 23%.
The Rita’s Italian Ice franchise system was sold to private equity group McKnight Capital Partners in 2005. Then in late 2011, investment firm Falconhead Capital bought a controlling interest.
Nearly a quarter of the Rita’s Italian Ice franchise owners who received SBA loans, some of whom may have collateralized their franchise loan with their house or other personal assets, were unable to repay those franchise loans… despite serious incentive to do so.
The Rita’s Italian Ice Franchise has a failure rate of 23% for SBA-backed franchise loans
According to Entrepreneur magazine, the Rita’s Italian Ice franchise system has maintained its size, with 540 U.S. franchises in 2008 and 544 in 2011. However, that doesn’t mean that franchises didn’t fail during that period (and were replaced by new franchisees) or that Rita’s franchises weren’t resold at a loss to new owners.
Are you familiar with the Rita’s Italian Ice franchise opportunity?
What do you think accounts for the SBA loan failure rate of Rita’s Italian Ice franchise owners?
What steps should Rita’s Italian Ice and Falconhead Capital be taking to stop further franchise failures?
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