Top

WORST FRANCHISES IN AMERICA by SBA Loan Defaults

July 14, 2012

Worst Franchises in America

WORST FRANCHISES IN AMERICA (by SBA loan defaults)

The chart below lists the franchise brands with the rates of loan defaults for SBA-backed loans made since 2001.

The full data is from the Small Business Administration (SBA), and is available in the Coleman Report, and as a searchable chart at BlueMauMau.

DEFAULT RATE:  SBA defines its failure percentage as the number of loans in liquidation plus charged-off loans, divided by the total number of loans disbursed.  Note that only franchises with 25 or more SBA loan disbursements are included here.  Some franchises that are not eligible for or receive SBA loans (such as Janitorial/Commercial cleaning franchises, vending opportunities, master franchises) would certainly rank among the failures if they received SBA loans.

DISCUSSION:  Franchisors, franchisees and informed readers are invited to share their insights and opinions below or at the “Discussion” links.  We’d like to know:  Is the SBA data accurate?  Are actual failure rates (including franchisees not receiving SBA funding) higher than the SBA default rates for specific franchises?  What accounts for these franchises’ high default rates?  What action has your franchise company implemented to combat these high failure rates?

Please share a comment below or at the franchise-specific discussion link.

FRANCHISORS:  To provide corrections, clarifications, rebuttals or to explain system improvements, please

contact UnhappyFranchisee.com

SBA’S WORST FRANCHISES BY LOAN FAILURE RATE (2001 – 2011)

RANK FRANCHISE DEFAULTRATE DISCUSSION
1. Executive Tans 81% EXECUTIVE TANS Franchise Complaints
2. Pro Golf 76% PRO GOLF Franchise Complaints
3. Golf ETC. 71% GOLF ETC. Franchise Complaints
4. Image Sun 70% IMAGE SUN Franchise Complaints
5. Mr. Goodcents 65% MR. GOODCENTS Franchise Complaints
WingZone 65% WING ZONE Franchise Complaints
Mr. Transmission 65% MR. TRANSMISSION Franchise Complaints
6. OBEE’S Soup 64% OBEE’S Franchise Complaints
7. Wireless Toyz 63% WIRELESS TOYZ Franchise Complaints
8. Nick & Willy’s 62% NICK-N-WILLY’S PIZZA Franchise Complaints
9. Smoothie Factory 60% SMOOTHIE FACTORY Franchise Complaints
Dream Dinners 60% Comment below
10. Camille’s Sidewalk Café 58% CAMILLE’S SIDEWALK CAFE Franchise Complaints
11. Planet Beach 57% PLANET BEACH Franchise Complaints> Franchisor Response
Wings to Go 57% WINGS TO GO Franchise Complaints
12. Petland 56% Petland Chain Sued by Unhappy Franchisees
Philly Connection 56% PHILLY CONNECTION Franchise Complaints
Carvel 56% CARVEL Franchise Complaints
Dollar Discount 56% DOLLAR DISCOUNT Franchise Complaints
Johnny Rockets 56% JOHNNY ROCKETS Franchise Complaints
13. Submarina 54% SUBMARINA Franchise Complaints
14. RedBrick Pizza 53% REDBRICK PIZZA Franchise Complaints
15. Beef O’Brady’s 52% BEEF O’BRADY’S Franchise Complaints
Cottman Transmission 52% COTTMAN Franchise Complaints
Pita Pit 52% PITA PIT Franchise Complaints
Winestyles 52% WINESTYLES Franchise Complaints
WOW Café & Wingery 52% WOW CAFÉ & WINGERY Franchise Complaints
16. My Gym 51% MY GYM Franchise Complaints
Juice It Up 51% JUICE IT UP Franchise Complaints
Taco del Mar 51% Comment below
17. Golf USA 50% GOLF USA Franchise Complaints
Double Dave’s Pizzaworks 50% DOUBLEDAVE’S PIZZAWORKS Franchise Complaints
Jerry’s Subs 50% JERRY’S SUBS Franchise Complaints
East of Chicago Pizza 50% EAST OF CHICAGO PIZZA Franchise Complaints
18. Huntington Learning Centers 49% HUNTINGTON LEARNING CENTERS Franchise Complaints
Atlanta Bread 49% ATLANTA BREAD Franchise Complaints
Instant Imprints 49% INSTANT IMPRINTS Franchise Complaints
Maui Wowi 49% MAUI WOWI Franchise Complaints
19. Max Muscle 48% MAX MUSCLE Franchise Complaints
Candy Bouquet 48% Comment below
Coffee Beanery 48% COFFEE BEANERY Franchise Complaints
Computer Renaissance 48% COMPUTER RENAISSANCE (FRIENDLY COMPUTERS) Franchise Complaints
20. Figaro’s 47% FIGARO’S PIZZA Franchise Complaints
21. Blimpie 46% BLIMPIE Franchise Complaints
All Tune & Lube 46% ATL ALL TUNE & LUBE Franchise Complaints
Planet Smoothie 46% PLANET SMOOTHIE Franchise Complaints
22. Fast Frame 45% FASTFRAME Franchise Complaints
23. Marble Slab Creamery 44% MARBLE SLAB CREAMERY Franchise
Kabloom 44% Comment below
AIM Mail Centers 44% AIM MAIL CENTERS Franchise Complaints
24. Back Yard Burgers 43% BACK YARD BURGERS Franchise Complaints
25. Cold Stone Creamery 42% COLD STONE CREAMERY Franchise Complaints
Roly Poly 42% ROLY POLY Franchise Complaints
26. Flowerama 41% Comment below
Chem Dry 41% CHEM-DRY Franchise Complaints
Fox’s Pizza 41% FOX’S PIZZA DEN Franchise Complaints
27. AAMCO 40% AAMCO TRANSMISSION Franchise Complaints
Maggie Moos 40% MAGGIE MOO’S Franchise Complaints
EmbroidMe 40% EMBROIDME Franchise Complaints
Keva Juice 40% KEVA JUICE Franchise Complaints
28. Quiznos 39% QUIZNOS OVERVIEW & DISCUSSION
Cornwell Tools 39% CORNWELL TOOLS Franchise Scam or No Scam?
Ritter’s Frozen Custard 39% RITTER’S FROZEN CUSTARD Franchise Complaints
Charley’s Grilled Subs 39% Comment below
29. Big Apple Bagels 39% Comment below
30. Hollywood Tans 37% HOLLYWOOD TANS Franchise Complaints
Budget Blinds 37% BUDGET BLINDS Franchise Complaints
Saladworks 37% Comment below
31. Foot Solutions 36% FOOT SOLUTIONS Franchise Complaints
Dickeys BBQ 36% DICKEY’S BARBECUE PIT Franchise Complaints
It’s a Grind 36% IT’S A GRIND COFFEE Franchise Complaints
Fitness Together 36% FITNESS TOGETHER Franchise Complaints
Pizza Inn 36% PIZZA INN Franchise Complaints
Bellacino’s Pizza 36% BELLACINO’S PIZZA Franchise Complaints
32. Matco Tools 35% MATCO TOOLS Franchise Complaints
Postal Connections 35% POSTAL CONNECTIONS Franchise Complaints
33. Murphy’s Deli 34% MURPHY’S DELI Franchise Complaints
34. CiCi’s Pizza 32% CICI’S PIZZA Franchise Complaints
Robeks Smoothies 32% Comment below
Buffalo Wings & Rings 32% BUFFALO WINGS & RINGS Franchise Complaints
Taco Maker 32% Comment below
35. Meineke 31% MEINEKE Franchise Complaints
Gymboree 31% GYMBOREE Franchise Complaints
Precision Tune 31% MEINEKE Franchise Complaints
Aussie Pet Mobile 31% Comment below
Maid Brigade 31% Comment below
36. PostNet 30% POSTNET Franchise Complaints
The Great Frame Up 30% THE GREAT FRAME UP Franchise Complaints
PostalAnnex+ 30% POSTALANNEX+ Franchise Complaints
37. Maaco 29% MAACO Franchise Complaints
TCBY 29% TCBY Franchise Complaints
Great Steak & Potato 29% GREAT STEAK & POTATO Franchise Complaints
38. Minuteman Press 28% MINUTEMAN PRESS Franchise Complaints
Smoothie King 28% SMOOTHIE KING Franchise Complaints
Rocky Mountain Chocolate 28% Comment below
Pak Mail 28% PAK MAIL Franchise Complaints
Bounce U 28% Comment below
Cookies By Design 28% Comment below
39. Play It Again Sports 27% PLAY IT AGAIN SPORTS Franchise Complaints
Godfather’s Pizza 27% GODFATHER’S PIZZA Franchise Complaints
40. Wetzel’s Pretzels 26% Comment below
Cartridge World 26% CARTRIDGE WORLD Franchise Complaints
Sign-A-Rama 26% SIGNARAMA Franchise Complaints
Melting Pot 26% Comment below
41. Curves 25% CURVES: Robert Lay’s Story
Sylvan Learning Centers 25% SYLVAN LEARNING CENTERS Franchise Complaints
Allegra Print 25% ALLEGRA PRINT Franchise Complaints
42. Baskin Robbins 24% BASKIN-ROBBINS Franchise Complaints
Tropical Smoothie Café 24%* TROPICAL SMOOTHIE CAFÉ Franchise Loan Defaults Overstated, Says Report;

TROPICAL SMOOTHIE CAFE Franchise Complaints

Merle Norman 24% MERLE NORMAN Franchise Complaints
TOGO’s Eatery 24% TOGO’S Franchise Complaints
Mr. Handyman 24% Comment below
43. Rita’s Italian Ice 23% RITA’S ITALIAN ICE Franchise Complaints
Big O Tires 23% BIG O TIRES Franchise Complaints
Papa John’s Pizza 23% PAPA JOHN’S PIZZA Franchise Complaints
GNC General Nutrition 23% GNC Franchise Complaints
Molly Maids 23% Comment below
Grease Monkey 23% GREASE MONKEY Franchise Complaints
1-800-Radiator 23% 1-800-RADIATOR Franchise Complaints
Wienerschnitzel 23% WIENERSCHNITZEL Franchise Complaints
44. Dunn Bros. Coffee 23% DUNN BROS COFFEE Franchise Complaints
Hungry Howie’s Pizza 23% HUNGRY HOWIE’S PIZZA Franchise Complaints
Pirtek USA 23% Comment below
45. Domino’s Pizza 22% DOMINO’S PIZZA Franchise Complaints
Premiere Rental 22% Comment below
A&W Restaurants 22% A&W RESTAURANTS Franchise ComplaintsFranchisor Response
Lawn Doctor 22% Comment below
46. Del Taco 21% DEL TACO Franchise Complaints
Best Value Inn 21% Comment below
Long John Silvers 21% Comment below
47. Moe’s 20% Comment below
Line X 20% LINE-X Franchise Complaints
True Value 20% TRUE VALUE Franchise Complaints
Gold’s Gym 20% GOLD’S GYM Franchise Complaints
Radio Shack 20% RADIOSHACK Franchise Complaints
Honey Dew Donuts 20% HONEY DEW DONUTS Franchise Complaints
Checkers Drive In 20% Comment below

* The SBA failure rate is disputed by the company.  Read: TROPICAL SMOOTHIE CAFÉ Franchise Loan Defaults Overstated, Says Report

WHAT IS THE WORST FRANCHISE IN AMERICA?
WHICH OF THESE FRANCHISE OPPORTUNITIES ARE BETTER THAN THEIR SBA RECORDS SUGGEST?
PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

 

Tags:  Franchise failure rates, SBA franchise loans, SBA franchise loan default rate, worst franchises, worst franchises in America, highest risk franchises, franchise opportunities, franchise failures, worst franchise opportunities, bad franchises, bad franchise opportunities, riskiest franchises, franchises to avoid, franchise opportunities, how to start a franchise, unhappy franchisee

Comments

20 Responses to “WORST FRANCHISES IN AMERICA by SBA Loan Defaults”

  1. […] a disturbingly high SBA loan default rate of 50%.  Golf USA is listed by the SBA as one of the worst franchises by SBA loan default, along with other golf store franchises Pro Golf (76%) and Golf ETC. […]

  2. Anonymous says:

    I have owned a Hunrtington Learning Center franchise for the past 2.5 yrs. I started from zero and expect to have a net profit after taxes and interest over $100K this calendar year.
    I have operated two non frachise businesses over the past 25 yrs and therefore came to the Huntington system with signigicant business experience.
    A Huntington franchise does present a few challenges that other businesses do not. Four challenges stick out in particular:
    1. The business revenue is highly season. Virtually all of the annual income is arned in the first and second quarters.
    2. A majority of the tuition revenue is prepaid at the start of the program and so it is easy to confuse earned and unearned revenue. The fact that the costs associated with the prepaid tuition will incurred over the following 3 to 5 months makes it difficult to predict future monthly cash flow and more importantly can result in negative cash flows in low revenue months that can exceed fixed costs.
    3. Selection of Center Management staff is more difficult as the ideal center director must possess skills in education and in sales, an uncommon skill set. The ideal director has an degree in education and an extraverted personality with the ability to close a sale that typically is in the $6,000 to $8,000 range.
    4. This is not a business for parents of young children. The hours of operation when the owner needs to be at the center are from 11AM to 7:30 or 8:30PM. This is not a business that can be run as an absentee owner, at least not for the first 3 or 4 years.

    These issues can be overcome and centers that do overcome these issues are quite profitable with net operating incomes over $200,000 per year.

    The educational product that Huntington offers is outstanding. In the short time period that I have been a franchisee, I have had several parents come back to visit the center following the conclusion of their child’s program, to say that it was “the best money they ever spent” and that their child has become very successful in school.

    The exam prep program also has outstanding results and our center averages a 270 point increase in SAT scores which is phenomenal. Parents and students are thrilled with the results.

    I hope this comment may be useful for individuals considering a Huntington franchise. It has it’s challenges but when done properly with good business sense, it is an enjoyable and rewarding business to own and operate.

  3. Todd says:

    A question for anonymous. So, if Huntington is such a great opportunity why does the SBA loan administration have to hand out government backed tax payer loans to put their franchisees in business? Why don’t they take the profit from the franchises that are giving them profits and reinvest it back into their business opportunity? I’ll answer that one for you! Because when you can get free money for blue sky and profit from it and you have an organization like the International Franchise Association and its created organizations to back and perpetuate the fleecing of American taxpayers why use your money which might be lost to the fraudulent opportunity you offer?

  4. Childcare says:

    Some rogue franchise operations do not use the franchise business name in the SBA loan process. They use some other business identities and SBA cannot trace the failures back to these franchises. Note that SBA does not monitor success but failures only.
    For example, Discovery Point Franchising uses Discovery Development as the business entity in SBA loans. Similarly Legacy Academy Franchising uses Commercial Contractors Enterprises in the SBA loan documents. However, during the loan courtship, the franchise name gets used as proven business model for the SBA loan evaluation.
    Since the final documents are not linked to SBA data, the failures do not get recorded against the franchises. Franchise registry or other databases monitors failures, and these franchises get a favorable treatment because statistically these franchises have no failure records.
    These childcare franchises provide the business for free when the franchisee purchases $2.5M+ building from the franchise owners. FDD and SBA registry are shown as clean and both franchise officials and SBA loan officers claim that the business model is excellent because there had been no failures in the past.
    ————-
    Comment by Anonymous on Huntington is based on imagination because so many Huntington franchisees have gone bankrupt. HLC has a proven path towards bankruptcy for franchisees. Hopefully new franchisees will not fall for those misleading information.

  5. Huntington by anonymous says:

    The high failure rate franchises are still in the SBA favor list called SBA registry. HLC has nearly 50% failure rate and SBA is still encouraging that franchise by allowing loans and advertising them in SBA registry. Does not make sense.

  6. Conspiracy Theory says:

    Surely there has to be a reason why our government officials are allowing tax payers to fund these franchisor opportunities instead of the franchisors themselves. If the franchisors have such a great opportunity then why do they need tax payers to fund start-up costs? You would think that these successful franchisors with a proven system would be cashing in on the financing of the franchises they sell as well as providing them with the tools (product) to be successful. There is no way main stream media would allow tax payers to bare the burden of fraud. Reputable magazines like Forbes and Fortune would NEVER allow tax payers to promote something that is a scam and does not promote growth or jobs. They would surely EXPOSE this industry if it was PROMOTING FRAUD. Wouldn’t they?

  7. The enlightened one. says:

    anonymous,

    It makes absolute sense! The coalition forces within the confounds of franchise organizations, attorneys, government organizations and political officials have spoken. It makes perfect sense!

  8. The enlightened one. says:

    Unhappy,

    Is there any way you can tell us how many of these franchisors listed are members of the International Franchise Association? As well as the IFA’s created organization called Vetfran? I think that would only be fair to the IFA as they and the FTC (Federal Trade Commission) seem to work together for the greater good of franchising. Surely none of the franchisors listed above are members of the IFA and Vetfran. Our political officials who serve the people would surely step in or those who issue membership’s would surely revoke these franchisor’s memberships as not to mislead the investors with F.D.D.’s approved by the FTC.

    Maybe the organization called the International Franchise Association accepts ANY franchisor as long as they contribute to FranPac. FranPac is an organization which legally (A grey area to control the people) takes donated money from franchisors and contributes it to campaign officials who might be swayed to vote their way. Bribes? Does it work? Why don’t you go to the IFA website and see how the money dispersed to public officials helps their agenda. How they even brag on the internet to its coalition forces

    Why are American’s the target of fraud in our government instead of the target of support? Was our constitution drafted to empower our leaders? Was our constitution drafted to make us slaves to our government? Was our Constitution drafted so the wealthy can fraud the people of the United States into buying fruitless franchises?

    There are some big name franchisors on this list and I challenge some of these failure rates because I know some of these companies who’s success rates are MUCH worst than the rates listed.

  9. John Kress says:

    I’m an attorney investigating allegations against the franchisor for Camp Bow Wow Wow. If you have any information concerning your experiences or that of others with this franchisor, I’m interested in hearing from you. Thanks.

  10. John Kress says:

    I’m an attorney investigating allegations against the franchisor for Camp Bow Wow. If you have any information concerning your experiences or that of others with this franchisor, I’m interested in hearing from you. Thanks.

    The Kress Law Firm, LLC
    John C. Kress, Esq.
    4247 South Grand Boulevard
    St. Louis, MO 63111
    Phone: (314) 631-3883
    E-mail: jckress@thekresslawfirm.com

  11. Edward says:

    Very interesting post by Anonymous regarding Huntington back in August 2012. What’s interesting about it is that most of the language is taken directly from Huntington’s marketing materials and phone scripts utilized by corporate staff. Even if it were a comment by a legitimate franchisee, his/her experience is the exception rather than the rule for Huntington. Most HLC franchisees are looking to get out as quickly as they can.

  12. Scamdemonian says:

    I don’t know where this information comes from but you talk about CRAP! There is no way MATCO TOOLS has only a 35% SBA loan rate failure from 2001 to 2011. Sorry! NO WAY IN HELL!!!

  13. Scamdemonian says:

    That’s like the Forbes article saying Snap-On is a #1 franchise of all and has no terminated franchisees over a years time.

  14. […] included those initial results in two posts:  WORST FRANCHISES IN AMERICA (by SBA loan defaults), and TROPICAL SMOOTHIE CAFE Franchise […]

  15. Scamdemonian: You are absolutely correct. These reporters do not dig deep to find the truth. There has been many Snap-On franchisee failures and Snap-On churned those outlets to make more and more profit without disclosing the failure rates. What is worse is Forbes did not correct their mistake even after knowing the truth. Snap-On remained number one.

    Conspiracy Theory: Not all franchise organizations are hiding their failure rates. The fraudsters are fast and the correction methods are too slow. It is so slow that a fraudster can have a happy life before getting caught. There are many examples- Bernie Madoff had a good life and what difference does it make if he has to spend the old-age life in prison. Cliff Clark, adviser to presidents, got caught a few years before his death. Cliff Clark of Discovery Point is about to…. you see. There are frauds and even if everyone is aware of it, it continues. Fortunately most of us do not want to harm others.

  16. Forbes did not correct the ranking:
    http://www.forbes.com/sites/jjcolao/2012/03/05/our-response-to-criticism-of-top-twenty-franchises-for-the-buck/

    We, common people, look at a glittering store like McDonalds and dream of owning one someday. How can we even guess that 33% of these well known stores are failing according to the SBA reports. The store operation does not even hiccup with a franchisee’s bankruptcy and endless misery. The actual failure numbers must be more.

  17. Scamdemonian says:

    Fraud promoting fraud is what franchise is. Dig deep into franchising and you will see that big money has purchased the rights to commit criminal acts against franchisees through a fraud protection coalition. That coalition starts with the IFA International Franchise Association and its created organizations to promote fraud.(Vetfran, FranPac and Minorityfran) These fran organizations further promote the fraud agenda of the IFA. The IFA along with the FTC are the BIGGEST problems with franchising. FTC or Federal Trade Commission is the fraudulent federal government department created to keep Americans from committing fraud to other Americans but stonewalls Americans from getting justice against corporations. Corporations are the problem with franchising. Yes! there may be some GOOD American franchisors out there that care about their franchisees being successful but the other 90% are screwing investors and using a coalition to do it.

    Franchisees need a coalition but the problem with starting a franchisee coalition is finding honest attorney’s. When it comes to attorney’s the franchisee will never ever be able to build a franchisee coalition because to be an attorney and fight a just cause for Americans does not make money. For an attorney to brave the waters of fraudulent corporations may mean the end to his career or threats from powerful people who have billions but still don’t have money. These CEO’s care about power and prestige. They don’t care about Americans or God. They care about Yachts and chumming it up with their fellow scammers.

  18. G says:

    I totally retract these statements I made previously under the alias “G” May 12, 2013. In fact, they were posted outside of my knowledge by someone I thought was giving me sound advice. In a moment of irritation I was frustrated with some things and most of the challenges discussed in this posting were never even reported to Healthy YOU Vending prior to this. Once Healthy YOU and Seaga learned that I had some issues both companies took action immediately. Since the situation had never been seen before on other machines the owners of both companies along with Seaga’s chief engineer flew to my area in San Diego to see my machines in the field first hand. I never expected that kind of service or concern. It showed me just how much they cared about their distributors after the sale. I was very pleased with the genuine interest Jeff Marsh and Michael Burnett took in helping me resolve my issue. At first I was convinced that I was too small time to for them to take my concerns seriously, but when they flew to my area to evaluate the issues I was having, it showed me that they were there to help me succeed. It was definitely the boost I needed being in business for myself. Having them come to San Diego to work with me greatly lifted my confidence in their company. Even though they could not duplicate the situation I had experienced they replaced all of my machines, no questions asked. What I considered to be engineering matters were resolved completely.

    I am happy with the resolution offered by Healthy YOU and feel their owners truly care about my situation and success in this business. Before they sent me the new machines I was allowed to see them first hand, which gave me a lot of reassurance. I was even offered a different model of machines if I wanted but the truth is I really like these machines and decided to stay with the HY900 due to the many features it has that others machines don’t have. It is nice to know that working with Healthy You Vending I am able to work with actual people and not just become another number in a vast arena of franchisees. After having my issues worked with on a personal level, they have regained my confidence in their product and customer service.

  19. Marcus Oneil says:

    Is this data update beyond 2012?

SHARE A COMMENT HERE:





Bottom