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.