Entreprenuers

Franchise Failure Rates

Many of our clients come to us with franchising questions. In the future, I plan to write on a variety of franchising topics to help you navigate the rough waters (and they can be very rough).

Today I wanted to pass along a great link that Richard Parker had in his blog at Trump University. He provided a great link to a listing of the loan portfolio data from the Small Business Administration and list out all of the franchises with at least 10 loans and their loan failure rate. Don’t confuse the loan failure rate with the franchise failure rate. Many franchises may fail, but the actual loan still gets paid. Many times, banks and the SBA will require that the business owner personally guarantee the loan. In order to avoid bad marks on his or her personal credit, the business owner will pay the loan – even though the business may be defunct.

While there may be some cases that occur the other way around (where the franchise does not fail, yet the owner doesn’t pay the loan), I believe them to be few and far between.

To see the list, go to: http://www.bluemaumau.org/failurerate

Please comment if you have any questions. This isn’t my list so I may or may not be able to clear them up, but I would love to try.

Thanks,
Chad

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