23 May 25 of the Worst Franchise Investments
Everyone, especially the franchisors, brags about how successful franchising is and how much safer it is for would-be business owners to buy a franchise as opposed to an existing non-franchised business. Blue MauMau’s recently released chart of the 25 franchises with the highest SBA loan default rates clearly demonstrates it “ain’t always comin’ up roses,” with the #1 worst franchise investment boasting a 71.1% SBA loan default rate.
According to Blue MauMau, “Some of the perennial worst franchises to buy — hoagie sandwich shops, ice cream stops, and auto repair garages — dominate this year’s list. The recession has only helped their failure rates climb.”
Ed Teixeira of FranchiseKnowHow.com commented on the value of this list. “Consider that loan defaults don’t happen overnight but rather reflect a certain continuum of franchise performance…I’ll offer my unsolicited comment that releasing this kind of information is important for the franchise industry. So many of us enjoy and depend upon this industry and it appears that there are always a certain number of franchise concepts that are definitely flawed.”