Why Franchise Owners At Top Chains Can’t Pay Their Bills

BNET:

One of the most popular financing methods for entrepreneurs looking to buy a franchise business is a loan guaranteed by the Small Business Administration. It turns out the SBA tracks default rates by chain, and recently released data on the top franchise chains over the past decade.

A healthy chain might have a default rate of 7 percent or so, as is the case with sandwich giant and top franchisee Subway. But other chains have proved to be a bad bet for the SBA, a recent CNNMoney article showed. The biggest losers:

Matco Tools topped the loser hit parade with a 36 percent SBA loan failure rate. One possible reason is the franchise’s relatively low barrier to entry, which may lure unqualified franchise buyers into the grueling business of selling tools out of a truck.

• Franchisees at Cold Stone Creamery’s franchisees didn’t pay on 31 percent of the more than 700 SBA loans chain owners got.

Read on…

Leave a Comment

Your email address will not be published. Required fields are marked *