The 25 Riskiest Franchises for Lenders

NuWire Investor:

Sub sandwich shops, auto care centers and quick printers dominate the list of worst franchises to buy, according to a Small Business Administration list given to lenders.


Blue MauMau once again gained access to this banking list and is publishing it to help inform franchise investment decisions. Taken straight from an SBA’s loan performance list covering the years from 2000 to 2007, this is the list that the agency provides loan officers of its most trusted lenders and banks throughout the country.

This is how the list is used. It is a quick filter of loan risk, of what franchise brands to navigate around and what looks less risky. For example, with a 48 percent failure rate on SBA loans, Mr. Goodcents Sub has the dubious honor of being at the top of worst investments. Compare the 48 percent to another sub chain, Subway’s, which had only 4 percent failures out of 1,974 disbursed loans.

The good news for Quiznos is that it didn’t make the worst 25 list. However, it was #26, worthy of a dishonorable mention. Blimpie, a sub maker that belongs to Kahala Corp’s group of franchising firms, ranked considerably worse at #5.

The loan officer and the franchise buyer realize that there are thousands of franchise opportunities to buy from, so why mess with the riskiest? Unless there is a miraculous reason why concepts with high failure rates are a great investment, the franchise buyer may want to move to other brands with lower failure rates.

Screenshot from Mr. Goodcents Subs & Pastas

Leave a Comment

Your email address will not be published.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