2012 Worst Franchises to Buy According to SBA
The Small Business Administration gave data to BlueMaumau.org on franchises that continuously failed to meet their loan payments. This is the same list given by the SBA to its affiliated lenders throughout U.S. Topping the list are ice cream shops and quick service restaurants. They lead the lowest performers among major franchise brands in terms of loan failure rate. The list is published to guide loan officers and potential franchisees to choose franchise brands with lower failure rates. Blue Maumau clarifies that the list only shows franchises that received SBA-backed loans. It has also eliminated brands with less than 50 loans.
Here is our annual listing of major franchise lemons to avoid investing in.
| Worst | FRANCHISE BRAND 25 worst brands with 50 or more loan disbursements | Failure % |
| 1 | GOLF ETC. | 71.08% |
| 2 | MR. GOODCENTS SUB’ AND PASTA | 64.71% |
| 3 | DREAM DINNERS | 59.70% |
| 4 | PLANET BEACH | 57.66% |
| 5 | CARVEL ICE CREAM | 56.41% |
| 6 | PHILLY CONNECTION | 55.77% |
| 7 | PETLAND | 55.56% |
| 8 | BEEF O’BRADY’S | 52.48% |
| 9 | COTTMAN TRANSMISSION | 52.21% |
| 10 | TACO DEL MAR | 51.35% |
| 11 | JUICE IT UP | 50.98% |
| 12 | HUNTINGTON LEARNING CENTER | 49.26% |
| 13 | ATLANTA BREAD COMPANY | 49.06% |
| 14 | ALL TUNE AND LUBE | 46.15% |
| 15 | BLIMPIE | 45.74% |
| 16 | FAST FRAME | 44.78% |
| 17 | KABLOOM | 44.23% |
| 18 | MARBLE SLAB CREAMERY | 43.66% |
| 19 | COLD STONE CREAMERY, INC. | 41.93% |
| 20 | FOX’S PIZZA DEN | 41.38% |
| 21 | AAMCO TRANSMISSIONS | 39.90% |
| 22 | MAGGIEMOO’S (ICE CREAM) | 39.39% |
| 23 | CORNWELL QUALITY TOOL COMPANY,INC | 39.22% |
| 24 | QUIZNOS SUBS* | 39.11% |
| 25 | BUDGET BLINDS | 37.31% |
Source: Small Business Administration. SBA 504 and 7(a) disbursed loans from 2001 to 2011
Many of these are well-known concepts to Blue MauMau writers. Some have been accompanied by news stories of financial ruin by franchisees, lawsuits, anger and even suicides.
This is ONLY a list of franchises that have received SBA loans. It does not account for conventional, traditional bank loans. Banks aren’t about to release their conventional loan statistics anytime soon or reveal their methodology and weaknesses. But since it is part of the executive branch of the United States government, the Small Business Administration does. The SBA notes that the failure rate equals the number of liquidations plus number charged off divided by total number disbursed. The disbursement dollars are for the total amount of loans disbursed X $1,000. Franchise networks that have received less than 10 disbursements (small business loans) have been left off, leaving a list of some 580+ franchise systems from 2001 to 2011. Blue MauMau then eliminated brands with fewer than 50 loans. …
Photo by kingjb23
