Thinking of Opening a Franchise? Think twice about the Top Fifteen Franchise Failures of 2008.
Yahoo! Finance recently published an article listing the top 15 franchise failures for 2008. They based the ranking on the rate of Small Business Association (SBA) loan defaults among franchisees. Yahoo! cited the troubled economy as the major factor for the failures.
Topping the list were Noble Roman's Pizza, with 53% of franchisees defaulting on their SBA loans, PJ's Coffee and Tea Café, with a 50% default rate, and Super Suppers, with 42% of the gourmet prepared meals franchise failing. Pizza franchises seem to have fared the worst out of all the business types, with five of the fifteen biggest failures being pizza franchises.
What can potential franchisees take way from this story? If you are considering opening a franchise, it is important to do your due diligence. Take a close look at which franchises are failing and why, before you take out an SBA loan. You should scrutinize the Franchise Disclosure Documents and the Franchise Agreement with the aid of an experienced franchise attorney. An attorney can also help you conduct research into the parent company's background, which is invaluable in helping you to better understand the financial aspects of the business, and to determine whether there are red flags pointing towards the business' demise. Please contact our firm for Franchise legal counsel.
To find out more about these unsuccessful franchises, visit Top 15 Franchise Failures.
