Financing / Data study
SBA loan default rates by franchise: 72 brands, 42,558 loans
A franchise is sold as the safer way into business. SBA's loan records show how much depends on which franchise: at some brands no loan failed, and at others more than one in four did.
"Default rate" is the phrase people search for, and as in our study of industries it is not quite what the public records measure. SBA's file marks a loan charged off when the remaining balance has been written off, after the borrower has stopped paying and the lender has finished collecting. That is the last step in the life of a failed loan, so charge-off rates run lower and later than default rates. They are the only measure of failure SBA publishes loan by loan.
When a borrower operates under a franchise, the lender records which one. We took the 478,963 7(a) loans approved in fiscal years 2010 through 2019 and paid out, the same loans as in the industry study. 42,558 of them, 8.9%, name a franchise. SBA's file spells one brand several ways (Subway appears under three codes and three names), so the first job was to put the names back together. Then, for each of the 72 brands with at least 100 loans, we counted how many had been charged off by June 30, 2026.
The brands at the two ends
At 4 brands, more than one loan in four was charged off
Share of 7(a) loans to each brand's franchisees, approved in fiscal years 2010–2019, that had been charged off by June 30, 2026. The 12 highest of 72 brands with at least 100 loans.
Source: The Mercantile Record analysis of SBA 7(a) loan records as of June 30, 2026. Method.
At 6 brands, no loan was charged off at all
Same measure and same scale as the chart above. The 12 lowest of 72 brands; among equals, the brand with more loans comes first.
Source: The Mercantile Record analysis of SBA 7(a) loan records as of June 30, 2026. Method.
At 4 brands more than one loan in four was charged off: Signarama (30 of 104 loans), Dickey's Barbecue Pit (63 of 222 loans), iLoveKickboxing (29 of 106 loans) and Fantastic Sams (30 of 118 loans). The gaps between those 4 are too small to rank them. In all, 14 brands had at least one loan in ten charged off.
At 6 brands no loan was charged off at all. The largest of them is Culver's, with 215 loans. 23 brands, those 6 among them, lost fewer than one loan in fifty.
For comparison, 7.1% of all 478,963 loans from those years were charged off.
Every brand with at least 100 loans
Click a column heading to sort. Two of the columns need a word of explanation.
Loans of the same size and year is the brand's yardstick. It is the share that would have been charged off if each of the brand's loans had done exactly as well as the average 7(a) loan, franchise or not, of the same size and approved in the same fiscal year. It matters because size and timing move the rate before the brand has any say. Hotels borrow millions, and loans that large seldom fail whoever takes them: 3.2% of all loans over $2 million were charged off. Small loans made in a bad year start from a much higher mark.
Against those loans says whether the gap between the two figures is more than luck. With 100 loans, one failure moves a brand's rate by a full percentage point, so small gaps mean nothing. We write "higher" or "lower" only when chance alone would produce a gap that large less than once in a hundred times. Everything else is "no clear difference".
| Signarama | Sign manufacturing | 104 | 28.8% | 8.0% | Higher | 16.4% | 29.5% | $150,000 |
|---|---|---|---|---|---|---|---|---|
| Dickey's Barbecue Pit | Limited-service restaurants | 222 | 28.4% | 6.5% | Higher | 18.9% | 20.9% | $243,250 |
| iLoveKickboxing | Gyms and fitness centers | 106 | 27.4% | 7.9% | Higher | 17.9% | 21.4% | $210,500 |
| Fantastic Sams | Beauty salons | 118 | 25.4% | 7.4% | Higher | 15.2% | 20.2% | $166,850 |
| Meineke | General automotive repair | 155 | 20.6% | 6.7% | Higher | 13.6% | 10.4% | $253,000 |
| Which Wich | Limited-service restaurants | 156 | 20.5% | 6.7% | Higher | 7.0% | 13.2% | $274,000 |
| AAMCO | Automotive transmission repair | 107 | 19.6% | 6.9% | Higher | 8.4% | 8.8% | $198,000 |
| Papa John's | Limited-service restaurants | 121 | 16.5% | 6.9% | Higher | 9.1% | 13.6% | $232,000 |
| Menchie's | Coffee, juice and snack bars | 201 | 16.4% | 6.7% | Higher | 8.0% | 10.9% | $309,000 |
| Sky Zone | All other amusement and recreation industries | 104 | 13.5% | 4.1% | Higher | 1.0% | 7.1% | $1,295,000 |
| Edible Arrangements | All other specialty food stores | 208 | 12.5% | 7.2% | Higher | 4.8% | 8.0% | $176,500 |
| Amazing Lash Studio | Beauty salons | 142 | 11.3% | 5.7% | No clear difference | 1.4% | 5.9% | $360,400 |
| Anytime Fitness | Gyms and fitness centers | 684 | 11.1% | 6.0% | Higher | 5.3% | 8.1% | $300,850 |
| Snap Fitness | Gyms and fitness centers | 156 | 10.3% | 7.3% | No clear difference | 6.4% | 6.6% | $150,000 |
| Massage Envy | Other personal care services | 325 | 9.5% | 5.8% | No clear difference | 2.5% | 6.3% | $416,800 |
| Maaco | Automotive body, paint, and interior repair and maintenance | 116 | 9.5% | 6.4% | No clear difference | 3.5% | 4.9% | $336,000 |
| Liberty Tax Service | Tax preparation services | 135 | 8.9% | 7.5% | No clear difference | 5.9% | 9.3% | $85,000 |
| Midas | General automotive repair | 100 | 8.0% | 6.7% | No clear difference | 4.0% | 7.4% | $261,750 |
| Firehouse Subs | Limited-service restaurants | 403 | 7.4% | 6.5% | No clear difference | 3.5% | 5.2% | $270,000 |
| FedEx Ground | General freight trucking, local | 208 | 7.2% | 7.0% | No clear difference | 2.9% | 7.6% | $150,000 |
| Subway | Limited-service restaurants | 1,307 | 7.0% | 6.9% | No clear difference | 2.7% | 4.3% | $184,500 |
| Papa Murphy's | Limited-service restaurants | 205 | 6.8% | 6.8% | No clear difference | 4.9% | 3.7% | $225,000 |
| Fastsigns | Sign manufacturing | 162 | 6.8% | 6.7% | No clear difference | 3.7% | 3.1% | $225,000 |
| Jimmy John's | Limited-service restaurants | 620 | 6.5% | 5.7% | No clear difference | 2.1% | 4.5% | $379,400 |
| The Learning Experience | Child care centers | 128 | 6.2% | 5.7% | No clear difference | 2.3% | 3.1% | $365,000 |
| Ace Hardware | Hardware stores | 295 | 6.1% | 5.6% | No clear difference | 2.0% | 2.1% | $455,200 |
| Little Caesars | Limited-service restaurants | 365 | 6.0% | 6.4% | No clear difference | 1.9% | 4.2% | $250,000 |
| Marco's Pizza | Limited-service restaurants | 268 | 6.0% | 6.2% | No clear difference | 3.4% | 3.6% | $326,350 |
| Budget Blinds | Window treatment stores | 124 | 5.7% | 7.8% | No clear difference | 5.7% | 2.9% | $150,000 |
| Sport Clips | Barber shops | 514 | 5.6% | 6.8% | No clear difference | 0.8% | 3.5% | $204,700 |
| Servpro | Other services to buildings and dwellings | 295 | 4.4% | 6.9% | No clear difference | 0.3% | 4.6% | $150,000 |
| Country Inn & Suites | Hotels and motels | 104 | 3.9% | 3.8% | No clear difference | 1.0% | 1.3% | $2,929,650 |
| Allstate | Insurance agencies and brokerages | 211 | 3.8% | 6.3% | No clear difference | 2.4% | 1.2% | $225,000 |
| Baymont | Hotels and motels | 138 | 3.6% | 3.3% | No clear difference | 1.5% | 1.9% | $2,200,000 |
| Kiddie Academy | Child care centers | 196 | 3.6% | 4.7% | No clear difference | 0.5% | 0.7% | $748,350 |
| La Quinta | Hotels and motels | 115 | 3.5% | 3.5% | No clear difference | 0.0% | 1.3% | $3,485,000 |
| Smoothie King | Limited-service restaurants | 215 | 3.3% | 6.8% | No clear difference | 0.5% | 2.4% | $262,000 |
| Supercuts | Beauty salons | 220 | 3.2% | 7.4% | No clear difference | 1.8% | 1.1% | $150,000 |
| Hand & Stone | Other personal care services | 140 | 2.9% | 5.5% | No clear difference | 0.7% | 1.7% | $376,750 |
| Tropical Smoothie Cafe | Limited-service restaurants | 224 | 2.7% | 6.7% | No clear difference | 2.2% | 1.6% | $255,700 |
| European Wax Center | Other personal care services | 308 | 2.3% | 5.9% | Lower | 0.7% | 1.4% | $350,000 |
| ServiceMaster | Janitorial services | 133 | 2.3% | 6.4% | No clear difference | 1.5% | 0.4% | $225,000 |
| Motel 6 | Hotels and motels | 223 | 2.2% | 3.7% | No clear difference | 0.4% | 0.5% | $1,680,000 |
| Americas Best Value Inn | Hotels and motels | 134 | 2.2% | 4.2% | No clear difference | 1.5% | 0.9% | $1,142,000 |
| Quality Inn | Hotels and motels | 458 | 2.2% | 3.6% | No clear difference | 0.2% | 1.8% | $2,181,000 |
| Dairy Queen | Limited-service restaurants | 417 | 2.2% | 6.0% | Lower | 0.2% | 1.1% | $340,000 |
| Great Clips | Beauty salons | 231 | 2.2% | 7.2% | Lower | 2.2% | 1.6% | $150,000 |
| Jersey Mike's | Limited-service restaurants | 245 | 2.0% | 6.4% | Lower | 1.6% | 1.8% | $300,000 |
| Comfort Inn and Comfort Suites | Hotels and motels | 297 | 2.0% | 3.6% | No clear difference | 0.0% | 1.0% | $2,820,000 |
| Super 8 | Hotels and motels | 363 | 1.9% | 4.0% | No clear difference | 0.5% | 1.0% | $1,510,000 |
| The Goddard School | Child care centers | 316 | 1.9% | 4.3% | No clear difference | 0.3% | 0.4% | $1,360,100 |
| Days Inn | Hotels and motels | 400 | 1.8% | 4.0% | No clear difference | 0.8% | 1.0% | $1,787,000 |
| Cold Stone Creamery | Coffee, juice and snack bars | 121 | 1.7% | 7.4% | No clear difference | 0.8% | 0.5% | $175,000 |
| Home Instead | Home health care services | 192 | 1.6% | 6.1% | Lower | 1.0% | 0.8% | $336,200 |
| Best Western | Hotels and motels | 259 | 1.5% | 3.8% | No clear difference | 0.0% | 0.9% | $2,500,000 |
| Orangetheory Fitness | Gyms and fitness centers | 346 | 1.5% | 5.4% | Lower | 0.3% | 0.9% | $474,500 |
| Econo Lodge | Hotels and motels | 211 | 1.4% | 4.2% | No clear difference | 0.0% | 0.8% | $1,299,100 |
| Dunkin' | Limited-service restaurants | 220 | 1.4% | 5.8% | Lower | 0.9% | 2.0% | $496,000 |
| Domino's | Limited-service restaurants | 235 | 1.3% | 6.4% | Lower | 0.9% | 0.4% | $283,200 |
| Chevron | Gas stations with convenience stores | 190 | 1.1% | 4.3% | No clear difference | 0.0% | 0.5% | $1,402,500 |
| Red Roof Inn | Hotels and motels | 197 | 1.0% | 3.7% | No clear difference | 0.0% | 0.2% | $1,920,700 |
| Shell | Gas stations with convenience stores | 123 | 0.8% | 4.8% | No clear difference | 0.0% | 0.1% | $1,135,000 |
| Rodeway Inn | Hotels and motels | 126 | 0.8% | 3.9% | No clear difference | 0.0% | 0.4% | $1,370,000 |
| The UPS Store | Private mail centers | 519 | 0.6% | 7.2% | Lower | 0.0% | 0.4% | $193,000 |
| Primrose Schools | Child care centers | 244 | 0.4% | 4.1% | Lower | 0.4% | 0.2% | $3,061,950 |
| Ameriprise Financial | Investment advice | 330 | 0.3% | 6.0% | Lower | 0.3% | 0.1% | $335,000 |
| Culver's | Limited-service restaurants | 215 | 0.0% | 5.1% | Lower | 0.0% | 0.0% | $805,100 |
| Christian Brothers Automotive | General automotive repair | 173 | 0.0% | 5.8% | Lower | 0.0% | 0.0% | $320,000 |
| Club Pilates | Gyms and fitness centers | 173 | 0.0% | 7.6% | Lower | 0.0% | 0.0% | $200,000 |
| Wingstop | Limited-service restaurants | 157 | 0.0% | 5.9% | Lower | 0.0% | 0.0% | $350,000 |
| Nothing Bundt Cakes | Retail bakeries | 132 | 0.0% | 6.0% | Lower | 0.0% | 0.0% | $350,000 |
| Planet Fitness | Gyms and fitness centers | 114 | 0.0% | 5.1% | Lower | 0.0% | 0.0% | $1,040,000 |
By that test 12 brands did worse than comparable loans, 17 did better, and 43 cannot be told apart from them. Subway, by far the largest brand with 1,307 loans, sits almost exactly on its mark: 7.0% charged off, against 6.9% for loans of the same size and year. Anytime Fitness, the second-largest, is clearly above its own: 11.1% against 6.0%.
Size and timing explain little. The twelve brands in the first chart had yardsticks between 4.1% and 8.0%. Their actual rates ran from 11.3% to 28.8%.
The big names are not where the losses are
Loans to the smaller brands were charged off 1.9 times as often as loans to the 72 biggest
Share of 7(a) loans approved in fiscal years 2010–2019 that were charged off. "Brands with 100 loans or more" are the 72 in the table; every other loan with a franchise code is in the second bar.
Source: The Mercantile Record analysis of SBA 7(a) loan records as of June 30, 2026. Method.
Show the numbers as a table
| Loans | Number | Charged off | Loans of the same size and year |
|---|---|---|---|
| Brands with 100 loans or more | 17,519 | 5.6% | 5.9% |
| All other franchise loans | 25,039 | 10.8% | 6.5% |
| Loans with no franchise | 436,405 | 7.0% | 7.2% |
Franchise loans as a whole did worse than other loans: 8.7% charged off, against 7.0% of loans to businesses with no franchise. Size does not explain it. Franchise loans are larger than most, with a median of $287,500 against $100,400, and larger loans fail less often. Their yardstick was only 6.3%.
Splitting them in two shows where the difference comes from. The 72 brands in the table account for 41% of franchise loans. Taken together, 5.6% of their loans were charged off, slightly under their yardstick of 5.9%. Every other franchise loan, 25,039 of them under 3,492 other names, did far worse: 10.8%, against a yardstick of 6.5%.
Most of those smaller brands have a handful of loans each, far too few to rank. As a group the message is plain. Franchises with a long record of SBA-financed outlets did about as well as other 7(a) loans of their size. Franchises without one were charged off about twice as often.
The records do not say why. What they do show is that the word "franchise" on a loan application is no evidence of safety. A particular brand's record is evidence, when the brand is old enough and large enough to have one.
Same business, different brand
| Kind of business | Brands | Loans | Charged off, all brands together | Lowest brand | Highest brand |
|---|---|---|---|---|---|
| Limited-service restaurants | 17 | 5,595 | 6.5% | Culver's, 0.0% | Dickey's Barbecue Pit, 28.4% |
| Hotels and motels | 13 | 3,025 | 2.0% | Rodeway Inn, 0.8% | Country Inn & Suites, 3.9% |
| Gyms and fitness centers | 6 | 1,579 | 8.0% | Club Pilates, 0.0% | iLoveKickboxing, 27.4% |
| Child care centers | 4 | 884 | 2.5% | Primrose Schools, 0.4% | The Learning Experience, 6.2% |
| Other personal care services | 3 | 773 | 5.4% | European Wax Center, 2.3% | Massage Envy, 9.5% |
| Beauty salons | 4 | 711 | 8.2% | Great Clips, 2.2% | Fantastic Sams, 25.4% |
| General automotive repair | 3 | 428 | 9.3% | Christian Brothers Automotive, 0.0% | Meineke, 20.6% |
The brand matters inside a single kind of business. Among the 17 limited-service restaurant chains in the table, the share of loans charged off runs from 0.0% at Culver's to 28.4% at Dickey's Barbecue Pit. Gyms, hair salons and auto repair shops are spread almost as widely.
Hotels are the exception. All 13 hotel brands fall between 0.8% and 3.9%, every one of them below the rate for loans with no franchise at all. Their yardsticks are low too, between 3.3% and 4.2%: hotel loans run to millions of dollars, the kind of sum normally lent against property.
What lenders are financing now
Everything above concerns loans made in 2019 or earlier. It has to. Failure takes years, and a loan made in 2024 has had no time to fail. But the brands lenders finance today are partly different ones.
In the twelve months to June 30, 2026, 7,337 7(a) loans went to franchises, under 1,569 different names. These are the 20 brands with the most.
| Brand | Loans in the last 12 months | Median loan | Loans, fiscal 2010–2019 | Charged off | Loans, fiscal 2018–2021 | Charged off within 4 years |
|---|---|---|---|---|---|---|
| The UPS Store | 157 | $340,000 | 519 | 0.6% | 340 | 0.0% |
| The Back Nine | 98 | $409,350 | 0 | – | 0 | – |
| Hotworx | 72 | $496,000 | 41 | – | 129 | 0.0% |
| The Goddard School | 52 | $1,499,400 | 316 | 1.9% | 195 | 0.0% |
| Domino's | 49 | $550,000 | 235 | 1.3% | 131 | 1.5% |
| Days Inn | 48 | $2,738,500 | 400 | 1.8% | 190 | 0.0% |
| Ace Hardware | 46 | $855,500 | 295 | 6.1% | 200 | 0.0% |
| Naturals2Go | 45 | $150,000 | 40 | – | 71 | 1.4% |
| Subway | 42 | $245,000 | 1,307 | 7.0% | 338 | 2.4% |
| Bricks & Minifigs | 41 | $244,900 | 11 | – | 3 | – |
| Quality Inn | 41 | $2,890,000 | 458 | 2.2% | 265 | 0.4% |
| Tropical Smoothie Cafe | 40 | $562,000 | 224 | 2.7% | 187 | 0.5% |
| Paris Baguette | 39 | $1,370,000 | 11 | – | 18 | – |
| Woof Gang Bakery and Grooming | 39 | $300,000 | 8 | – | 12 | – |
| Comfort Inn and Comfort Suites | 38 | $4,273,450 | 297 | 2.0% | 162 | 0.0% |
| Paul Davis Restoration | 38 | $500,000 | 55 | – | 19 | – |
| Super 8 | 38 | $1,957,000 | 363 | 1.9% | 192 | 0.0% |
| Jersey Mike's | 37 | $635,000 | 245 | 2.0% | 169 | 0.6% |
| Kiddie Academy | 37 | $935,000 | 196 | 3.6% | 116 | 0.0% |
| Sam the Concrete Man | 36 | $150,000 | 0 | – | 19 | – |
12 of the 20 are in the main table. For the other 8 there is little to go on, and for 6 of them nothing: too few loans in either period to give a rate. The Back Nine had 98 loans approved in those twelve months and not one paid out in fiscal 2010 through 2021.
The four-year column needs care. It covers loans approved in fiscal 2018 through 2021, and four years is a short time: among the older loans, the typical charge-off came 4.7 years after approval. A zero in that column means no early failures. It does not mean the brand is safe.
5% of 7(a) loans went to franchises in fiscal 2010, and 16% in fiscal 2021
Share of 7(a) loans that carry a franchise code, by fiscal year of approval (October to September), cancelled loans left out. SBA did not publish its franchise directory between May 2023 and June 2025.
Source: The Mercantile Record analysis of SBA 7(a) loan records as of June 30, 2026. Method.
Show the numbers as a table
| Approved in | Loans | With a franchise code | Share |
|---|---|---|---|
| FY2010 | 39,913 | 2,068 | 5.2% |
| FY2011 | 45,628 | 2,277 | 5.0% |
| FY2012 | 38,889 | 2,255 | 5.8% |
| FY2013 | 40,416 | 2,860 | 7.1% |
| FY2014 | 45,962 | 4,250 | 9.2% |
| FY2015 | 55,421 | 5,345 | 9.6% |
| FY2016 | 56,789 | 5,481 | 9.7% |
| FY2017 | 56,080 | 5,444 | 9.7% |
| FY2018 | 54,223 | 6,418 | 11.8% |
| FY2019 | 45,686 | 6,162 | 13.5% |
| FY2020 | 36,490 | 4,995 | 13.7% |
| FY2021 | 45,360 | 7,105 | 15.7% |
| FY2022 | 42,282 | 5,907 | 14.0% |
| FY2023 | 51,747 | 6,755 | 13.1% |
| FY2024 | 62,618 | 5,493 | 8.8% |
| FY2025 | 64,096 | 6,556 | 10.2% |
Franchises take a larger share of the program than they used to. In fiscal 2010, 5.2% of 7(a) loans carried a franchise code. In fiscal 2021 it was 15.7%.
The drop in fiscal 2024 coincides with a change in the rules, and may be a gap in the records more than a fall in lending. SBA stopped publishing its franchise directory on May 11, 2023. The lending manual that took effect on June 1, 2025 brought it back, and tells lenders to enter the brand's name and code with every franchise application. The share of loans carrying a code went from 13.1% in fiscal 2023 to 8.8% in fiscal 2024. We would not read the figures for fiscal 2024 and 2025 as a retreat from franchise lending.
What SBA checks about a franchise, and what it does not
SBA keeps a directory of franchise brands it has reviewed. Under its lending manual, a brand that meets the Federal Trade Commission's definition of a franchise has to be on that list before one of its franchisees can get a 7(a) or 504 loan. The definition is wider than the word suggests. The manual applies it to the fuel-supply agreements of gas stations, which is why Chevron and Shell are in the table above.
The review settles whether the business is eligible for an SBA loan. It is not a judgment on whether franchisees do well, and SBA says so twice. The manual: "Placement of a brand on the Directory is not an endorsement or a guaranty of the success of the brand." The directory's own page: placement "is not an endorsement or approval of the brand and does not ensure the success of the business."
The lender is asked for a little more. In the written analysis behind its decision on a franchise loan, it "must review any credit information provided, such as the number of failed franchisees and cash flow projections provided by the franchisor." That is a review of what the franchisor supplies. The manual's passages on franchises do not mention how the brand's earlier SBA loans turned out. Those records are public, and any lender or borrower can look.
If you are thinking of buying a franchise
These are rates for groups of loans made years ago. They say nothing certain about one outlet in one town. They are still worth a few minutes before you sign.
Look the brand up. If it is in the table, you can see how SBA loans to its franchisees turned out, and whether that was better or worse than similar loans. If it is not there, that is information too. It means the brand had fewer than 100 SBA loans in ten years, and loans to brands like that were charged off about twice as often as loans to the brands that are listed.
Read Item 20 of the disclosure document. Under the Federal Trade Commission's Franchise Rule, a franchisor must give you its Franchise Disclosure Document at least 14 calendar days before you sign a binding agreement or pay anything. (The rule has exemptions. Fuel-supply agreements for gas stations are one.) Item 20 is the part to read against this page. It shows, state by state and for each of the last three years, how many franchised outlets opened, changed hands, were terminated, were not renewed, were bought back by the franchisor or stopped operating for other reasons. It also gives the names and telephone numbers of current franchisees, and of every franchisee who left the system in the last year. Call some of the ones who left. The same item has to say whether franchisees have signed agreements that limit what they can tell you.
Ask what the franchisor has told the lender. SBA's manual expects the lender to review what the franchisor provides on failed franchisees and on cash flow. Ask to see the same figures.
Remember whose guarantee it is. Anyone who owns 20% or more of the business guarantees an SBA loan personally, franchise or not. The brand does not share that risk. Our guide to the personal guarantee explains what you would be signing.
Buying an outlet that already exists is a different kind of loan. For SBA it is the purchase of a business, with its own rules on the buyer's equity and on cash flow. See SBA loans to buy a business.
What these numbers are not
- Not default rates. A charge-off is the end of the road. Loans that are behind on payments but not yet written off cannot be seen in the public file.
- Not final. 15% of these franchise loans are still being repaid, and some of them will fail.
- Not a count of failed outlets. A franchisee can close and still repay the loan, and a loan can be charged off while the outlet trades on under a new owner.
- Not the whole brand. Only franchisees who borrowed through the 7(a) program are here. Those who paid cash, borrowed elsewhere or used SBA's 504 program are not.
- Not a verdict on the franchisor. The records do not say why a loan failed. The site, the owner, the local market and the brand all look the same from here.
- Loans, not owners. An owner with three outlets may have three loans. We checked whether a few large operators could be driving a brand's figure, matching borrowers by name and state. They are not: the brands in the table average 1.14 loans per borrower, and no borrower accounts for more than 4 of a brand's charged-off loans.
- The yardstick is a rough one. It allows for loan size and year and nothing else. A restaurant chain is measured against all loans of that size, not against other restaurants. The table by kind of business is there for that.
- Names are entered by lenders. We merged the spellings of each brand by hand and may have missed one. Listings that cover two brands under one agreement are left out of both. So are 89 loans filed under the placeholder "Temporary franchises" and 40 that have a code and no name.
- A brand's past is not its present. These are loans made between 2010 and 2019. Brands are sold, change their management and rewrite their agreements.
Method in brief
We used SBA's public file of 7(a) loans approved in fiscal years 2010 through 2019, dated June 30, 2026, without the loans marked cancelled or never paid out. A loan is a franchise loan if the file gives it a franchise code. The file spells the franchise names of these loans 4,297 different ways. We treated names as one brand when they carry the same brand name and the loans are in the same line of business. 193 of those spellings became the 72 brands listed, and the download shows which. Names we did not merge by hand are counted as the same when they differ only in capitals or punctuation.
A brand's yardstick is the average, over its loans, of the charge-off rate of all 7(a) loans in the same one of 7 size bands and approved in the same fiscal year. For "higher" and "lower" we ask how often a group of that many loans, each failing at the yardstick rate, would end up at least that far from it. We require less than 1% of the time, counting both directions. Loans to one owner tend to fail together, which is one reason the bar is set high.
The newer record counts charge-offs within 48 months of approval, on loans approved in fiscal 2018 through 2021 and paid out. Recent lending is loans approved from July 1, 2025 to June 30, 2026 and not cancelled. The full method and the table to download are on the data page.
Sources
- 7(a) & 504 FOIA dataset, U.S. Small Business Administration. Loan-level records as of June 30, 2026. Every count and rate in this article. Outcomes come from the fiscal 2010–2019 file; recent lending and the newer record also use the file for fiscal 2020 onward. Checked October 10, 2026.
- SOP 50 10 8.1, Lender and Development Company Loan Programs, U.S. Small Business Administration. Effective October 1, 2026. Section A, Ch. 1, Para. G, Franchises: the directory, which agreements count as franchises, what the lender enters with an application. The credit standards for 7(a) loans: what the lender reviews for a franchise. Checked October 10, 2026.
- SBA Franchise Directory, U.S. Small Business Administration. The directory dated October 9, 2026, and the statement on its page that a listing is not an endorsement. Checked October 10, 2026.
- 16 CFR Part 436, Disclosure Requirements and Prohibitions Concerning Franchising, Federal Trade Commission, in the Electronic Code of Federal Regulations. Section 436.2(a): the disclosure document must be given at least 14 calendar days before signing or paying. Section 436.5(t), Item 20: the tables of outlets and the lists of current and former franchisees. Read as current on October 7, 2026. Checked October 10, 2026.
- Affiliation and Lending Criteria for the SBA Business Loan Programs, final rule, 88 FR 21074, Federal Register. April 10, 2023, effective May 11, 2023. States that from the effective date SBA would no longer publish the Franchise Directory. Checked October 10, 2026.
- SOP 50 10 8, Lender and Development Company Loan Programs, U.S. Small Business Administration. Effective June 1, 2025. The manual that brought the directory back. Checked October 10, 2026.
Corrections and updates
- First published.