7 thoughts on “Worst Franchises by SBA Loan Default Rate (2014)”

• Thanks for putting this together, it’s very helpful!

• So why isn’t Matco, Snap-On or Mac on this list? I find it completely captivating that the only TOOL franchise listed above is the one with the smallest share of the market and the best opportunity for success letting franchisees have territory’s versus an LOC. So Matco, Snap-On and Mac must be utilizing the funds being funneled into banks through the New Market Tax Credit program to boost the numbers their CHURN franchises using tax payer dollars to back them up. I always wondered why SUNTRUST bank from Atlanta, GA carried the note on my Matco loan as a franchisee. Then I discovered how this whole scam works!

• Not sure they are eligible for SBA loans.

  Read:
  http://www.unhappyfranchisee.com/snap-on-tools-sba-wont-guarantee-loans/

• Todd: Can you explain the scam of the bank note? We had that note too beyond SBA guaranteed loan.

• Will try to respond to issues identified above related to Foot Solutions and failure
  rate and why….we are a specialty Foot Wear retailer with focus on Health and Wellness….started in 2000…by 2007 we were opening approximately 40 new stores
  a year and staffed for continued growth….one out of every 10 stores opened was in
  positive cash flow in its first month of business….we had several exclusive lines of
  shoes and products. Average sale was $200 and not unusual for a customer to spend
  over $1,000 plus….we focused on Fit, Fashion and Comfort….our stores crossed into
  the solving foot pain and medical issues all tied to the feet and body alignment…
  we had and still have gross margins in the 60% plus area unheard of in our industry.
  Why did we start losing stores…..
  Economic down turn
  Medicare changes to Diabetic shoe bill
  e com sales …. shoes sold at discounts with a lot less overhead then retailer.
  We had a exclusive line of toning shoes that represented 25% plus of our sales
  that got copied by Sketchers and killed the market niche…
  So lets say there were a number of things that happened in reasonably close
  proximity that had a direct impact on the newer stores that entered the market
  place …..at the same time we did have a number of stores that did successfully
  grow to the top 10% of our stores during the down turn….
  More then 50% of Medicare based businesses in the Foot Wear market place are
  gone. More then 50% of the independent Foot Wear retailer have closed and continue to close due to the same issues that we faced…..
  We are not focused on growth at this time but we do have a number of franchisees
  that have well passed retirement age and would like to sell their businesses….our
  focus is on supporting those successful franchisee’s that are ready to move on with
  plans for very slow progressive growth over the next 3 years…. our objective is only
  5 new stores for 2015. We have taken steps to survive the down turn and store closures, we have redefined our market niches and strategy on how to reach those
  customers that need our services, we have our own lab in USA that makes the custom orthotics providing our franchisees with gross margins of 75 to 80%, we are
  one of only 3 schools in the USA that has a Certified teaching program for Pedorthist, we lead the Pedorthic Field and provide a much needed service, we have hired key people to support the current position we are in and have outsourced for very specific skill sets needed. Our business has been reviewed by
  a number of outside franchising experts and they all have given us high marks on
  the concept and viability of the Foot Solutions model for today and tomorrows market place……..I would say we have repositioned ourselves for the opportunity
  to grow our business concept within a niche that literally has no major competitors
  at this time……I will be happy to explain or discuss this with any one….

• I will try. I was granted a loan through Suntrust Bank out of Atlanta, Ga. Why would a bank from Atlanta, Ga. want to give a franchisee from Arkansas a loan to start up a franchise that Churns 100% of it’s franchisees over a 5 to 6 year period? These notes are spread out over 7 years if you only have good credit and no start up. That is when I found out about the New Market Tax Credit allocating money to banks like Suntrust Bank who receive this money to boost business opportunities in low income or poorly developed communities. I have posted much of this information on the Matco comments. How it works though is our government provides tax dollars to promote community development in in small communities and low income areas. ONE of these ways is through the NMTC or New Market Tax Credit. This money is was meant to help small communities grow but what it is doing is giving BIG corporations a place to pull tax payer dollars to fund their fraud. I say this because why the hell would SUNTRUST Bank want to lend Todd Peterson $63,000 with no money down. WELL!!! If the money is not Matco’s and is free money with the guise of promoting rural and small community development why wouldn’t Matco take that money each year and CHURN as many franchisees as they could to tap into those funds?

  It isn’t just the NMTC either! There are a LOT of funds slotted for community development with different titles but they all do the same thing. FUND the franchise industries fraud!

• Almost bought a Line-X franchise for Spray-on Lining & Coatings. Line-X price is $246,000.00. As owner of 2 truck dealerships with collision shops, I’ve witnessed many fake offers and fraudulent schemes. When I located Flexible Lining Systems this taught me everything. Clear and simple; an actual Spray-Lining & Coatings dealership, pure and hybrid polyurea for under $26,000.00 superseded any product, equipment or dealership service Line-X (also Rhino Linings) ever offered. For that reason I renamed Corpus Christi Bedliners now our legal name, “Rhino-Line-X Alternative”…