WORST FRANCHISES IN AMERICA by SBA Loan Defaults

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• I have owned a Hunrtington Learning Center franchise for the past 2.5 yrs. I started from zero and expect to have a net profit after taxes and interest over $100K this calendar year.
  I have operated two non frachise businesses over the past 25 yrs and therefore came to the Huntington system with signigicant business experience.
  A Huntington franchise does present a few challenges that other businesses do not. Four challenges stick out in particular:
  1. The business revenue is highly season. Virtually all of the annual income is arned in the first and second quarters.
  2. A majority of the tuition revenue is prepaid at the start of the program and so it is easy to confuse earned and unearned revenue. The fact that the costs associated with the prepaid tuition will incurred over the following 3 to 5 months makes it difficult to predict future monthly cash flow and more importantly can result in negative cash flows in low revenue months that can exceed fixed costs.
  3. Selection of Center Management staff is more difficult as the ideal center director must possess skills in education and in sales, an uncommon skill set. The ideal director has an degree in education and an extraverted personality with the ability to close a sale that typically is in the $6,000 to $8,000 range.
  4. This is not a business for parents of young children. The hours of operation when the owner needs to be at the center are from 11AM to 7:30 or 8:30PM. This is not a business that can be run as an absentee owner, at least not for the first 3 or 4 years.

  These issues can be overcome and centers that do overcome these issues are quite profitable with net operating incomes over $200,000 per year.

  The educational product that Huntington offers is outstanding. In the short time period that I have been a franchisee, I have had several parents come back to visit the center following the conclusion of their child's program, to say that it was "the best money they ever spent" and that their child has become very successful in school.

  The exam prep program also has outstanding results and our center averages a 270 point increase in SAT scores which is phenomenal. Parents and students are thrilled with the results.

  I hope this comment may be useful for individuals considering a Huntington franchise. It has it's challenges but when done properly with good business sense, it is an enjoyable and rewarding business to own and operate.

• A question for anonymous. So, if Huntington is such a great opportunity why does the SBA loan administration have to hand out government backed tax payer loans to put their franchisees in business? Why don't they take the profit from the franchises that are giving them profits and reinvest it back into their business opportunity? I'll answer that one for you! Because when you can get free money for blue sky and profit from it and you have an organization like the International Franchise Association and its created organizations to back and perpetuate the fleecing of American taxpayers why use your money which might be lost to the fraudulent opportunity you offer?

• Some rogue franchise operations do not use the franchise business name in the SBA loan process. They use some other business identities and SBA cannot trace the failures back to these franchises. Note that SBA does not monitor success but failures only.
  For example, Discovery Point Franchising uses Discovery Development as the business entity in SBA loans. Similarly Legacy Academy Franchising uses Commercial Contractors Enterprises in the SBA loan documents. However, during the loan courtship, the franchise name gets used as proven business model for the SBA loan evaluation.
  Since the final documents are not linked to SBA data, the failures do not get recorded against the franchises. Franchise registry or other databases monitors failures, and these franchises get a favorable treatment because statistically these franchises have no failure records.
  These childcare franchises provide the business for free when the franchisee purchases $2.5M+ building from the franchise owners. FDD and SBA registry are shown as clean and both franchise officials and SBA loan officers claim that the business model is excellent because there had been no failures in the past.
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  Comment by Anonymous on Huntington is based on imagination because so many Huntington franchisees have gone bankrupt. HLC has a proven path towards bankruptcy for franchisees. Hopefully new franchisees will not fall for those misleading information.

• The high failure rate franchises are still in the SBA favor list called SBA registry. HLC has nearly 50% failure rate and SBA is still encouraging that franchise by allowing loans and advertising them in SBA registry. Does not make sense.

• Surely there has to be a reason why our government officials are allowing tax payers to fund these franchisor opportunities instead of the franchisors themselves. If the franchisors have such a great opportunity then why do they need tax payers to fund start-up costs? You would think that these successful franchisors with a proven system would be cashing in on the financing of the franchises they sell as well as providing them with the tools (product) to be successful. There is no way main stream media would allow tax payers to bare the burden of fraud. Reputable magazines like Forbes and Fortune would NEVER allow tax payers to promote something that is a scam and does not promote growth or jobs. They would surely EXPOSE this industry if it was PROMOTING FRAUD. Wouldn't they?

• anonymous,

  It makes absolute sense! The coalition forces within the confounds of franchise organizations, attorneys, government organizations and political officials have spoken. It makes perfect sense!

• Unhappy,

  Is there any way you can tell us how many of these franchisors listed are members of the International Franchise Association? As well as the IFA's created organization called Vetfran? I think that would only be fair to the IFA as they and the FTC (Federal Trade Commission) seem to work together for the greater good of franchising. Surely none of the franchisors listed above are members of the IFA and Vetfran. Our political officials who serve the people would surely step in or those who issue membership's would surely revoke these franchisor's memberships as not to mislead the investors with F.D.D.'s approved by the FTC.

  Maybe the organization called the International Franchise Association accepts ANY franchisor as long as they contribute to FranPac. FranPac is an organization which legally (A grey area to control the people) takes donated money from franchisors and contributes it to campaign officials who might be swayed to vote their way. Bribes? Does it work? Why don't you go to the IFA website and see how the money dispersed to public officials helps their agenda. How they even brag on the internet to its coalition forces

  Why are American's the target of fraud in our government instead of the target of support? Was our constitution drafted to empower our leaders? Was our constitution drafted to make us slaves to our government? Was our Constitution drafted so the wealthy can fraud the people of the United States into buying fruitless franchises?

  There are some big name franchisors on this list and I challenge some of these failure rates because I know some of these companies who's success rates are MUCH worst than the rates listed.

• I'm an attorney investigating allegations against the franchisor for Camp Bow Wow Wow. If you have any information concerning your experiences or that of others with this franchisor, I'm interested in hearing from you. Thanks.

• I'm an attorney investigating allegations against the franchisor for Camp Bow Wow. If you have any information concerning your experiences or that of others with this franchisor, I'm interested in hearing from you. Thanks.

  The Kress Law Firm, LLC
  John C. Kress, Esq.
  4247 South Grand Boulevard
  St. Louis, MO 63111
  Phone: (314) 631-3883
  E-mail: jckress@thekresslawfirm.com

• Very interesting post by Anonymous regarding Huntington back in August 2012. What's interesting about it is that most of the language is taken directly from Huntington's marketing materials and phone scripts utilized by corporate staff. Even if it were a comment by a legitimate franchisee, his/her experience is the exception rather than the rule for Huntington. Most HLC franchisees are looking to get out as quickly as they can.