SBA Loan Default Rates by Franchise Brand, Computed From SBA 7(a) Data

Dickey's Barbecue Pit leads at 30.29%, with Fantastic Sams close behind at 28.57%. These loans were all approved after the 2008-2009 recession, so that downturn doesn't explain them.

Even among the most popular brands the spread is wide: Anytime Fitness at 12.65% versus The UPS Store at 0.67%. Popularity with lenders is not the same as a track record of repayment.

Hotels, child care and service brands cluster at the low end, such as Primrose Schools at 0.53%. Several of these carry big loans: Primrose averaged $2.70 million and Red Roof Inn $2.01 million.

Matco Tools tops the long-run list at 34.72%, but its loans averaged about $80K for mobile tool routes. Quiznos lost 659 of 2,316 resolved loans, a 28.45% rate across the full history.

Loans approved in FY2007 failed at 38.03% because they ran straight into the recession. Rates bottomed at 6.96% in FY2013, then climbed to 13.17% for FY2018 approvals, many of which hit the pandemic shutdowns early in their life.

SBA 7(a) charge-off rates for 63 franchise brands with at least 100 resolved loans, FY2010-FY2019 approvals (status as of June 30, 2026)

Source: U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2010-FY2019) loan-level data, as of June 30, 2026 (FOIA_7a_FY2010_FY2019_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, 7(a) and 504 FOIA data dictionary (LoanStatus: CHGOFF = Charged Off, PIF = Paid In Full, EXEMPT = disbursed loans not yet resolved). Download as image

SBA 7(a) charge-off rates for 36 franchise brands with at least 400 resolved loans, all FY1991-FY2026 approvals (status as of June 30, 2026)

Source: U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY1991-FY1999) loan-level data, as of June 30, 2026 (FOIA_7a_FY1991_FY1999_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2000-FY2009) loan-level data, as of June 30, 2026 (FOIA_7a_FY2000_FY2009_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2010-FY2019) loan-level data, as of June 30, 2026 (FOIA_7a_FY2010_FY2019_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2020-Present) loan-level data, as of June 30, 2026 (FOIA_7a_FY2020_Present_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, 7(a) and 504 FOIA data dictionary (LoanStatus: CHGOFF = Charged Off, PIF = Paid In Full, EXEMPT = disbursed loans not yet resolved). Download as image

Charge-off rate of resolved SBA 7(a) loans, franchise vs non-franchise, by approval year (status as of June 30, 2026)

Source: U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2000-FY2009) loan-level data, as of June 30, 2026 (FOIA_7a_FY2000_FY2009_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2010-FY2019) loan-level data, as of June 30, 2026 (FOIA_7a_FY2010_FY2019_asof_260630.csv); U.S. Small Business Administration, SBA Open Data, 7(a) and 504 FOIA data dictionary (LoanStatus: CHGOFF = Charged Off, PIF = Paid In Full, EXEMPT = disbursed loans not yet resolved). Download as image

What is the SBA loan default rate for franchises?

For loans approved between FY2010 and FY2019, 10.18% of resolved franchise loans were charged off. That counts 3,686 failed loans out of 36,217 that either paid in full or were written off by June 30, 2026. Non-franchise loans from the same years failed at 7.76%.

Stretch the window back to FY1991 and the two groups look almost identical: 15.87% for franchises and 15.75% for everyone else. The long-run number is higher because it includes loans approved in the mid-2000s that ran straight into the 2008-2009 recession.

A note on wording. The SBA files don't have a field called "default." A borrower can miss payments, catch up, and never show up as a loss. A charge-off is the end of the road: the lender stopped collecting and wrote off what was left. So these rates understate how many owners hit trouble, but they show exactly how many loans were lost.

Loans still being repaid are left out. That matters for newer brands, where many loans haven't had time to either succeed or fail.

Which franchise brands have the highest SBA default rates?

Among 63 brands with at least 100 resolved loans from FY2010-FY2019, Dickey's Barbecue Pit had the worst record at 30.29%. That's 63 charge-offs out of 208 loans. Fantastic Sams, Meineke and Which Wich round out the top of the list.

Over the full history, among brands with 400+ resolved loans, Matco Tools sits highest at 34.72%, followed by Cold Stone Creamery, Blimpie and Quiznos. Quiznos alone accounts for 659 charge-offs.

Brands can change, for better or worse. Cold Stone Creamery charged off 30.75% of loans across all years, but only 1.96% of its FY2010-FY2019 loans. Read the decade table first, then use the all-years table to see whether a brand has a history worth asking about.

Look at what these brands share. Most are food, service and repair concepts, and 10 of the 12 worst averaged under $400K per loan. A smaller loan makes a franchise easier to buy, but it can also mean less cushion when sales come in under plan. Fitness concepts show up too: Anytime Fitness charged off 12.65% of its loans in the decade, Snap Fitness 11.03%.

Are franchises safer than independent businesses?

Not on this evidence. Franchise loans in the 2010s did worse than non-franchise loans, and over three decades the two are basically tied. The year-by-year table shows the gap widening from FY2014 on: franchise loans approved in FY2016 failed at 10.95%, against 7.61% for non-franchise loans.

What a franchise does give you is a much narrower set of outcomes per brand. Subway, the most financed brand of the decade, charged off 7.60% of its resolved loans. The UPS Store charged off 0.67%. Planet Fitness and Wingstop had none. If you pick a brand with a strong record, a franchise can be a safer bet than starting from scratch. If you pick a weak one, it can be worse.

Franchises are still a big slice of SBA lending. In FY2025, 9.19% of 7(a) loan approvals went to franchise businesses, roughly 1 in 11.

Why did franchise defaults rise for loans made after FY2014?

The approval-year chart has a shape worth understanding. Franchise loans made in FY2013 charged off at 6.96%. By FY2018 the rate had nearly doubled to 13.17%. Non-franchise loans rose too, but less, reaching 9.75% for the same year.

A few things likely played a part. Franchise lending grew fast in those years: resolved franchise loans went from 2,758 for FY2013 approvals to 5,043 for FY2015. When money flows easily, weaker borrowers and weaker brands get funded. A brand with little history can look great on paper until its first wave of owners runs out of cash.

Timing hurt as well. A loan approved in FY2017 or FY2018 was only a couple of years old when the pandemic closed dining rooms, gyms and salons. Young loans have the least equity and the largest balances, so they break first.

The lesson for a buyer today: a brand's recent growth is not proof that its owners are doing well. Check its charge-off rate next to the closure counts in its FDD before you trust the sales pitch.

What the dollar charge-off rate adds

The brand tables show two rates. The loan count rate tells you how often borrowers failed. The dollar rate tells you how much money was lost, and it's usually lower because lenders recover some of the balance from collateral and guarantors.

When the dollar rate is close to or above the count rate, it can mean failures came early, before much was repaid, or that the bigger loans were the ones that failed. Liberty Tax is an example: 9.84% of loans charged off, but 12.90% of dollars. Dickey's lost 23.40% of dollars. For you as the borrower, early failure is the worst case, because the unpaid balance is large and your personal guarantee covers it.

How to use these numbers before you sign

• Look up the brand in both tables. A brand with 100+ resolved loans and a rate under the 10.18% franchise average is a reasonable start, not a guarantee.
• Ask the franchisor about the gap. If their rate is well above average, ask what changed and get the answer in writing.
• Compare against the FDD's outlet tables, which list closures, transfers and terminations by year. High charge-offs plus high turnover is a pattern, not bad luck.
• Call former franchisees listed in the FDD. Ask whether they still owed on their SBA loan when they closed.
• Read the personal guarantee on the loan and on the franchise agreement. SBA lenders require one from major owners, and a charge-off can follow you to your house and savings.
• Check what the franchise agreement makes you spend after opening, such as remodels or new equipment. Required spending soon after opening piles on cost right when cash is tightest and the loan balance is highest.

Sources and method

Every number on this page comes from the sources below, each opened and read on or before October 18, 2026. A second, independent review checked every figure against its source and corrected anything that did not match. Figures that could not be confirmed were left out.

1. U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY1991-FY1999) loan-level data, as of June 30, 2026 (FOIA_7a_FY1991_FY1999_asof_260630.csv) (As of June 30, 2026 (file posted July 21, 2026))
2. U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2000-FY2009) loan-level data, as of June 30, 2026 (FOIA_7a_FY2000_FY2009_asof_260630.csv) (As of June 30, 2026 (file posted July 21, 2026))
3. U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2010-FY2019) loan-level data, as of June 30, 2026 (FOIA_7a_FY2010_FY2019_asof_260630.csv) (As of June 30, 2026 (file posted July 21, 2026))
4. U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) (FY2020-Present) loan-level data, as of June 30, 2026 (FOIA_7a_FY2020_Present_asof_260630.csv) (As of June 30, 2026 (file posted July 21, 2026))
5. U.S. Small Business Administration, SBA Open Data, FOIA - 7(a) loan-level data, all four files (FY1991-FY1999, FY2000-FY2009, FY2010-FY2019, FY2020-Present), as of June 30, 2026 (As of June 30, 2026 (files posted July 21, 2026))
6. U.S. Small Business Administration, SBA Open Data, 7(a) and 504 FOIA data dictionary (LoanStatus: CHGOFF = Charged Off, PIF = Paid In Full, EXEMPT = disbursed loans not yet resolved) (Data dictionary posted with the June 30, 2026 FOIA files)