Franchisees of the 10 brands in the ranking defaulted at more than double the rate for SBA borrowers who invested in all other chains, according to a Wall Street Journal analysis of charge-offs of all SBA-backed franchise loans in the past decade. Put another way, franchisees of those 10 brands have left taxpayers on the hook for 21 percent of all franchise-loan charge-offs in the past decade, collectively failing to pay back $121 million in SBA-guaranteed loans from 2004 through 2013. The 7(a) loan-guarantee program is the SBA's most popular loan program by far. It was set up six decades ago to help borrowers who can't qualify for traditional loans obtain funding to start or expand franchises and other small businesses. The SBA guaranteed nearly $18 billion in 7(a) loans, including $2 billion for franchisees, in the fiscal year ended Sept. 30, 2013. Overall, 18 percent of all SBA 7(a) loans — and 13 percent of all such loans to franchisees — were charged off, according to data from 2004 through 2013. Quiznos franchisees charged off more money than any other brand during the 10-year period that the Journal reviewed. Its franchisees accumulated $38 million in unpaid loans and had a default rate of 30 percent from 2004 through 2013.
