What is the best way to measure franchise failure rates by brand?

The cleanest public proxy is SBA franchise loan default data combined with unit growth trends. SBA defaults show where franchisees struggled to repay debt, while shrinking unit counts can indicate closures, distress, or weak economics. Neither metric is perfect alone. Together, they are much more informative than generic franchise industry averages.

Does a high SBA default rate mean a franchise definitely fails?

Not automatically. An SBA default is not the same thing as a permanent business closure. But a high default rate across many loans is a major red flag. It suggests recurring franchisee stress, weak unit economics, or too much leverage in the system.

What SBA default rate is dangerous for a franchise buyer?

As a rule of thumb, under 5% is relatively strong, 5% to 15% is caution territory, and above 15% deserves heavy scrutiny. Above 30% is a serious warning sign unless the loan count is extremely small.

Where can I see franchise failure rates by specific brand?

FranchiseIQ's free Franchise Failure Rates Data Hub lets you search 2,800+ brands, filter by industry, and compare SBA default risk and growth trends in one place.

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SBA DataApril 18, 2026·11 min read

Franchise Failure Rates by Brand (2026): What the SBA Data Actually Shows

We analyzed franchise risk data across 2,797 brands, including SBA default rates for 1,724 brands and industry benchmarks across 20 categories. The result: franchise failure risk varies massively by brand, and the biggest danger is not the generic franchise industry average. It is buying into the wrong system.

Quick answer

The strongest public proxy for franchise failure rates by brand is SBA loan default data plus unit growth direction. In our dataset, some brands show 0% defaults, while others show 100% defaults. That spread is exactly why buyers should stop relying on vague claims like “franchises are safer than small businesses” and evaluate individual systems instead.

Why “franchise failure rate” is the wrong starting point

Franchise buyers often search for a single failure-rate number. That sounds useful, but it hides the real issue. A low-capex B2B service brand and a heavily leveraged restaurant concept should never be treated as having the same risk profile. Category matters. Brand matters even more.

Franchisors rarely publish clean brand-level failure statistics. Item 20 disclosures help, but raw closure counts do not tell you everything. Some units transfer. Some close voluntarily. Some restructure. SBA default records add a second, much harder-to-spin lens: whether franchisees were able to service debt.

What our 2026 brand-level data covers

2,797

brands in the failure-rate hub

1,724

brands with SBA default data

industry categories

cleaning brands with SBA data, the riskiest major category

Brands showing the highest visible risk

The table below highlights examples from the highest-risk end of the dataset. These brands all show 100% SBA default rates in the current corpus. That does not automatically mean every current location is doomed. It does mean every recorded SBA-financed borrower in the matched data defaulted, which is an extreme warning sign.

Brand	Industry	SBA default rate	Units
Frontier Adjusters, Inc.	Other	100%	587
Premier Pools & Spas / Pinnacle Pools & Spas	Health/Wellness	100%	127
Expense Reduction Analysts, Inc.	Financial Services	100%	144
Great Steak	QSR	100%	25
TWIN RESTAURANT FRANCHISE, LLC	Casual Dining	100%	61
GLOBAL RECRUITERS NETWORK	Staffing	100%	180
The Coffee Beanery	QSR	100%	27

Lower-risk examples are real too

Zero-default brands exist across travel, fitness, child services, and business services. That does not guarantee success. It does show the distribution is not random. Some franchise systems appear to produce far fewer debt blowups than others.

Brand	Industry	SBA default rate	Units
CruiseOne	Travel	0%	1,954
i9 Sports	Fitness	0%	245
Bricks 4 Kidz	Child Services	0%	133
Soccer Shots	Fitness	0%	35
The Growth Coach	Financial Services	0%	36

The industry backdrop matters

Brand-level risk sits inside an industry-level risk environment. Cleaning and staffing run materially hotter than travel or business-format franchises. That means the same brand-level diligence process should be even stricter in the more failure-prone categories.

Industry	Avg SBA default	Brands	With SBA data
Cleaning/Janitorial	16.2%	179	81
Staffing	12.1%	40	11
Technology	11.5%	148	63
Education/Tutoring	11.0%	226	94
QSR	9.7%	1,591	677
Home Services	9.6%	568	321
Travel	3.2%	268	121
Business	1.9%	25	2

How to use this data without fooling yourself

Check loan count and sample quality. A 100% default rate on one or two loans is weaker evidence than 30% across dozens of loans.

Pair SBA defaults with unit growth. A brand with low defaults but shrinking units still deserves scrutiny.

Read Item 19 and compare it to the capital required. Some brands survive on paper but cannot support debt service plus an owner salary in reality.

Look for system-level consistency. If the brand's economics only work for top-quartile operators, the median buyer is taking more risk than the marketing suggests.

Use category context. A middling brand in a low-risk category can be safer than a seemingly strong brand in a structurally fragile one.

Best next step: search the full brand database

A static list of “safe” and “dangerous” franchises is useful for SEO, but it is not enough for diligence. The right workflow is to start with the brand you are actually considering, then compare its SBA default rate, industry risk, unit growth, investment level, and Item 19 visibility against peers.

Use the free Franchise Failure Rates Data Hub

Search 2,800+ brands, sort by SBA default risk, filter by industry, and spot shrinking franchise systems before you invest.

Open the data hub →SBA default rankings →