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    2 Replies Latest reply on Jan 9, 2010 5:52 AM by Mongoose

    SBA Financed Quiznos:1,878 Failures in 2008 alone! Scout
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      In 2008, there were 1,878 SBA financed Quizno's restaurants that failed. That totaled over $276 Million dollars charged off by lenders, most of which was reimbursed by the SBA. According to SBA data, that was about 20% of all Quizno's restaurants that were financed. That's 1 in 5!

      What lessons are there to be learned here?

      1) Just because a franchise is a well known name, it doesn't necessarily mean the business will succeed. There really is no such a thing as a "plug 'n play" franchise concept. Every business, franchise or independant, service or retail, big or small, requires a major committment of time, effort, and money. Even though someone has developed and refined a concept, this does not make it fool proof. Anyone who claims a concept is a "can't lose" is trying to sell you a bill of goods.

      2) Just because you can get financing, it doesn't mean you are guaranteed to succeed. Banks have certainly lending parameters, and if you met those parameters, you will be approved for financing. This does not, however, guarantee that your business will succeed. Banks are playing the odds based on their historical experiences. Of course, historical results were no help when the current economy hit and businesses that were previously successful started dropping like flies.

      3) An SBA guarantee helps the lender, not the borrower. If you have an SBA guaranteed loan, it really doesn't mean much to the borrower. The assurance is for the lender, and was offered in the first place in order to compel the lender to make the loan. Once the business fails, the SBA guarantee is of no use to the borrower, and will not result in automatic waiver the loan. The lender will continue to have every legal option available to it.