Methodology · Last updated August 17, 2026

How the franchise SBA default rates are built

Every figure on this site derives from the U.S. Small Business Administration's public 7(a) FOIA loan file (data.sba.gov). A brand's default rate is the share of its SBA 7(a) loans approved FY2010–FY2019 that were charged off, with loan statuses as of June 30, 2026, measured across 501 franchise brands and 26,749 resolved loans.

Where does the data come from?

The source is the SBA 7(a) FOIA dataset published at data.sba.gov (dataset family "7(a) & 504 FOIA"). The SBA refreshes these files quarterly; this site uses the release with loan statuses as of June 30, 2026. Each record is one loan: approval date, gross approval amount, franchise code and name where the borrower is a franchisee, NAICS industry code as reported at origination, and the loan's current status (paid in full, charged off, cancelled, or outstanding). Nothing here comes from franchisor disclosures, brokers, or surveys.

Which loans count, and why is the cohort FY2010–FY2019?

Rates use loans approved in federal fiscal years 2010 through 2019. The denominator is resolved loans — paid in full plus charged off. Cancelled and never-disbursed loans are excluded upstream because no money went out. Loans approved from FY2020 onward are reported as counts only (loans and early charge-offs), never as a rate. Most of those loans have not reached maturity, and a default rate on an unresolved cohort is censored: the numerator can only grow, so any percentage published today would understate the eventual rate and reward the youngest, least-tested brands. That is the censoring problem, and the honest response is to wait for the cohort to mature.

How were the 10.2%, 8.0%, and 7.8% benchmarks computed?

All three come from the same FY2010–FY2019 cohort and the same resolved-loan denominator. The all-franchise 7(a) charge-off rate of 10.2% pools every loan carrying a franchise code. The all-borrower rate of 8.0% pools every resolved 7(a) loan in the cohort. The non-franchised rate of 7.8% pools resolved loans with no franchise code. Industry benchmarks on brand pages pool every franchise loan in that brand's primary industry, so a brand is compared with its peers, not with the whole economy.

Does the franchise gap replicate in other datasets?

Yes. In the 1990s 7(a) cohort, franchised borrowers charged off at 15.5% versus 11.9% for non-franchised borrowers. In the 2010s SBA 504 program — a different loan product with different lenders and collateral — franchised borrowers charged off at 4.0% versus 2.7% for non-franchised borrowers. Different decades and a different program show the same direction: franchised borrowers default more often than comparable independents.

How are brand names normalized?

The SBA records franchise names inconsistently ("WINDOW GENIE", "Window Genie", "9ROUND; 9round kickboxing"). We uppercase each name, drop punctuation and parenthetical text, key on the first segment before a semicolon, and merge rows that share a key: loan and default counts are summed, rates recomputed, and average loan sizes weighted by loan count. Display names use the cleanest variant. Brands whose merged sample is under five loans are not published as pages.

What are the known limitations?

• SBA borrowers skew undercapitalized relative to all-cash buyers, so these rates can overstate risk for well-funded operators.
• Franchise tagging covers only roughly 9–12% of 7(a) loans; brands with few SBA-financed franchisees will have small samples.
• Small samples move a lot: at 20 loans, one default is five percentage points. Pages state the sample size and a caveat wherever it applies.
• Industry codes are self-reported at origination and are not audited.
• Charge-off is a lending outcome, not a business-closure count; some failed units never had SBA loans and some charged-off borrowers kept operating.

How are corrections handled?

This is independent research from public U.S. government data. We are not affiliated with any franchisor, broker, or franchise consultant, and nothing here is legal, financial, or investment advice. Franchisors and franchisees who believe a figure is wrong can email [email protected] with documentation — a loan-level extract, a franchise-code mismatch, or evidence of a merge error. We review within 5 business days, correct the data file, rebuild the site, and note the change on this page.

How can the numbers be reproduced?

Every figure derives from the public files at data.sba.gov — dataset "7(a) & 504 FOIA". Filter to approval fiscal years 2010–2019, keep loans with a franchise code, drop cancelled loans, group by normalized franchise name, and divide charged-off by resolved loans. The site's cleaned brand table is published as CSV and JSON; a machine-readable index of pages is at /llms.txt.