Properties that well-known franchises occupy are often lucrative commercial income properties, but there are always exceptions to the rule. For example, triple net properties for the franchises below are often considered risky investments due to the franchises’ recent history (2000-2011) of Small Business Administration (SBA) backed loan defaults. Before you consider buying triple net properties that these businesses occupy, consult with Westwood Net Lease Advisors.
Everyone seems to love hot wings, but Wings-N-Things hasn’t performed well enough to stay out of the top position for SBA loan defaults from 2000-2011, a period during which franchisees defaulted on a bewildering 94.1% of their loans.
Since the advent of Netflix and other web-based movie services, Blockbuster Video has been on the ropes financially. In many areas, its stores are dying off like rows of dominoes toppling, as its 78.5% loan default rate would suggest.
Seemingly everyone enjoys playing golf, but Pro Golf franchises couldn’t rake in enough money to keep from posting a dismal default rate of 74.6%. In 2012, the Small Business Association (SBA) rated Pro Golf the worst business franchise.
MR. GOODCENTS SUB’ AND PASTA
Mr. Goodcents Sub’ and Pasta franchises were once considered good investment opportunities. Unfortunately, franchisees haven’t been able to sell enough of the company’s sandwiches to avoid a 64.7% default rate.
Johnny Rockets imitates the iconic American milkshake and burger joints of the 1950s, which sounds like a great business idea. Nevertheless, franchisees of the bustling restaurant have recently experienced a loan default rate of 56 percent.
DOLLAR DISCOUNT STORES
Dollar Tree, Dollar General, and Family Dollar are currently thriving in an era of recessionary spending. But one of their competitors, Dollar Discount Stores, has had it rough. As of recently, franchisees have defaulted on 55.5% of their loans.
Fuddruckers is a fun-filled create your own burger restaurant with a catchy name, but any excitement you feel as you consider investing in the business should be tempered by its franchisees’ unusually high loan default rate of 52.1%.
Has the smoothie craze ended? Based on Planet Smoothie’s dismal 46.3% default rate heading into 2012, it makes you wonder. Owning a property that a Plant Smoothie franchise occupies could turn out to be a rough ride.
Blimpie’s slogan may be “It’s a Beautiful Thing”, but the business’s loan default rate of 45.7% is downright ugly. If you need to lease to a submarine sandwich shop business, Subway appears to be a much safer bet than Blimpie.
Quizno’s built its brand around the “toasted sub.” However, while its subs certainly taste unique compared to its competitors’ sandwiches, this hasn’t kept Quizo’s Subs’ franchisees from defaulting on 43.7% of their SBA backed loans.