Glossary · Reading the business
Franchise failure rate(franchise charge-off rate)
In short
The share of a franchise brand's SBA loans that lenders charged off — a hard signal of whether the model actually works.
What it means in a deal
Most "best franchise" lists are sponsored. The failure rate isn't: it's the percentage of a brand's SBA loans (over a fixed cohort of years) that ended in a charge-off, straight from public lending records. A brand with hundreds of loans and a near-zero failure rate has a proven system; a high rate with real volume is a warning. Lenders track this the same way, so a clean record also means easier financing and better terms on that brand.
Related terms
Common questions about Franchise failure rate
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
- What is the 'Prime Rate' when talking about SBA 7(a) loan rates?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
- How does failure to disclose information impact my SBA 7(a) loan approval?
- Is the SBA 7(a) loan guaranty designed to protect my business from failure?
- What is the Wall Street Journal Prime Rate's role in SBA 7(a) loan interest rates?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-16 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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