{"ok":true,"canonical_url":"https://dealroom.so/glossary/franchise-failure-rate","api_url":"https://dealroom.so/api/public/glossary/franchise-failure-rate","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-16","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"franchise-failure-rate","term":"Franchise failure rate","aka":"franchise charge-off rate","group":"Reading the business","definition":"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":"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.","url":"https://dealroom.so/glossary/franchise-failure-rate","official_sources":[],"related":[{"slug":"cohort-charge-off-rate","term":"Cohort charge-off rate","url":"https://dealroom.so/glossary/cohort-charge-off-rate"},{"slug":"business-acquisition-loan","term":"Business acquisition loan","url":"https://dealroom.so/glossary/business-acquisition-loan"},{"slug":"dscr","term":"DSCR","url":"https://dealroom.so/glossary/dscr"}],"related_questions":[{"question":"What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?","url":"https://dealroom.so/for-lenders/questions/what-alternative-base-rates-are-available-for-variable-rate-7-a-loans-besides-the-wall-str"},{"question":"What is the 'Prime Rate' when talking about SBA 7(a) loan rates?","url":"https://dealroom.so/sba-loans/basics/what-is-the-prime-rate-when-talking-about-sba-7-a-loan-rates"},{"question":"What specific alternative base rates are permissible for variable rate 7(a) loans?","url":"https://dealroom.so/for-lenders/questions/what-specific-alternative-base-rates-are-permissible-for-variable-rate-7-a-loans"},{"question":"How does failure to disclose information impact my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/how-does-failure-to-disclose-information-impact-my-sba-7-a-loan-approval"},{"question":"Is the SBA 7(a) loan guaranty designed to protect my business from failure?","url":"https://dealroom.so/sba-loans/basics/is-the-sba-7-a-loan-guaranty-designed-to-protect-my-business-from-failure"},{"question":"What is the Wall Street Journal Prime Rate's role in SBA 7(a) loan interest rates?","url":"https://dealroom.so/sba-loans/basics/what-is-the-wall-street-journal-prime-rate-s-role-in-sba-7-a-loan-interest-rates"}],"related_tool":{"label":"Franchise finder","url":"https://dealroom.so/franchises"}},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Franchise failure rate","url":"https://dealroom.so/glossary/franchise-failure-rate","source_type":"DealRoom Data"}}