The premium tested

Franchise loans fail more often than independent ones

Charge-off rate on seasoned FY2010–FY2019 7(a) originations.

The case for franchising rests on reduced risk. In the lending data the franchise book charges off 24.8% more often than the independent book. Franchise loans are larger and more often fund startups, so this is a difference between two populations rather than a controlled effect — but the risk-reduction claim does not appear here.

7.86%franchise charge-off rate — 42,463 seasoned loans
6.30%non-franchise — 436,548 seasoned loans
+24.8%relative difference
Source: Analysis of SBA 7(a) FOIA loan-level data (as of 31 March 2026). Cancelled approvals excluded. Franchise status per the SBA franchise name field. Published by sba-feasibility-study.com.