When you’re looking to buy a business, “risk” is usually the first word on your mind. While no investment is a sure thing, the Small Business Administration (SBA) provides us with a powerful “cheat sheet” through its loan performance data.
Recent data (FY2020–FY2023) offers a unique stress test. It covers the COVID-19 era—a period that pushed many businesses to the brink. If a brand saw zero defaults during that window, it’s a massive signal of a resilient business model.
Here is the breakdown of the most stable franchises based on the latest SBA 7(a) loan performance.
Understanding the “Default Metric”
To keep the data reliable, we look at charge-offs—instances where the borrower couldn’t repay and the SBA had to pay the lender guarantee. We’ve also filtered this list to brands with over 25 loans. Why? Because a brand with only 2 loans and 0 defaults doesn’t have a large enough sample size to prove it’s a “safe bet.”
The big picture: The average franchise default rate during this period was roughly 17.3%. However, the elite group below averaged a staggering 0.21%.
🏆 The Zero-Default Elite (0% Charge-off Rate)
These fifteen brands managed a perfect record in recent years. We’ve ranked them by the number of loans—the higher the loan count with zero defaults, the more impressive the “safety” score.
| Rank | Franchise | No. of Loans | Industry |
| 1 | The UPS Store | 615 | Shipping & Business Services |
| 2 | HOTWORX | 305 | Infrared Fitness |
| 3 | Crumbl | 241 | Food (Bakery) |
| 4 | Ace Hardware | 235 | Retail / Home Improvement |
| 5 | Quality Inn | 233 | Hospitality |
| 6 | Motel 6 | 209 | Hospitality |
| 7 | Super 8 | 199 | Hospitality |
| 8 | Jersey Mike’s | 188 | QSR (Sandwiches) |
| 9 | The Goddard School | 183 | Childcare & Education |
| 10 | Scooter’s Coffee | 180 | Beverage / Coffee |
| 11 | Tropical Smoothie Cafe | 167 | Healthy QSR |
| 12 | Servpro | 163 | Restoration Services |
Pro Tip: Notice a trend? The list is dominated by essential services (shipping, hardware, restoration), hospitality, and childcare. These are sectors that people continue to pay for even when the economy gets bumpy.
📉 The “Extremely Low” Risk Category
Even if a brand didn’t hit a perfect zero, anything under 1% is statistically incredible. Interestingly, Subway—which often gets a bad rap in older data—performed very well in this recent window.
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Best Western: 0.61% (Only 1 default out of 165 loans)
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Domino’s: 0.70% (Only 1 default out of 143 loans)
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Smoothie King: 0.74% (Only 1 default out of 136 loans)
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Subway: 0.82% (Only 2 defaults out of 244 loans)
⚠️ A Word on High-Risk Concepts
On the flip side, some service-based brands struggled significantly during the same period. Home services like Aire Serv (14.81% default) and Mr. Appliance (13.46%) saw double-digit failure rates. Other brands frequently flagged for high default counts include Dickey’s Barbecue Pit and Anytime Fitness.
If you are looking at a brand with a default rate north of 10%, you need to ask very hard questions about their overhead and franchisee support.
Final Takeaway for Buyers
If you’re a buyer looking for a “safe” entry point into business ownership, the brands at the top of this list are a great place to start your due diligence. Their ability to survive 2020-2023 with virtually zero loan failures proves they have:
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Strong demand from customers.
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Effective training for owners.
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Lender confidence (which makes getting your loan much easier).
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 450 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential.