Best and Worst Franchises Listed by SBA Loan Defaults

The absoute worst franchise in America by loan default rates is Wings-N-Things with a __% loan faulure.

The absoute worst franchise in America by loan default rate is Wings-N-Things with a devastating 94% default status.

By William Bruce

As a business broker, I’m often asked about franchises. A franchise can be an excellent investment if — big “if” — you choose the right one.

To shed some light on the issue, the Small Business Administration has provided us with their latest list of franchise brands ranked by the percentage of loans in default status.

This list is for a 10-year period ending September 30, 2011.  Only franchise brands with a minimum of 10 loans are included.

Some franchise brands have been ineligible for SBA guaranteed loans from their inception.  This is most commonly due to legal issues created in their franchise documents.  For a list of franchises and the issues which render them ineligible for SBA loans, please see our article by clicking here.

Here are additional articles that might be of interest: What is a Franchise Really Worth (includes valuation of most food service franchises), How to Analyze a Business You’re Considering BuyingHow to Make a Written Offer to Buy a Business and How to Handle the Due Diligence Investigation When Buying a Business.

A complete and searchable listing of all ranked franchises by name and loan default rate can be viewed at Blue MauMau.

From the SBA loan default list, these are the franchise brands with default rates above 40 percent for the 10 year period ending September 30, 2011:

Brand Failure Percentage
WINGS-N-THINGS 94.12%
TILDEN FOR BRAKES CAR CARE CENTER 92.86%
NOBLE ROMAN PIZZA 86.36%
JUST-A-BUCK 81.82%
LA PALETERA 81.25%
EXECUTIVE TANS 80.85%
COUNTRY CLUTTER (BED & BREAKFAST) 80%
BEAR ROCK CAFE 80%
BLOCKBUSTER VIDEO 78.57%
SUPER SUPPERS 76.92%
PRO GOLF 76.47%
SHAPEXPRESS 75%
ATHLETE’S FOOT 73.91%
STEAK ESCAPE 71.43%
GOLF ETC. 71.08%
00452–24 SEVEN VENDING 70%
IMAGE SUN 70%
L. A. TAN 66.67%
MR. TRANSMISSION 65.38%
AMAZON CAFE 65.22%
WING ZONE 65.12%
MR. GOODCENTS SUB’ AND PASTA 64.71%
NEW YORK NY FRESH DELI 64.29%
OBEE’S SOUP SALAD SUBS 64.10%
U BUILD IT 63.64%
FRULLATI CAFE 63.64%
WIRELESS TOYZ 62.50%
NICK-N-WILLY’S PIZZA 62.16%
PARTYLAND (RETAIL PARTY GOODS) 61.11%
BREADEAUX PIZZA 60%
FROZEN ROPES NORTHSHORE 60%
NESTLE TOLL HOUSE CAFE 60%
SMOOTHIE FACTORY 60%
DREAM DINNERS 59.70%
CAMILLE’S SIDEWALK CAFE 57.89%
PLANET BEACH 57.66%
SUPER SUPPERS OF KELLER 57.14%
WINGS TO GO 56.76%
CARVEL ICE CREAM 56.41%
ROLY POLY ROLLED SANDWICHES 56.25%
JOHNNY ROCKETS 56%
PHILLY CONNECTION 55.77%
DOLLAR DISCOUNT STORES 55.56%
PETLAND 55.56%
COUNTRY KITCHEN 53.85%
SAMARI SAMS TERIYAKI GRILL 53.85%
STEAK-OUT 53.85%
SUBMARINA SANDWICHES 53.85%
HAIR COLOR EXPRESS 53.33%
RED BRICK PIZZA 53.06%
LARRY’S GIANT SUBS 52.63%
BEEF O’BRADY’S 52.48%
VELOCITY SPORTS PERFORMANCE 52.38%
COTTMAN TRANSMISSION 52.21%
FUDDRUCKER’S 52.17%
WOW CAFE AND WINGERY 51.72%
WINESTYLES, INC. 51.72%
PITA PIT 51.52%
TACO DEL MAR 51.35%
MY GYM 51.02%
JUICE IT UP 50.98%
ECONO LUB N TUNE 50%
CHEEBURGER CHEBURGER 50%
STREET CORNER NEWS 50%
JUICE ZONE 50%
REALTY WORLD 50%
JIMBOY’S TACOS 50%
LEE MYLES AUTOMOTIVE TRANSMISSIONS 50%
JERRY’S SUB SHOP 50%
DOUBLEDAVE’S PIZZAWORKS 50%
EAST OF CHICAGO PIZZA 50%
GOLF U.S.A. (RETAIL GOLF EQUIP.) 50%
HUNTINGTON LEARNING CENTER 49.26%
ATLANTA BREAD COMPANY 49.06%
INSTANT IMPRINTS 48.84%
MAUI WOWI 48.65%
CANDY BOUQUET,INC 48.28%
COMPUTER RENAISSANCE 48%
COFFEE BEANERY (RETAIL COFFEE) 48%
NORWALK FURNITURE IDEA 47.62%
MAX MUSCLE 47.62%
PACIUGO ITALIAN GELATO RENAISSANCE 47.62%
DAILY GRIND 47.37%
SHANE’S RIB SHACK 47.37%
NATIONWIDE FLOOR & WINDOW COVERINGS 47.06%
FIGARO’S ITALIAN PIZZA 46.67%
PLANET SMOOTHIE 46.34%
USA BABY 46.15%
ALL TUNE AND LUBE 46.15%
CHICAGO’S PIZZA OF GREENFIELD 46.15%
GREAT WRAPS 45.83%
BLIMPIE 45.74%
PIP PRINTING 45.45%
BUCK’S PIZZA 45.45%
FAST FRAME 44.78%
AIM MAIL CENTER 44.44%
PIZZA FACTORY 44.44%
MARS 44.44%
KABLOOM 44.23%
DRY CLEANING STATION 43.75%
BAD ASS COFFEE COMPANY (THE) 43.75%
QUIZNO’S SUBS 43.75%
MARBLE SLAB CREAMERY 43.66%
EXTRA INNINGS TRAINING CENTERS 43.48%
BACK YARD BURGERS 42.86%
NATURE’S TABLE 42.86%
COLD STONE CREAMERY, INC. 41.93%
NATHAN’S FAMOUS 41.67%
FOX’S PIZZA DEN 41.38%
FLOWERAMA 41.18%
TACONE 41.18%
CHEM-DRY 41.18%
NESTLE TOLL HOUSE BY CHIP 41.18%
MR. ELECTRIC 40.91%
THE HONEY BAKED HAM CO. AND CAFE 40%
SAM & LOUIE’S NEW YORK PIZZA 40%
EXTREME PITA (THE) 40%
HELP-U-SELL (REAL ESTATE) 40%
IMAGE ARTS ETC. 40%
MAMA FU’S NOODIE HOUSE 40%
KEVA JUICE 40%
KOLACHE FACTORY 40%

================================================

On the other hand, those franchises with zero to 20 percent loan defaults for the 10 year time frame are listed below:

Wendy's was among several franchise brands with no loan defaults.

Wendy’s was among several franchise brands with no loan defaults.

CHECKERS DRIVE-IN RESTAURANT 20%
SEA TOW OF RHODE ISLAND 20%
LEDO PIZZA 20%
GOLD’S GYM 20%
PURIFIED WATER TO GO 20%
BIG BOY 20%
SIGNS BY TOMORROW 20%
SEARS CARPET & UPHOLSTERY CARE 20%
HOMES & LAND (MAGAZINE) 20%
HONEY DEW DONUTS 20%
MCDONALD’S 20%
CHURCH’S FRIED CHICKEN 19.61%
EXXON 19.57%
BEN & JERRY’S ICE CREAM 19.44%
CERTA PROPAINTERS 19.18%
FIREHOUSE SUBS 19.13%
PORT OF SUBS 19.05%
CROWN TROPHY 19.05%
BRUSTER’S 18.95%
SIR SPEEDY PRINTING CENTER 18.87%
MIDAS MUFFLER SHOP 18.75%
ERBERT & GERBERT’S SUBS & CLUBS 18.75%
COLDWELL BANKER (REAL ESTATE BROKERS 18.75%
CIRCLE K 18.75%
TUTOR TIME 18.75%
COUSINS SUBMARINES (RESTAURANT) 18.64%
ARBY’S 18.60%
MANAGEMENT RECRUITERS 18.60%
PUMP IT UP 18.29%
LITTLE GYM 18.28%
EXPRESS PERSONNEL SERVICES 18.18%
RAPID REFILL INK 18.18%
SHERIDAN’S FROZEN CUSTARD 18.18%
DESERT SUN 18.18%
BUSINESS CARDS TOMORROW 18.18%
FISH WINDOW CLEANING 18.18%
CHEVROLET 18.18%
CHARLIES CHICKEN 18.18%
FASTSIGNS 18.10%
HOBBYTOWN USA 18%
KID TO KID 17.86%
RE/MAX REALTY 17.74%
CARSTAR AUTOMOTIVE 17.65%
SHONEY’S RESTAURANT 17.65%
MOBIL OIL (STATIONS) 17.54%
THE PITA PIT 17.39%
HONEY BAKED HAMS & CAFE 17.39%
IGA FOOD STORES 17.39%
CLARION INN & SUITES 17.39%
WOODCRAFT FRANCHISE CORPORATION 17.07%
THE UPS STORE 16.67%
MERLIN’S MUFFLER 16.67%
FAST-FIX JEWELRY REPAIRS 16.67%
DO IT BEST HARDWARE 16.67%
POWERHOUSE GYMS 16.67%
HANDEL’S ICE CREAM 16.67%
EDIBLE ARRANGEMENTS 16.16%
UPS STORE 16.11%
WINGSTOP RESTAURANT 15.96%
HUDDLE HOUSE 15.91%
SUNOCO SERVICE STATION 15.87%
KUMON MATH AND READING CENTER 15.79%
SIGNS NOW 15.79%
LIBERTY TAX SERVICE 15.63%
PAUL W. DAVIS SYSTEMS 15.38%
RIGHT AT HOME 15.38%
GOODYEAR TIRE 15.38%
MCALISTER’S GOURMET DELI 15.38%
MARCO’S PIZZA 15.38%
SCOOTER’S COFFEEHOUSE 15.38%
MARATHON OIL COMPANY 15.38%
APPLE SPICE JUNCTION 15.38%
1 800 GOT JUNK 15.38%
HOWARD JOHNSON 15.22%
TACO JOHN’S 15.15%
MAIL BOXES ETC. USA 15.10%
AUNTIE ANN’S (SOFT PRETZELS) 15.07%
ACE HARDWARE 15%
COLOR ME MINE FRANCHISING, INC 14.81%
REMAX 14.75%
JERSEY MIKE’S (DELI RESTAURANT) 14.43%
SEARS CATALOG STORE 14.42%
MRS. FIELD’S COOKIES 14.29%
PHILLIPS 66 14.29%
SAVE – A – LOT 14.29%
SCOTTISH INNS 14.29%
MIRACLE-EAR CENTERS 14.29%
HANDYMAN CONNECTION 14.29%
FORD MOTOR (DEALERS) 14.29%
LENNY’S SUB SHOP 14.29%
RONZIO 14.29%
INSTY-PRINTS 14.29%
BEVINCO 14.29%
TWO MEN AND A TRUCK 14.29%
MARTINIZING DRY CLEANING 13.64%
HARDWARE HANK 13.51%
KOA KAMPGROUNDS(KAMPGROUNDS OF AMERICA) 13.33%
NEW HORIZON COMPUTER LEARNING CENTER 13.33%
ARTHUR MURRAY DANCE STUDIO 13.33%
AMERIHOST INN 13.33%
ORIGINAL PANCAKE HOUSE (THE) 13.04%
DUNKIN DONUTS 12.88%
CITGO SERVICE STATION 12.77%
KENTUCKY FRIED CHICKEN 12.70%
POSTAL INSTANT PRESS 12.50%
GLASS DOCTOR 12.50%
PINCH-A-PENNY 12.50%
POPEYE’S FAMOUS FRIED CHICKEN 12.35%
CHEVRON (GAS STATION) 12.32%
PEARLE VISION CENTER 12.12%
CONOCO SERVICE STATION 11.76%
JANI-KING (JANITOR’S SERVICE) 11.54%
RAMADA INN 11.31%
SNAP FITNESS 11.21%
BOSTON THE GOURMET PIZZA 11.11%
MAD SCIENCE GROUP, THE 11.11%
MR. ROOTER 11.11%
NAPA AUTO PARTS 10.96%
SONIC DRIVE-IN 10.84%
GREAT HARVEST BREAD CO. 10.77%
VALERO 10.71%
DENNY’S RESTAURANT 10.67%
RAINBOW INTERNATIONAL CORPORATION 10.53%
BURGER KING 10.39%
PIZZA RANCH 10%
JOHNNY’S NEW YORK STYLE PIZZA 10%
AMERICAN EXPRESS FINANCIAL ADVISORS 10%
PONDEROSA STEAK HOUSE 10%
BAHAMA BUCK’S 10%
ORECK FLOOR CARE CENTER 10%
JAZZERCISE 10%
KWIK KAR OIL & LUBE 10%
CHUCK E. CHEESE (SHOW BIZ PIZZA) 10%
SHELL SERVICE STATION 10%
REBATH OF NH 10%
SERVICEMASTER 9.84%
SNAP-ON-TOOLS 9.80%
JACKSON HEWITT TAX SERVICE 9.62%
QDOBA MEXICAN GRILL 9.52%
DAIRY QUEEN 9.41%
TEXACO SERVICE STATION 9.30%
SUBWAY SANDWICH SHOP 9.13%
DIPPIN DOTS 9.09%
MILIO’S SANDWICHES 9.09%
JAN-PRO CLEANING SYSTEMS OF UTAH 9.09%
AIRE SERV (H&AC) 9.09%
MAIDS (THE) 9.09%
COLOR TYME 9.09%
SPORTS CLIPS 9.06%
INTERNATIONAL HOUSE OF PANCAKES 9.01%
ECONO LODGE MOTEL 8.79%
ARCO (GAS STATION) 8.70%
CLEANING AUTHORITY (THE) 8.57%
TRAVELODGE 8.57%
MEDICINE SHOPPE 8.47%
PAPA MURPHY’S TAKE & BAKE PIZZA 8.43%
BUDGET INN 8.33%
UNION 76 OIL 8.33%
SEVEN-ELEVEN (7-11) FOOD STORES 8.33%
PADGETT BUSINESS SERVICE 8.33%
CAPTAIN D’S SEAFOOD RESTAURANTS 8.33%
SNAPPY TOMATO PIZZA COMPANY 8.33%
VALVOLINE INSTANT OIL CHANGE 8.11%
ANYTIME FITNESS 7.83%
SERVPRO 7.79%
GREAT CLIPS 7.74%
CAMP BOW WOW BRANDING LLC 7.69%
GUESTHOUSE INN 7.69%
PAUL MITCHELL ADVANCED EDUCATION 7.69%
CLUB Z 7.69%
SUBS & PASTAS 7.69%
WINGER’S FRANCHINING, INC. 7.69%
WILD BIRDS UNLIMITED 7.69%
ABBEY CARPET 7.69%
KNIGHTS INN 7.69%
CENTURY 21 7.46%
QUALITY INN 7.43%
SCHLOTZSKY’S SANDWICH SHOP 7.32%
WORLDWIDE EXPRESS 7.14%
SLUMBERLAND 7.14%
UNOCAL 76 7.14%
MEDICAP PHARMACY 6.98%
KIDS R KIDS 6.73%
DISCOVERY POINT 6.67%
KILWIN’S CHOCOLATES 6.67%
BOJANGLES (RESTAURANT) 6.67%
EL POLLO LOCO 6.67%
RODEWAY INNS 6.52%
H & R BLOCK 6.45%
SUPER 8 MOTEL 6.37%
TUNEX 6.25%
ROTO ROOTER 6.25%
RED CARPET INN 6.25%
ROUND TABLE PIZZA 6.25%
SKYLINE CHILI 6.25%
DAYS INN 6.19%
ZAXBY’S 6.15%
PAUL DAVIS RESTORATION 6.06%
#NAME? 5.99%
FRIENDLY’S 5.88%
JACK-IN-THE-BOX 5.88%
HOLIDAY INN 5.80%
JIFFY LUBE 5.71%
GOLDEN CORRAL (RESTAURANT) 5.68%
GREAT AMERICAN COOKIE COMPANY, INC. 5.26%
ONCE UPON A CHILD 5.26%
BEST WESTERN INN 5.04%
VISITING ANGELS 5%
HARDEE’S RESTAURANT 5%
BUFFALO WILD WINGS GRILL & BAR 4.76%
PERKINS RESTAURANTS 4.76%
RED ROOF INN 4.76%
BADCOCK HOME FURNITURE & MORE 4.76%
MASSAGE ENVY 4.74%
KIDDIE ACADEMY 4.65%
TAN WORLD, INC. 4.55%
COUNTRY HEARTH INN 4.55%
GODDARD EARLY LEARNING CENTER 4.37%
LITTLE CEASAR’S PIZZA 4.35%
CULVER’S FROZEN CUSTARD 4.27%
PRIMROSE SCHOOL (DAYCARE) 4.22%
BEE HIVE HOMES OF AMERICA 4.17%
BATTERY PLUS 3.70%
PIZZA HUT 3.57%
JIMMY JOHN’S 3.51%
MICROTEL 3.37%
HOME INSTEAD SENIOR CARE 3.33%
CULLIGAN SOFT WATER SERVICE 3.13%
HAMPTON INNS 3.10%
COMFORT KEEPERS 2.86%
MOTEL 6 2.82%
BAJA FRESH MEXICAN GRILL 2.78%
LA QUINTA INN 2.25%
TACO BELL 2.17%
MELLOW MUSHROOM 1.75%
COMFORT SUITES 1.59%
COMFORT INN 1.56%
PLATO’S CLOSET 1.37%
HOLIDAY INN EXPRESS 0.68%
MARRIOTT HOTEL 0%
JAMBA JUICE 0%
JASON’S DELI 0%
JETS PIZZA 0%
AMERIPRISE FINANCIAL SERVICES 0%
WINGATE INNS 0%
AMERICINN 0%
CHRISTIAN BROTHERS AUTOMOTIVE 0%
ALLSTATE INSURANCE 0%
KELLER WILLIAMS REALTY 0%
CHRYSLER 0%
REALTY EXECUTIVE 0%
SARPINO’S PIZZERIA 0%
COUNTRY INNS & SUITES 0%
EXPRESS LUBE & OIL 0%
COUNTRY INN 0%
FAIRFIELD INN 0%
FARMER BOYS-BREA 0%
FARMER BOYS WORLD’S GREATEST RESTAUR 0%
FARMERS INSURANCE 0%
SPRING-GREEN LAWN CARE 0%
PLANET FITNESS 0%
STANLEY’S STEAMER CARPET CLEANING 0%
STATE FARM INSURANCE 0%
PIGGLY WIGGLY 0%
STEAK N SHAKE 0%
CANDLEWOOD SUITES 0%
PENN STATION, INC. 0%
AARON RENTAL PURCHASE 0%
DUTCH BROS. COFFEE 0%
FIVE GUYS FAMOUS BURGERS AND FRIES 0%
FLEET FEET 0%
SLEEP INN MOTEL 0%
TACO CASA 0%
BP EXPRESS 0%
CHICKEN EXPRESS 0%
GRANITE TRANSFORMATIONS 0%
CHILDREN’S LIGHTHOUSE 0%
HARLEY DAVIDSON 0%
HEALTH MART INC. 0%
ZOUP 0%
TIM HORTON DONUTS 0%
HAWTHORNE SUITES FRANCHISING,INC. 0%
TOPPERS PIZZA 0%
HILTON INNS 0%
SHRED-IT 0%
HOME HELPERS 0%
VAGABOND INN 0%
BAYMONT INNS & SUITES 0%
MERRY MAIDS 0%
AUTOMOTIVE TECHNOLOGIES 0%
WENDY’S 0%

A complete and searchable listing of all ranked franchises can be viewed at Blue MauMau.

Franchises can be an excellent way to go into business. One investor said that with a franchise “you’re going into business for yourself but not by yourself.” With the right franchise, this is true. A good franchise is certainly less risky than independently starting a new business from scratch.

For our article on a special type of franchising, referred to as master franchising, please click here.

If we can answer any questions, contact information is below.

#    #     #

William Bruce is a business broker, appraiser and franchise advisor.  He consults nationally on issues involved in franchising, business transfers and valuation.  He may be reached at WilliamBruceOnline@gmail.com or (251) 990-5934.  His business brokerage website may be viewed at www.WilliamBruce.net.

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About William Bruce

President, American Business Brokers Association / Business Broker and Accredited Business Intermediary assisting business buyers and sellers with the transfer of ownership since 1986 / Author: How to Buy a Business.
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20 Responses to Best and Worst Franchises Listed by SBA Loan Defaults

  1. Mary Reitz says:

    Thanks for sending this information!

  2. Pingback: What Is a Master or Regional Franchise? | William Bruce on Business: A Discussion

  3. Pingback: Some Franchises Are Not Qualified for SBA Guaranteed Loans | William Bruce on Business: A Discussion

  4. nicole_pace@yahoo.com says:

    Hi William I enjoy reading your emails. I find them informative and insightful for the small business entrepreneur. I live in New York and I am looking to buy a business. Do you recommend that I work through a business broker to help me find the right match. I am worried that they will only show me businesses they represent, rather than one that would be a good match for me. I am particularly interested in buying an online business. I lok forward to hearing your opinion on this. Sincerely, Nicole Palina-Pace

  5. Reblogged this on SSV's Services: Jobs & Training and commented:
    Thinking about taking on a franchise opportunity? Be sure to look at this list first!

  6. Norwalk Furniture Idea is no longer a franchise. Any stores that kept the Norwalk Furniture Idea or Norwalk Furniture name are independently owned and operated and do not hold any franchise contract. Norwalk Furniture is now strictly a manufacturer of custom upholstered furniture. This has been in effect since the company was re-born in Oct. 2008

  7. Thanks for your great information, the contents are quiet interesting.I will be waiting for your next post.
    auto brokers license

  8. Hello William,
    Blue MauMau has incorrect information listed about Sam & Louie’s New York Pizzeria. The failure rate is 7.7% according to the FranData and the Franchise Registry, not 40%. Below is a link to the report that has the correct information. https://www.dropbox.com/s/0uxsc4pb2imve07/Enh_SBA_SLNYP%20%281%29.pdf

  9. george meade says:

    I am thinking of opening an education franchise. I have been researching different companies. I had narrowed down my search to Kumon Math & Reading centers, EyeLevel centers and JEI Learning centers. Then I read about the child abuse, child sex scandals, child molestation cases at franchisee centers of Kumon Math & Reading. I don’t know if the others too have similar franchisee sex scandals going on.

    I do not want to associate myself with a company like Kumon that is in childrens’ education but actually victimized innocent children. What would you advise?

    • George, I’m not aware of the Kumon scandal. That sounds serious, and would give me pause also. We have a Huntington center listed for sale and from my research, I think they’re a good organization.

    • Steph Rubin says:

      George, I agree with you. I too wouldn’t want to be associated with a company like Kumon Math & Reading centers that has a history of sex crimes against children. Child sex crime scandals is the worst types of scandals. It never goes away no matter what overtures companies may make.

      I have seen entire schools dwindle and ultimately shut down because of molestation scandals. So for a franchise like Kumon Math & Reading centers that cater to young K-12 children the impact can be far greater. It just ups the risk to your investment, to a whole new level. Ultimately, let’s face it. The Kumon franchise http://www.kumonfranchise.com system is made up of many independent operators. Being a part of the Kumon franchise system creates a “guilty by association syndrome” for the rest of the Kumon franchise system even if the sex crimes against children didn’t involve all the Kumon franchisees. Thus the risk is high. The risk is even higher if you attempt to purchase an existing franchise which would undoubtedly cost you umpteen times more money. A tainted franchise system like Kumon franchise could possibly wipe you out financially.

      Having bought and sold franchises, I know it is a difficult decision to choose between franchise systems once you have set your mind on an industry, in your case “education.” My advice would be to draw a SWOT chart for yourself and keep an open mind about the industry. Then choose an industry that matches your strenghts. Then research on the franchise opportunities in that industry. Research, Research, Research!! You can never go wrong. Or take the advice of a franchise consultant like William Bruce!

      Good luck!

      • NL says:

        The problem with Kumon Math & Reading is that sex scandals have been perpetrated by the Kumon family themselves. So who can blame many of the franchisees for sex crimes?

        http://archives.starbulletin.com/2004/09/17/news/story2.html

        When my sister first opened a Kumon center in Atlanta the son of the founder of the Kumon Math & Reading company was involved in a major sex scandal with a franchisee Debra Tajiri, who owned two Kumon Math & Reading centers in Manoa and Kailua. She later claimed that Hiroshi Kumon had ruined her life after they had an affair and began asking him for money over a 21-month period beginning in March 2002. An employee of Debra Tajiri, the Kumon franchisee, later allegedly extorted $150,000 from a son of the founder of the Kumon learning method in exchange for 2,000 “compromising” photos. Debra Tajiri and one Sean Yonehiro, whom she hired to work in her centers as an assistant, were later arrested and faced a charge of sending international extortion communications which is punishable by up to 20 years in prison. Both were arrested after Yonehiro met with an FBI agent posing as Kumon’s attorney at Ala Moana Park and took from him a bag containing what he believed to be $150,000. At the time of the affair, Hiroshi Kumon was Director of Kumon Institute of Education in Japan, the parent company of Kumon North America, one of five regional headquarters worldwide responsible for operations in Canada, the United States and Mexico.

        An individual who went by the name “Max Lee” and who had been e-mailing Hiroshi Kumon while he was in Japan threatening to release compromising photos of Hiroshi Kumon if he didn’t pay for them. The complaint does not describe the photos but does say that Lee threatened to release the photos if Kumon also did not send more pornographic pictures of himself. More than five years after their affair, Debra Tajiri (the Kumon franchisee) allegedly began e-mailing Hiroshi Kumon asking for $500,000 to remodel her house, the complaint said. In those e-mails, she allegedly told Kumon that “you have taken a lifestyle from me,” and that she was considering filing a lawsuit. She also accused him of infecting her with a venereal disease and said that he should pay for her medical treatment. Kumon allegedly paid her more than $350,000. Later Debra Tajiri, the Kumon franchisee, allegedly continued asking Kumon for money, saying electricity at her home was shut off and that she could not pay contractors to finish work on her home. Debra Tajiri, the Kumon franchisee, e-mailed Hiroshi Kumon again, saying she needed $550,000 to secure a building contract. When he didn’t respond, she e-mailed him saying her life was “hell” and was over, and asking him why he had not sent money. Investigators learned that the e-mails sent by “Max Lee” came from an account belonging to Debra Tajiri and from her Nipo Street home.

        One of three vehicles spotted at Kumon franchisee Debra Tajiri’s residence was a white Ford pickup truck that was later seen at the Hawaii State Library — the first meeting Lee allegedly requested for Kumon’s representative to bring the money. A man was seen walking around the library on that day before leaving in the white truck registered to Yonehiro, who lists a Nipo Street address as his residence.

    • Marty Fish says:

      George, there are no Kumon sex scandals or anything of the sort. That is absolutely not true. It sounds like horrible rumors that someone is spreading. Check our track record and our Franchise Disclosure Document. We have a clean history and track record. We are one of the world’s largest and oldest credible franchisors in the world, with over 4 million students. I know, because I have been with Kumon for 15 years and I have 4 children who have been in Kumon. If I ever had a clue that those things were happening, I would have left long ago.

  10. tsuz says:

    I just watched a video about children being molested at Kumon tutoring centers. It is scary. Now no place is safe for children.

    http://abclocal.go.com/kabc/video?id=8348289&pid=8347625

    I feel so sad for the kids. What the kids had been put through was inexcusable, which I realize happens a lot. Such incidents are awfully traumatic for children and they will have to live with a lifetime of guilt and shame.

    My thoughts, well-wishes etc., go out to all children molested by their Kumon tutors :-(

    Children should be encouraged to talk to their parents and tell them of such crimes as soon as they happen.

    • Michael Nolan says:

      BlueMauMau and other websites have incorrect failure rates listed for many, many franchises. Sam & Louie’s is listed at 40% failure rate, the correct rate is 7.69%. Here is a link to some information about the incorrect reporting and the corrected information about Sam & Louie’s specifically.

      https://www.dropbox.com/s/4uxdlqn6umdmnqp/Enhanced%20SBA%20Loan%20Loss%20Analysis%20for%20Sam%20%26%20Louie%27s.pdf

      Does anyone know of a way to get websites like BlueMauMau and others to post the correct information. I have contacted them directly and they just don’t care. They don’t realize (or again don’t care) the damage that this incorrect information can cause a franchise system in terms of gaining new franchisees and securing loans for those that are not scared away by misinformation. Unfortunately most people believe that all information posted on line is factual.

      • Michael, it appears to me that your complaint is with the SBA, not BlueMauMau, as they are just reporting information that the SBA has released. I believe if you got the SBA to correct any alleged errors, BlueMauMau and other websites would report the corrections.

      • Michael Nolan says:

        I’ve tried that approach, I will try it again. BlueMauMau did not care to correct or even note it when I supplied them with the facts.

    • Bruce L says:

      Why do people have to “Molest” children? Kumon Math & Reading is one of the worse tutoring companies out there. But, they still charge enough to keep their franchisees well fed. Not sure then why Kumon franchisees molest children? These cases should be a wake up call for all parents who fail to spend some time with their children and think that such tutoring centers places to send their children.

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