March 21, 2017 // Franchising.com // New York, NY - Franchise Grade®, the leading franchise market research firm in the franchise industry, has released its most recent Facts and Figures report - SBNO: Why and When Franchises Never Open for Business.
This latest report focuses on a category in Item 20 of the Franchise Disclosure Document (FDD) that receives little attention. It presents franchise agreements that are signed but not yet opened, commonly referred to as Sold but Not Opened (SBNO). To better understand the subject, Franchise Grade analyzed 1003 franchise systems with SBNO disclosures from 2012 to 2015.
The franchise systems studied revealed a 17.5% increase in the number of SBNO’s from 2012 to 2015. Personal Services and QSR franchises were the leading SBNO franchise sectors in the industry with an average of 44 and 38 SBNO per franchise.
Commenting on the results of the report, Jeff Lefler, CEO and Founder of Franchise Grade stated: “SBNO can be a double-edged sword. When a prospective franchisee sees that a franchise system has a development pipeline, it can indicate a growing system. However, if the franchise is increasing in SBNO numbers without any resulting growth, it can signal more emphasis on selling rather than helping to develop new franchises. This can increase the investment risk for the prospective franchisee.”
An increase in SBNO can reflect a sign of resurgence. For example, the Real Estate sector has had steady growth in SBNO resulting from a rebound of the residential real estate market. Sectors that also had steady growth in SBNO are Retail Food, Personal Services, QSR and Lodging.
To download a copy of the report: [https://www.franchisegrade.com/reports/article/sold-but-not-open].
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SOURCE Franchise Grad