Unformatted text preview: dy by the General
Accounting Office found that the SBA had guaranteed 18,000 franchise loans between 1967 and 1979, subsidizing the launch of new Burger
Kings and McDonald’s, among others. Ten percent of these franchise loans ended in default. During the same period, only 4 per-cent of the
independent businesses receiving SBA loans defaulted. In New York City, the SBA backed thirteen loans to Burger King franchisees; eleven of
them defaulted. The chain was “experimenting,” according to a congressional investigation, using government-backed loans to open
restaurants in marginal locations. Burger King did not lose money when these restaurants closed. American taxpayers had covered the
franchise fees, paid for the buildings, real estate, equipment, and supplies.
According to a recent study by the Heritage Foundation, the SBA is still providing free investment capital to some of the nation’s largest
corporations. In 1996, the SBA guaranteed almost $1 billion in loans to new franchisees. More of those loans went to the fast food industry
than to any ot...
View Full Document
This note was uploaded on 02/25/2014 for the course MGMT 120 taught by Professor Litt during the Spring '08 term at UCLA.
- Spring '08