Franchise owners were faced with an extraordinary mix of conditions in 2020, making running a business even harder than usual. With the unemployment rate reaching a peak of 14.7 percent in April, the COVID-19 epidemic significantly disrupted the American economy.

Even while unemployment decreased to 6.7 percent in November, it is still more than it was before the pandemic, intensifying by more than 3 percent.

Due to the current economic crisis, several failing franchisees were forced to file for bankruptcy or shut down completely. These companies will join a list of formerly well-known companies that, for various reasons (far before the pandemic), lost money and went out of business in the last ten years.

Top Franchises That Went Out of Business

  1. Bennigan’s

One of America’s first casual dining concepts, Bennigan’s is an American restaurant chain with an Irish pub theme that was established in 1976 in Atlanta by restaurateur Norman E. Brinker. For most of its existence, the company was run by Pillsbury’s restaurant division before being acquired by Grand Metropolitan, a British booze conglomerate.

The business was sold to Texas-based Metromedia restaurant since it was illegal for liquor manufacturers to also operate liquor retail stores; nonetheless, the company didn’t declare bankruptcy until 2008. After that, the chain underwent a number of restructuring and ownership transitions before being acquired by Legendary Restaurant Brands, LLC in 2015. The business is currently based in Dallas, Texas.

Sales and customer support at Bennigan’s declined as a result of the company’s failure to update and expand the restaurant concept and the deteriorating quality of their menu items over time. Due to parent company Metromedia Restaurant Group of Plano, Texas filing for Chapter 7 bankruptcy protection in July 2008, all 150 of Bennigan’s corporate sites throughout the US were shut down.

  1. Perkins & Marie Callender’s Inc.

In addition to offering bakery goods including pies, muffins, and other pastries, Perkins LLC, also known as Perkins Restaurant & Bakery, is an American network of casual dining restaurants that offers breakfast and other homestyle meals.

The Smithies Pancake House, owned by Matt and Ivan Perkins, opened in Cincinnati, Ohio, in 1957, launching the Perkins brand. As a franchise, the chain grew in 1958. In 1967, Wyman Nelson, a franchisee in Minnesota, debuted a broadened menu and a vigorous marketing push.

About 600 restaurants are owned or franchised by Perkins & Marie Callender’s Inc. The company filed for bankruptcy with a proposal to restructure debt that would transfer ownership of the business to Wayzata Investment Partners LLC.

According to a statement released today, the proposed restructuring was approved by holders of more than 80% of Perkins’s unsecured notes as well as all its secured notes. The restructuring must be finished by October 21. The Memphis, Tennessee-based corporation announced that as part of the strategy, 58 restaurants will close.

  1. Bally Total Fitness Corporation

Recreational facilities are offered by Bally Total Fitness Corporation. The Corporation provides workout facilities, health classes, personal training, fitness centers, and other services. Bally operates gyms and athletic clubs throughout the United States.

At its 2007 peak, prior to the filing of the first of two Chapter 11 bankruptcies, Bally operated nearly 440 facilities located in 29 U.S. states, Mexico, Canada, South Korea, China, and the Caribbean under the Bally Total Fitness, Crunch Fitness, Gorilla Sports, Pinnacle Fitness, Bally Sports Clubs, and Sports Clubs of Canada brands.

With $761 million in unpaid debt, Bally filed for bankruptcy in August 2007. Its stock price had dropped over the previous 10 years, losing over 99% of its worth, from a peak of about US$37.00 to less than $0.37 on the Pink Sheets. Soon after, it was taken off of the NYSE.

Bally, which is wholly owned by the hedge fund Harbinger Capital, announced its exit from bankruptcy court protection on October 1, 2007. In the latter part of that year, it had sold its 16 Toronto health clubs to established chains: 10 of the clubs went to GoodLife Fitness, and 6 to Extreme Fitness, allowing the latter to make its first foray into the city’s downtown.

  1. Blockbuster LLC

Previously known as Blockbuster Video, Blockbuster LLC was an American company that offered home video and game rental services. The majority of their services were provided by video rental stores, but subsequent alternatives came in the form of streaming, DVD-by-mail, video on demand, and movie theaters.

The business, which was once run by Blockbuster Entertainment, Inc., grew internationally throughout the 1990s. Blockbuster had 9,094 locations and employed 84,300 employees at its height in 2004, 58,500 of whom worked in the US and 25,800 abroad.

Blockbuster’s decline was mostly attributed to poor management, the Great Recession, as well as growing opposition from Redbox automated kiosks, Netflix’s mail-order business and video on demand. The business had a large loss of revenue in the late 2000s, and in 2010, it sought bankruptcy protection.

By the end of the following year, Dish Network had acquired all 1,700 of its remaining locations, and by 2014, the final 300 company-owned outlets had been shut down.

Dish kept a small number of franchise agreements despite corporate sponsorship for the brand coming to an end, allowing some independently held franchisees to continue operating. Only one franchised store, in Bend, Oregon, United States, remains operational after a number of further closures in 2019.

  1. Friendly’s

On the US East Coast, there is a chain of eateries called Friendly’s. Brothers S. Prestley and Curtis Blake established Friendly’s in 1935 in Springfield, Massachusetts. 10,000 people work there, and George Michel is the CEO. It features 22 ice cream flavors and serves diner-style food; several locations also offer table service but with an ice cream-only take-out window.

There are 126 Friendly’s locations overall, distributed between the states of Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and South Carolina. Friendly’s announced it had applied for chapter 11 bankruptcy protection and closed 63 stores in October 2011.

Friendly’s was a victim of a challenging economic climate, increased commodity costs, and shifting consumer tastes. For financial support during the bankruptcy process, the company acquired debtor-in-possession loans totaling more than $71 million.

Later that month, the Pension Benefit Guaranty Corporation, a federal organization in charge of defending employee pension plans, charged Sun Capital with shifting assets illegally in order to maintain control of the business. Both parties were able to come to an agreement a few days later. The US Bankruptcy Court granted Friendly permission to sell the business at auction on December 22, 2011.

  1. (Quiznos) Quiz Holdings, LLC

Located in Denver, Colorado, Quiz Holdings, LLC, doing business as Quiznos, is an American franchised fast-food restaurant that specializes in serving toasted submarine sandwiches. Jimmy Lambatos established it in 1981, and ten years later he sold it to Rick and Richard Schaden.

Since then, it has expanded to approximately 5,000 eateries. In North America, Quiznos was the second-largest chain of submarine sandwich shops as of 2013.

After two years, the restaurant began providing franchises to aid in expansion, releasing its first in 1983. Quiznos American, Inc. was the company that advertised the franchisees. In the United States, there were 12 Quiznos restaurants open by 1987.

The United States Bankruptcy Court for the District of Colorado received Quiznos’ Chapter 11 bankruptcy filing on March 14, 2014. While restructuring its debt and making operational upgrades, Quiznos stated that it would carry on with business as usual. On June 30, 2014, Quiznos emerged from bankruptcy, having paid off around $400 million of its creditors.

  1. Sbarro, LLC

Sbarro, LLC is a national chain of pizza restaurants in the United States that specializes in Italian-American fare and New York-style pizza sold by the slice. According to QSR Magazine, the company was placed 15th among quick-serve and fast-casual businesses with U.S. headquarters for global sales in 2011. Entrepreneur magazine ranked Sbarro as the top quick-service restaurant in the Italian category in 2008.

Not all reviews were favorable; the food’s quality had come under fire, and it was suggested that this had contributed to two bankruptcies. Sbarro has more than 600 restaurants in 28 nations. The Pentagon, American naval bases, casinos, as well as shopping centers, airports, service areas, and college campuses, all have Sbarro stores.

On April 4, 2011, the business sought Chapter 11 bankruptcy protection. It was recognized as the fifth-largest pizza chain in the nation at the time by Pizza Today. In less than a year, it was the third-largest pizza chain to file for bankruptcy.

  1. Mrs. Fields Cookies

Mrs. Fields’ Original Cookies Inc. is an American franchisor in the snack food sector. Its two main brands are Mrs. Fields and TCBY. It is one of the top US retailers of freshly baked specialty cookies and brownies made on-site as well as the biggest seller of soft-serve ice yogurt in the nation through the retail establishments of its franchisees.

Additionally, it runs a gifting and branded retail operation and enters into numerous licensing agreements.  More than 300 franchised and licensed stores may be found using its franchise systems in 22 different countries in addition to the United States.

Under the Mrs. Fields Gifts brand, it also sells retail groceries and has a gift catalog. Broomfield, Colorado serves as its principal city. Mrs. Fields was laid off as a result of the reorganization brought on by the sale of these brands. The parent company of the frozen yogurt and cookie chains TCBY and Mrs. Fields Famous Brands filed for bankruptcy in August 2008.

  1. Krispy Kreme Doughnuts, Inc.

Krispy Kreme, Inc. (previously Krispy Kreme Doughnuts, Inc.) is a chain of coffee shops and a multinational American doughnut firm. Vernon Rudolph (1915-1973), who purchased a yeast-raised recipe from a New Orleans chef, rented a building in 1937 in Winston-Salem, North Carolina’s Old Salem, and started selling to neighborhood grocery stores.

This is how Krispy Kreme came to be. German investment business JAB Holding Company revealed in May 2016 that it had made a bid to buy the company for $1.35 billion over the ensuing two months, turning it into a privately held entity.

A deal was finalized on July 27, 2016. In December 2017, Krispy Kreme relocated its corporate offices to Charlotte, North Carolina; however, the company’s global headquarters and Krispy Kreme Support Center will continue to be located in Winston-Salem.