The franchise loan industry experienced its share of indigestion in 2001, as collateral performance industry-wide continues to decline. Delinquencies and defaults have risen and losses have begun to flow through to investors. As part of Fitch's continued focus on the franchise industry, an index was constructed to aggregate the performance of all deals and monitor the industry as a whole by both issuer and vintage.

To be included in the index a deal must have been closed no earlier than 1996, have been sold into the public or 144A market and contain mostly QSR and C&G loans. Currently, 37 transactions are entered into the index. The index is run on a quarterly basis and tests the following industry vital signs: current collateral and securities outstanding; cumulative and monthly losses; and both the number of borrowers and dollar amount of loans that are either delinquent greater than 60 days and/or defaulted.

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