A Subway Franchisee Filed For Bankruptcy And We Don't Know Why

Starting up your own restaurant can be a risky business if you do not know exactly how to operate an eating establishment. For entrepreneurs who alway enjoyed a great meal and dreamed of one day owning their own restaurant, a franchise feels like a safe bet. After all, if a big corporation is backing you up and can provide you with not only the supplies and location, but a how-to-map for running, how unstable could it be?

Well, if you are in business with Subway as a franchisee, the answer is: very unstable. Even holding the title as America's largest fast food restaurant chain could not prevent Subway closing a large number of locations starting in 2024. In 2025, conditions worsened for Subway as The Street reported that a California Subway franchisee has filed for Chapter 11 bankruptcy. Why this is happening remains hazy, but what could not be any more clear is that Subway is in trouble and its franchisees are starting to take a hit.

So many chain restaurants were struggling in 2024 and now, in 2025, the restaurant industry at large might be facing another tough year of business, including fast food. Per The Street, a Subway franchise owner in Montebello, California, filed a petition on June 25, 2025 in the U.S. Bankruptcy Court for the Central District of California. The Subchapter V petition aimed to reconfigure the business in order to remain open for operation and protect the franchise, listing $50,000 to $100,000 in assets and $100,000 to $500,000 in liabilities, though no reason was accounted for in the bankruptcy filing.

Sadly, this is not the first time that a franchise owner from Subway has had to file for bankruptcy. According to Restaurant Business, a Subway franchisee in Texas filed for Chapter 11 bankruptcy for the company, River Subs LLC, which operated 48 Subways in the San Antonio area and lost $3 million in a 2023 wrongful death lawsuit. While court documents showed that assets and liabilities listed in the filing totaled between $1 million and $10 million, no official cause was named as the reason for the bankruptcy.

Subway is a known name in fast food and compared to Quiznos, Jersey Mike's, and Jimmy John's, Subway offers a lot of bang for your buck as a customer who is hungry for a sandwich. As a franchise owner, Subway can be a great place to make a decent living with the average outlet typically bringing in around $400,000 per year in revenue, according to Dr. Franchise, noting that the franchise fee to start a Subway is $15,000.

From there, owners pay 12% of weekly gross sales in royalties, as well as ad fees. After the subtraction of wages, fees, and franchise expenses, a typical Subway outlet tends to average $40,000 to $50,000 on an annual basis. While Subway is typically considered to be one of the lowest-cost franchises to start up, Business Insider reported that in 2021, Subway's franchise disclosure agreement went up thousands of dollars, from roughly $139,550 to $342,400 in 2020 to somewhere in the range of $207,050 to $476,900 in 2021. Even with the increase in cost, Subway franchises were still relatively cheap to start up compared to McDonald's, which cost $1.3 million to $2.3 million in initial investments.