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D72/100FDD 2025

Subway — Litigation & Risk

Food & Beverage - Quick Service · FDD Items 3, 4 & 5

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Elevated Risk

84 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
84
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
5,097
Government-backed loans issued
Default rate
6.8%
vs <3% typical · system-wide
5-yr default rate
2.4%
Defaults
324 loans
Loans charged off or defaulted
Total loan volume
$967.4M
Avg loan size
$190K
Participating lenders
698

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
1 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Connecticut
State whose law governs disputes — relevant if you're not based there

What drove the 72/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is FALSE — franchisor may face solvency/operational viability issues
  2. 02MEDNo Item 19 financial performance data disclosed — impossible to validate ROI claims or typical unit economics
  3. 03MINORRoyalty fee percentage not specified — hidden cost structure creates pricing uncertainty and potential for surprise escalations
  4. 04MINORNo territory protection — franchisees face direct competition from other Subway locations and channel conflict
  5. 05MEDUnit growth data unknown — suggests stagnation or decline in system size, typical of mature/struggling QSR franchises
  6. 06MINORInvestment range ($238k–$536k) is substantial with no corresponding revenue/profit benchmarks to justify capital requirement

Severity inferred from FDD text — not a regulatory or legal classification

Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.