Giant fast-food chain’s franchisee closes locations in bankruptcy
Merchant cash advance loans have played a role in the financial distress of several restaurant franchisees, forcing certain businesses to file for bankruptcy protection and close locations. The short-term, high-interest loans are a fast way for a small business to acquire financing, but can include ...
Giant fast-food chain’s franchisee closes locations in bankruptcy
Overview
Merchant cash advance loans have played a role in the financial distress of several restaurant franchisees, forcing certain businesses to file for bankruptcy protection and close locations.
The short-term, high-interest loans are a fast way for a small business to acquire financing, but can include high-interest APRs over 40%, for short terms, such as three to 18 months. Terms can require daily or weekly repayment schedules that often tap a percentage debit and credit card sales, plus a fee, according to NerdWallet.
Merchant cash advance debt led a significant fast-food franchisee to seek bankruptcy protection after facing financial difficulties.
Subway franchisee closes locations
Major Subway franchisee MTF Enterprises LLC rejected the leases of six of its sandwich shop locations in Maine and Virginia and closed them as part of its bankruptcy case.
MTF Enterprises and its affiliates, which had operated 43 Subway franchises in four states, filed for Chapter 11 bankruptcy protection on Jan. 21, 2026, after defaulting on merchant cash advance loans in October 2025, according to Restaurant Dive.
The debtor also ran into difficulties in December 2025 as seven of the franchisee's locations in Maine were shut down by state officials. A sign posted on a Subway door said the store's seller registration certificate had been revoked for failing to comply with state rules, WHOM-Radio reported.
State shut down seven Subway shops
The seven restaurants closed by the state were located in Hampden, Lisbon Falls, Brunswick, Portland, Topsham, Westbrook, and Wiscasset, Maine. An eighth restaurant in Blue Hill, Maine, also closed, according to the Portland Press Herald.
The debtor in April filed a motion to reject the leases of three of its Subway shops in Virginia and another three in Maine, Fast Company reported. While the shops are still listed on Subway's locator list, no operating hours are included.
The six restaurants with lease rejections are located in five cities: Boothbay, Maine; Portland, Maine; Blue Hill, Maine; Williamsburg, Va.; and Chincoteague, Va., according to Inc.
MTF Enterprises' website MTFsubs.com on June 24 listed 37 restaurants owned by the franchisee with 305 employees working for the company.
MTF Subs could close more shops
MTF Enterprises could close more Subway shops, as a bankruptcy judge is allowing the debtor until Aug. 19 to reject additional leases, according to Inc.
Details
The debtor operates its Subway shops in Pennsylvania, Maine, New Hampshire, and Virginia.
MTF Enterprises was not immediately available for comment.
The debtor listed $500,000 to $1 million in assets and $1 million to $10 million in liabilities in its bankruptcy petition filed in January, according to court documents from PacerMonitor.
MTF Enterprises founder Michael Fay opened his first Subway location in Pennsylvania in 2017, according to its website. The franchisee's holdings grew to 43 locations by the time the company filed for bankruptcy protection in January 2026.
“The operator accessed funding through short-term Merchant Cash Advance loans, which left it on the hook for a percentage of future sales. In October, one of the franchisee’s MCA lenders sent a notice to Stripe claiming MTF had fallen into default on its loans and claiming a lien on sales; the MCA lenders sent similar notices to Block — Square’s parent company — and American Express in December, court records show,” Restaurant Dive reported in February.
"Merchant cash advances (MCAs) have emerged as a popular solution, offering near-instant funding with minimal paperwork," Allan Garfinkle, chief revenue officer at Crestmont Capital, said on the company's website.
"However, this convenience comes at a significant cost, one that is not always apparent in the initial offer," Garfinkle said. "The hidden danger lies in the structure of the MCA itself, which can lead to a cycle of debt and, ultimately, default."
MTF Subs' closed Subways:
- 989 Wiscasset Road, ME-27, Boothbay, Maine
- 6 Allen Ave., Portland, Maine
- 16 South Street, Blue Hill, Maine
- 5251 John Tyler Highway, Williamsburg, Va.
- 1430 Richmond Road, Williamsburg Va.
- 6448 Maddox Blvd., Chincoteague, Va.
- Source: Inc.
Related: 32-year-old high-end restaurant chain closes all locations
Source
Originally published at www.thestreet.com.
