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YES it sounds like you have cash flow issues with my new franchise.
First of all welcome to this web site. It also sounds like you are trying to close the barn door
as the horses are running out.
You bought this existing franchise. Did you have YOUR Lawyer?? and Your Accountant??
What did the legal closing papers say about inventory??
Can you or did you speak to the Subway Franchise At the Top. (can not come up with the right
words BUT the Corporation "Subway".
They will want to know what is happening locally.
Good luck, LUCKIEST

Thank you for your thoughtful reply. The store has had two previous owners in six years. The last one was an absent owner and the store was dirty and the employees were presenting themselves similar to the gang culture. They are gone. I do have a manager that I like very much. He has cleaned the story and hired some decent kids and many of the problems we had early on are gone. We have had many lovely comments from customers and even ex- employees at the vast improvement. When I got the keys Sept. 29, we were robbed at gun point 4 times in two months. The existing manager came to work with hickeys on her neck, they were stealing. Now all of that is taken care of. I have a new ownership sign on the building and a new surveillance system which has dissuaded the roberies and theft. I had to replace many things as they were very run down or broken.
I think location is part of the problem. I have hired an advertising co to start with coupons on the back of Albertson's receipts. My seller neglected to tell me until after I had given him $5,000 that there would be a mandatory remodel required one year from now. I think I paid too much for the restaurant given what I know now. (150,000+2500 in inventory +2750.00 half of the transfer fee) The payment is steep amoritized over 7 years. My manager was inexperienced as was/am I. We knew we needed better and more efficient employees so he tended to schedule too many so that he could improve the history of terrible customer service. We both wanted to present a better picture to the customers so we probably over did it. In addition we probably bought too much food early on.The previous owner did not carry all the cheeses for example. to cut costs and again we wanted to present our restauant as a fully stocked and well functioning. The problem as you say is it is a low volume store and therefore does not support what we are trying to acheive.

Hi luckiest,
Yes I did use my own lawyer and accountant. How efficient my accountant was I'm not sure. Yes I am trying to close that barn door as I am rather fond of the piece of property that the bank has secured my loan with.
The local development agent for subway is supposed to support new franchisees when they start out but ours is pretty hands off unless a serious problem arises. He owns the majority of Subways in town and is nearing retirement and dosen't need or want my problems.

Thank you for the encouragement. I do really appreciate it.

Hello Cynsmithers,

I'm sorry to hear your dilemma. I have some concerns about you using your personal resources to fund your business. You need to develop business credit so that your personal assets are not subject to loss. We have a proven program that we use for our clients. Also, I can help you with financing solutions. Where is your store located? You can contact me via email at moreheadsconnections@gmail.com to exchange contact info.

Warm regards,
TJ Morehead

I am sorry to hear of your troubles. I think you identified a big problem-you paid too much for the store in the first place. Just a few days ago I purchased a Subway with sales similar to yours for $90,000 + $5,000 transfer fee = $95,000. The store also needs remodeled to the Tuscany decor, and my regional Subway representative said to budget $40,000 for that. Altogether, I have a loan for the purchase price amortized over ten years and the remodel costs will be my own contribution. At current sales, my estimated owner's discretionary cash flow is around $1850. The loan payment is a bit over $1,100, leaving me some buffer even if sales never increase. Estimating your cost of the loan, I can see how you aren't able to break even. You said you had your accountant look over the books. I suggest finding a new accountant. I am an accountant myself, and I can tell you that it isn't difficult getting a break even estimate in a relatively simple business like a single Subway franchise.

Ok, what's done is done. However, even with your high loan payment, I am still having difficulty figuring out why your expense are $22,000/month. Unless your lease is very high, you shouldn't be much over $19,000. Have you closely examined the sales reports and looked at labor? Subway says one person should be able to make 10 sandwiches/hour, although 6 is more realistic. Look at the sandwich volume, and assess if you can cut staff hours. Does you manager report to you a count of the bread and supplies, to indicate if the staff is stealing and/or giving away food? Did you look into getting a waiver to the Subway 98 hour requirement so you can reduce costs by closing earlier?

Another issue you will soon be facing is the remodel. You didn't mention how extensive it is. If you aren't currently in the Tuscany decor, count on at least $30,000 for that. The remodel is required by Subway and the due date is printed on the combo reports, which is another thing you should have gotten from the previous owner. You can't continue losing $4k/month. I would consider drastic measures if my store persisted in such a condition.

I hope I provided you with some things to think about. Good luck, and please update us on your progress.

I hope these suggestions have provided some insight.

I have 22 years with Subway, as an aowner, DA and broker, and can diagnose many problems and suggest solutions. Check out www.mrfranchiseman.com for full Subway details for buyers and sellers.

Creating Cash flows are a major problem with new franchisees and buyers; lots of help available at the same site.
You will find banks turning you down for loans too - cash flow must be airtight

mrfranchiseman invites you to pick up your free report on "10 biggest mistakes franchise buyers make" at www.mrfranchiseman.com