A US senator is about to turn up the heat on Subway Restaurants amid complaints by mom-and-pop franchisees that they are victims of the restaurant chain‘s downsizing efforts.
Sen. Catherine Cortez Masto (D-Nev.) on Wednesday announced she will introduce legislation this month to require companies like Subway to disclose their rate for defaulted government-backed small business loans to wannabe franchisees.
The senator didn’t specifically mention Subway in making the announcement at the end of a sub-committee hearing on economic policy, but she has previously said she is concerned that the sandwich maker has been putting some of its franchisees needlessly out of business — at taxpayers’ expense.
The legislation would require Subway and other franchise owners to reveal their rate of defaulted Small Business Administration loans to prospective franchisee seeking to borrow money from the government agency.
According to the SBA, Subway franchisees have a relatively high default rate of 12 percent over 10 years.
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