Economic issues have forced another franchisee of the nation’s largest fast-food chain, Subway, to file for bankruptcy protection, as the restaurant sector continues to battle rising costs.
Subway Sandwich Shop franchisee Cherry Butte Company, which operates three North Dakota locations, filed for Chapter 11 bankruptcy to reorganize its businesses, according to BankruptcyObserver.
The Regent, N.D.-based Subway franchisee filed its Subchapter V petition in the U.S. Bankruptcy Court for the District of North Dakota on July 21, listing over $19,000 in assets and over $1.8 million in debts, according to court documents.
Franchisee files bankruptcy petition
The debtor did not give a reason for filing for bankruptcy in its petition. Debtor counsel Karl Johnson of MJB Law Firm PLLC was not immediately available for comment.
The debtor’s largest unsecured creditors include the U.S. Small Business Administration, owed over $487,000; Dakota Western Bank, owed over $394,000, Grasshopper Bank, owed over $343,000; TVT Capital Source LLC, owed $240,000; Glenridge Capital LLC, owed over $130,000; and Byzfunder NY LLC, owed $128,000.
Operator’s revenue declined
Rising food and labor costs, along with higher interest rates, have continued to pressure independent restaurant operators even as inflation has moderated.
The franchisee’s annual gross revenue has declined in the last two years as sales dropped from $2.67 million in 2024 to $2.34 million in 2025 and had generated $1.15 million through the July filing date.
Cherry Butte Company, which was founded in 2007, has Subway franchise agreements for three locations at 455 12th St.; 401 West Villard, Suite 106; and 2456 Third Ave. West, in Dickinson, N.D., according to the debtor’s petition.
Other Subway franchisees have encountered financial distress that led to bankruptcy filings.
Subway franchisee MTF Enterprises LLC, operator of 43 Subway sandwich restaurants in Maine, New Hampshire, Pennsylvania and Virginia, filed for Chapter 11 bankruptcy protection on Jan. 21, 2026, in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, according to PacerMonitor.
Loan default led to bankruptcy filing
MTF Enterprises allegedly defaulted on cash advance loans from merchant cash advance lenders, which resulted in a lien on sales, Restaurant Dive reported.
The debtor claimed that merchant cash advance lenders “improperly seized or interfered with the collection of sales revenue,” the report said. It explained that the weekly and daily payments drawn by the lender were the primary cause of the debtor’s financial problems.
Franchisees of Subway competitor sub shops have also filed for Chapter 11 bankruptcy this year.
Firehouse Subs franchisee also files
Popular Firehouse Subs sandwich chain franchisee CN Holdings LLC filed for Chapter 11 bankruptcy on March 23, 2026, to reorganize its business, according to Bankruptcy Observer.
The Idaho Falls, Idaho-based franchisee filed its petition in the U.S. Bankruptcy Court for the District of Utah in Salt Lake City, listing up to $100,000 in assets and $1 million to $10 million in liabilities in its petition.
The debtor, which operates 11 Firehouse Subs franchises in Utah and Idaho, has closed one Utah location and planned to sell unprofitable locations, according to Restaurant Business Magazine.
Subway, the nation’s largest fast-food chain, completed its sale to private equity firm Roark on April 30, 2024, for reportedly $9.6 billion.
Subway has over 20,000 U.S. stores
Subway, which was founded in August 1965, is the largest fast-food chain in the U.S. with over 20,100 units, according to TheStreet’s July 22 review of the restaurant operator’s locations page on its website.
McDonald’s ranked No. 2 among fast-food chains with over 13,700 units, and Starbucks was No. 3 with over 13,500 , according to StatsPanda‘s latest research on July 20.
Subway’s store count in the U.S. peaked at 27,118 locations in 2015. The popular sandwich chain has 35,000 locations in 35 countries worldwide, according to its website.
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