The Submarina franchise has an disturbingly high SBA loan default rate of 54%.
According to the 2011 Submarina Franchise Disclosure Document, Submarina had 52 franchise locations at the start of 2008. In the following 3 years, they opened 32 new franchise locations.
Unfortunately, 43 Submarina locations were terminated or ceased operation in the same time period, leaving Submarina with just 44 locations by the end of 2010.
Submarina franchisees have been granted 33 SBA-guaranteed loans; more than half of those loans have been defaulted on by Submarina franchise owners.
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The Submarina Franchise has a failure rate of 54% for SBA-backed franchise loans
Despite having more franchise locations fail than are currently open, Submarina continue to market it’s franchise concept as a proven winner. The Submarina website states that when you buy a franchise:
…the business model has been proven, and when duplicated efficiently, will certainly produce success.
Despite a loan default rate of 54%, Submarina markets its franchise as a “proven winner”:
It has been said that the three most important ingredients of a successful business are “location, location, location.” Add to this formula proficiency in operating the Submarina system and you have a proven winner.
What Submarina doesn’t point out is that it’s likely that Submarina franchise owners who received SBA loans may have collateralized their franchise loan with their houses or other personal assets, and more than half were unable to repay those franchise loans… despite serious incentive to do so.
Are you familiar with the Submarina franchise opportunity?
What do you think accounts for the SBA loan failure rate of Submarina franchise owners?
What steps should Submarina be taking to stop further franchise failures?
Please share a comment, opinion or insight below.
ARE YOU A SUBMARINA FRANCHISE OWNER OR FORMER SUBMARINA FRANCHISEE? ARE YOU FAMILIAR WITH THE SUBMARINA FRANCHISE OPPORTUNITY? PLEASE SHARE A COMMENT BELOW.
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