Subway seized for want of a $2919 tax payment

seized nonpayment taxesI don’t know if this is a harbinger of things to come, or whether it’s just someone whose franchise dreams died, but yesterday at the Flatiron Crossing Mall in Broomfield, Colorado, I was struck by the rather alarming sign on the door of the local Subway franchise, as shown to the right.
As it happens, I had been in that particular Subway franchise and had a conversation with the owner about his experience as a franchise business owner. He was, like so many people are, retired from another profession and had invested in the Subway franchise because he thought it would be a sure fire way to make money and have a half-time job as he went into his retirement. As I recall he wasn’t that old (late 40s?) but it’s a very common story in the industry.
Problem was, as he explained, he didn’t quite make enough to be able to hire other people to work: by doing the work himself, he avoided taxes, health care and wages, so it was a cross he was bearing, working 60+ hours/week trying to keep the business afloat.
As the sign attests, he didn’t succeed and the business is not afloat, it’s down in Davey Jones locker with all the other failed businesses and franchise opportunities.
What most struck me was how little he owed: $2919.00:

seized amount due

That was enough, however, that when he missed six weeks of tax payments to the City, Broomfield seized the business and shut him down.
Peeking inside, it’s clear everything’s been moved around and inventoried, and indeed, the auction house that’s going to sell off hardware and equipment to try and recoup the lost tax payments has a business card on the window:
roller auctions

Certainly, one company’s failure is another company’s opportunity.
I see this as a cautionary tale and can’t but feel for the owner of this particular Subway sandwich shop. He went into it with his dreams and hopes for a brighter tomorrow and somehow, year after year, the dream slipped away, it became harder and harder to make ends meet, and finally, one day, he just didn’t open up shop again. He walked away. And then The Man came and for want of less than $3000 in taxes, took away any chance for him to resurrect it and come out ahead.
With that in mind, how’s your business doing? Are you realistically, pragmatically assessing its state, or are you living in dreamland as your dreams slip through your fingers too?

8 comments on “Subway seized for want of a $2919 tax payment

  1. And this week construction of a Circuit City store on Cape Cod was halted, about 1/2 way to finished.
    No official statement was made to the [biggest] local radio station, but off the record the project manager revealed he was telling contractors ‘no return date in sight’ and further, many more CC’s would shutter their doors nationwide.

  2. Sad indeed. Interestingly, the “seized” picture features another business casualty in its reflection. That’s where Michael and I think La Madeleine should make its entry into the Colorado market (mainly because we’d like to have one around).

  3. Man, that’s a powerful story Dave. I know these times are difficult for small business owners. As one of those owners, I feel like it’s my duty to stay positive and focus on getting things done and moving the company forward, seeking new knowledge and challenging myself to improve.
    But I also look at my personal life and see just how much my family is curtailing spending and think that it must be tough on any business that is reliant on consumer spending and confidence.

  4. It is said to see that they could not let him stay in business and work a payment schedule out. Another restaurant in Westminster, CO went six months without paying rent and was behind 18 months on sales tax before it got shut down. The owners must have known the man was coming because one night they came in and took all the tv’s and item of value out of the sports bar before the auction folks could sell anything.

  5. I think the local authorities at Broomfield should have been a little less harsh with this case. I mean, the man must have worked really hard to start and run his Subway business.

  6. Dave, what struck me most about this story is the small amount of money owed, and that the City shut down the business after only six weeks missed tax payments. I have to wonder if this has always been common practice there, or is a result of heightened awareness and expedited collection (read that ‘financial panic’) activity on the part of a nervous local government overreacting to the current economic crisis.
    I generally pay half my bills on the 1st of each month, and the other half on the 15th. Sometimes a couple of those bills fall slightly after the due date (by a matter of days). That’s never seemed to be an issue before this economic crunch. However, lately I’ve noticed that I’ll actually get phone calls from creditors if a bill has gone only 5 or 6 days (yes, days!) past the due date.
    It’s getting a little ridiculous. In the past couple of days (being the 14th today) I’ve gotten calls from Dell, Home Depot, Citicard Financial, and AT&T (cell phone) asking for payment on an ‘overdue account’.
    When I ask how ‘overdue’ the account is, none of them have been more than 6 days. In the good old days (not so long ago?) I seem to remember that you had to go at least 30 days past due on a bill before they started badgering you on the phone.
    Sounds like it’s possible that this kind of paranoia may be infecting local governments as well. As small business owners, we might want to be very careful to always answer our phones and carefully chek our mail, lest we show up at the office and find an unexpected (and probably undeserved) notice on the door.

  7. Scary, scary stuff. With so many people being downsized, outsourced, laid off, and so on, there’s a tremendous temptation, especially for those in the 40-65 age range, to raid their meager savings (even their 401ks), and buy into a franchise. They think they’re investing in a guaranteed source of income. Of course, they’re not.
    While not all franchises are bad, it’s wrong to assume they’re risk-free. And they attract many people who lack the experience and/or business sense necessary to run one’s own business.
    I don’t know if your friend miscalculated on his cash flow needs, or if the economic downturn has changed its operating parameters in a way that couldn’t be anticipated. In any event, his is indeed a cautionary tale. Thanks for posting it.

  8. Well, we are not alone, and I knew we weren’t but this is the first story I’ve seen that relates to ours. My husband purchased a sports bar in 2003 and much like the Subway man, he ended up running it himself to save on labor, in 2005 I also began to work full time at the restaurant. In 2007 my husband became disabled at 37 from end stage liver disease. I was running the restaurant solo for the past year and with the extra help I had to hire to cover everything my husband did, we too became delinquent on state taxes. As if this wasn’t enough to deal with, I secured a loan to try and cover the delinquent sales tax totaling 68,000.00. I could only get a loan for 50,000.00. In an effort of good faith I handed over the 50,000.00 to the state and tried to negotiate the remainder which was mostly interest and penalties due to my husbands recent (and temporary) disability. They will reduce penalties but not interest, HOWEVER, they would not accept the proof of his disability until I paid Nov & Dec 08 taxes totaling 16,000.00, then they would reduce the penalties so I could continue business. Well, we don’t have 16,000.00 more dollars, so the state refused to renew my 2009 Liquor license. Liquor sales make up 50% of our business so we were forced to shut down the restaurant a week before that embarrasing sign would have been placed on our front doors. 25 people lost their jobs that day, need I remind you that Georgia has a 10% unemployment rate right now. REALLY? Well I know these taxes are higher than 3000.00 like the subway man, but our restaurant operated on a larger scale so they would be and that is only 2 months behind for us. I am heartbroken over this, it was all we had in the world. All the hard work, sweat and tears doesn’t mean anything to the people sitting behind the desk making these decisions. I even called the govoners office crying and pleading, my friend a local TV news anchor offered to pitch our story but it is humiliating and too late for my business to be saved. This is a sad time in America and stories like mine are going to become all too familiar. I’m scared for my children’s future and mine.
    Atlanta, Ga.

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