Turmoil at Subway Continues as Company Ignores Franchisees
The drama at America's largest fast-food chain is far from over. Amid swirling rumors of a possible sale and growing public discord between franchisees and management, a group of more than 100 anonymous Subway operators on Monday published an open letter to one of the company's owners. Their message, however, appears to have fallen on deaf ears.
The appeal to Elisabeth DeLuca, one of the main shareholders at Subway and the widow of founder Fred DeLuca, is part of a public plea by disgruntled franchisees who allege that their operating problems go largely ignored by the company. In fact, some claim that their attempts to communicate with CEO John Chidsey have been completely unreciprocated. (RELATED: This Once Fast-Growing Burger Chain Is Close to Disappearing)
In the letter, the operators outline several accusations at the expense of Subway's management, including that they aren't allowed to upgrade the quality of their ingredients, while their signed franchise agreements can be changed by the company at any moment, without notice. The letter also alleges that Subway forced franchisees into money-losing decisions—like opening new locations right next to existing ones—and even recruited competitors to put some out of business, a claim which was confirmed by one of Subway's inspectors in 2019.
The letter includes requests for more autonomy in procuring ingredients and leasing their restaurant spaces, and fairer franchise agreements. Also, in the event of the chain's sale, they are asking for 8% of the profits "as a sign of good faith for all the turmoil and heartache that we have endured throughout Subway's 40-plus-year history."
Subway denied to Eat This, Not That! that it was readying itself for a sale, saying in a statement that the open letter was not representative of most of its franchisees.
"This letter is not representative of the opinions of the vast majority of our dedicated franchisee network. Subway is committed to the long-term success of our franchisees and provides multiple forums for franchisees to share feedback, working hand-in-hand with them to ensure decisions are focused on maximizing their profitability," the chain said. "There are many exciting announcements—ranging from menu enhancements to digital upgrades and new delivery options—on the horizon, and we look forward to sharing these with you in the coming weeks. Subway is not for sale."
But according to a pair of sources behind the letter who spoke to Eat This, Not That!, the response they are hoping to receive—one from Mrs. DeLuca herself—hasn't yet materialized, and frustration is mounting. Their group of more than 100 operators has now purportedly grown to include more than 200 operators representing more than 500 stores.
One of them, a long-term operator of several dozen stores who requested anonymity over concerns of retaliation, acknowledged that problems existed at Subway prior to Mr. DeLuca's death. However, the chain's founder had almost exclusive authority, making it easier to see issues resolved. But Mr. DeLuca seemingly didn't put in place plans for a successor, and the sandwich empire he built from the ground up was left without a true leader after his death in 2015.
According to the operator, none of the company's interim CEOs, Mr. Chidsey included, have had enough power to truly affect change. This prompted the group of franchisees to turn to Mrs. DeLuca, the majority owner alongside Dr. Peter Buck, the second original founder. While she has never been involved in the business of Subway, she may be the only individual with any power to do something.
"The owners are hands-off but own the whole business," the operator said. "It's time for them to take some responsibility."
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