Subway Franchise Agreements

Senator Catherine Cortez Masto, a Nevada Democrat, wrote in a may letter to the small business administration that franchisees had accused Subway of “using minor offenses to steal owners` business through a rigged arbitration system,” citing Reports from the New York Post. “I am concerned about the growing complaints from entrepreneurs about unfair practices that are causing them financial hardship,” she wrote. In its response, the Agency stated that of 1,551 Federally guaranteed loans that have been approved for subway franchisees over the past decade, 12 percent have been billed or were deemed unlikely – a much higher rate than the average duty-free loan. “Subway attaches enormous importance to its network of small entrepreneurs,” said a Subway spokeswoman. “As such, it`s about ensuring that viable metro sites remain open. We help franchise owners find buyers for their restaurants. However, when DeLuca died in 2015, the company fought back. Rivals like Jimmy John and Quiznos had grown up, and Subway spokesman Jared Fogle pleaded guilty to child sex and pornography. Mr. DeLuca`s sister, Suzanne Greco, took over the management and inherited a company that many thought had grown too fast and without a plan. In 2016, for the first time, more Subway stores closed than they opened.

However, while many franchisees have become undressed due to a lack of performance, others who operate profitable sites have also felt targeted. “I wouldn`t fill out the form,” a Southern franchisee told the Post, adding that he knew another franchisee nearby, who was asked to fill out the form and has so far refused. In fortune`s 1998 article, then-Director Tina Perazzini said subway wasn`t much concerned about the cannibalization of the franchise`s sale with new sites and told the publication, “We installed them in every f—ing location we could.” Franchise Description: The franchisor is Doctor Associates LLC. The franchisor offers qualified buyers the right to build and operate, from a single site, a retail business that prepares and sells 6-inch flatbreads and flat sandwiches, salads and other food products. Other franchise options include: non-traditional sites, airport terminal, theme park and national park sites, satellite sites, Community Development Program sites, military bases and co-brand sites. The Federal Trade Commission is asking Subway to establish an annual list of franchisees with permanently closed branches that, according to the company, “gives potential franchisees the opportunity to contact them to discuss their experience with Subway.” But many franchisees who received redundancy letters after being deemed non-compliant ended up selling their stores – sometimes under duress and often for much less than they thought, several franchisees said.