Home Business Subway franchisees air their beef with owner amid sale rumors

Subway franchisees air their beef with owner amid sale rumors

by Noble J. Ozogbuda

A group of Subway Restaurant store owners are vying to be heard amid rumors that America’s largest restaurant chain is gussying itself up for a potential sale.

An anonymous group of franchisees who claim to represent 250 Subway stores, or 1 percent of its total US locations, posted an open letter on Monday to Elisabeth DeLuca, the widow of their dead co-founder Fred DeLuca, with a list of demands they claim could help improve their lot —  as well as Subway’s.

Requested changes include giving store operators the ability to source their own produce, to negotiate changes to franchise agreements, and to lease properties from landlords other than Subway.  

“As Subway Franchisees we don’t directly lease our stores from the landlord, the letter to DeLuca, 73, said. “We sublease them from Subway even though we are the ones that find and choose the locations. So if Subway wants to kick us out of our locations for any reason, they are within their legal rights to, even if we’ve been playing by the rules the entire time.”

Ditto for franchise agreements which are written in such a way “that Subway could change the rules on us at any time, without notice, for anything,” the letter said.  

Subway’s tight grip over its store’s operations has even prohibited some operators from upgrading the quality of the food they sell, the letter said. And it’s making their lives miserable amid sagging sales.

“We are the Franchisees of Subway,” said the letter posted Monday on ElisabethDelucaOpenLetter.com. “We’ve worked hard, struggled, and persevered all in the name of chasing our piece of the American Dream.”

Elisabeth DeLuca
The letter to Elisabeth DeLuca requests franchisees have the ability to lease properties from landlords other than Subway.
facebook

“Sadly, for many of us, this dream has turned into a nightmare,” the letter said.
The call for change comes amid rumors that chief executive officer John Chidsey has been cutting costs, including moving operations to Florida from Milford, Conn., in an effort to pretty the company up for sale.  

Both Restaurant Brands International, owner of Burger King and Tim Hortons brands,  and Inspire, owner of Buffalo Wild Wings and Arby’s chains, have done due diligence into Subway in the last 18 months, according to a Business Insider report on April 12, which helped fuel the sales rumors.

Chidsey has denied the report. But industry sources tell The Post that the pandemic is the only reason the company wasn’t put up for auction last year as initially planned.

“The plan was to sell in 2020, but by the time the auction would have started the pandemic hit,” said an investor source with knowledge of the company’s plans. A sale “will likely start in the third or fourth quarter of this year,” this person added.

Subway restaurant
Subway’s tight grip over its store’s operations has even prohibited some operators from upgrading the quality of the food they sell, the letter said.
Christopher Sadowski

According to the franchisees behind Monday’s letter, a sales process could open the door to their demands finally being heard.

“They have the motive and incentive (to listen to franchisees’ suggestions) because they are trying to sell the chain,” said an organizer of the Web site, which currently represents about 100 franchisees. “Subway is a sinking ship right now and they have to stabilize operations to sell the company.”

Subway sales through September were down 27 percent compared to 2019, according to public filings — making it one of the hardest hit fast-food chains during the pandemic.
Fred DeLuca loomed large over Subway until he died in 2015, leaving Elisabeth and their son Jonathan with half of the sandwich empire he co-founded in 1965 with Dr. Peter Buck. His sister Suzanne Greco was even CEO for three years until 2018.

Elisabeth and Johnathan now hold two of Subway’s four board seats. Elisabeth, who could not be immediately reached for comment, worked for a time in Subway’s corporate offices, but now lives in the Miami area and is not believed to be involved in day-to-day decision making.

You may also like

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Got it! Read More

Privacy & Cookies Policy