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Subway responds to open letter by anonymous franchisees.

‘Subway is not for sale,’ quick-service brand states

Company responds after anonymous franchisees issue letter to owner Elisabeth DeLuca, asking for changes and saying ‘this dream has turned into a nightmare’

Subway on Wednesday flatly said it is not for sale after media reports over the past week and an anonymous franchisee letter Monday that asked for a share of any proceeds if the company were sold.

“Subway is not for sale,” a spokesperson for the Milford, Conn.-based quick-service sandwich chain said in a statement.

Earlier in the week, an anonymous group of franchisees had published an open letter to Elisabeth DeLuca, widow of founder Fred DeLuca and a major owner of the brand, saying their Subway “dream has turned into a nightmare.”

“This letter is not representative of the opinions of the vast majority of our dedicated franchisee network,” Subway said in its statement Wednesday.

“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 company spokesperson 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 had struggled, especially during the pandemic. Unit counts from Chicago-based Datassential’s 2021 Firefly 500+ Report indicated 1,557 U.S. Subway restaurants closed in 2020, with the brand ending the year at 22,177 restaurants domestically.

In the open letter to Elisabeth DeLuca, a major owner of Subway parent Doctor’s Associates Inc., “A Concerned Group of Subway Franchisees” outlined six changes they would like to see in the company.

The first five were enumerated, including:

  • Any change to franchise agreements must be mutually agreed upon.
  • Franchisees should have the right to directly lease their stores, rather than through a Subway subsidiary.
  • Franchisees should be able to source fresh vegetables every day and offer higher quality ingredients when available
  • Subway Business Development Agents must be barred from purchasing stores closed due to their inspections.
  • Franchisees should be exempt from paying royalties to Subway in the amount of the Paycheck Protection Loan, part of the federal government assistance program during the pandemic, and any federal aid that they have received.

The sixth request brought up rumors of a possible sale of the brand, which the company flatly denied.

“There is talk that a sale of Subway is pending,” the franchisees’ open letter stated. “As part of any sale of Subway, we, the franchisees, would like to receive a royalty rebate of 8% of the sale, to be proportionally distributed to the Franchisees by gross sales, as a sign of good faith for all of the turmoil, and heartache that we have endured throughout Subway’s 40-plus-year history.”

Subway in March said it would be moving some corporate functions from Connecticut to Florida, setting up culinary, marketing and “consumer-facing” business in a new hub there. Subway CEO John Chidsey maintains a residence in Florida.

Subway founder Fred DeLuca died in in 2015.

Subway has more than 40,000 units in 100 countries worldwide.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless


TAGS: Franchising
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