Subway Got Too Big. Franchisees Paid a Price.

[Eugene]

Source: New York Times

Subway Got Too Big. Franchisees Paid a Price.

Sabotaged meatballs. The wrong soap. Franchisees say supervisors manipulated inspections — then took their stores. A company ‘hit man’ says it’s true.

By Tiffany Hsu and Rachel Abrams
June 28, 2019

Manoj Tripathi couldn’t shake the feeling that someone had a vendetta against his Subway sandwich shop. A franchisee for nearly two decades, he had done everything he could to keep his restaurant, in a strip mall in Northern California, in perfect condition. But lately it seemed like someone was out to get him.

It was the middle of 2017, and inspectors sent by Subway’s regional manager were finding a new problem to cite each month: a handprint on the glass door, the wrong brand of bathroom soap, cucumber slices that were too thick, he said. They seemed to be little things, but with each write-up, Mr. Tripathi’s grip on his store weakened. If he racked up enough infractions, Subway could terminate his contract and take control of the business.

When an inspector named Rebecca Husler arrived one day that September, Mr. Tripathi thought his restaurant was pristine. Then he noticed that a single light fixture needed a new bulb. Mr. Tripathi rushed out to buy a replacement, but by the time he returned, Ms. Husler had marked it as a violation. A year later, just as he feared, he lost the Subway.

Mr. Tripathi wasn’t paranoid. Ms. Husler really was out to get him. She had specific instructions from her boss, the regional Subway supervisor, to find fault with the store, she said in an interview.

-snip-

Read more: https://www.nytimes.com/2019/06/28/business/subway-franchisees.html

[msongs]

1. subway has crappy food IMO quit going there yrs ago nt

[customerserviceguy]

4. Agreed

Any place that has a Jersey Mike's can snub Subway.

[dalton99a]

2. Great piece.

Subway is the largest fast-food company in the world by store count, with more than 24,000 restaurants in the United States alone. It got that way thanks in large part to entrepreneurial immigrants. Unlike at chains such as McDonald’s and Burger King, where many franchises are operated by investment firms, Subway owners are mostly individuals and families. The company’s co-founder, Fred DeLuca, made stores easy to open; most new franchisees are charged a $15,000 initial fee, compared to $45,000 at McDonald’s. In exchange, Subway operators must hand over more revenue than at many other chains — 8 percent of gross sales — while also agreeing to other fees and stipulations.

For half a century, the system worked to mutual advantage. Subway’s value hit $12.3 billion, and countless first-generation Americans bootstrapped their way to success, one foot-long at a time.

By the time Mr. DeLuca died in 2015, though, the company was struggling. Rivals like Jimmy John’s and Quiznos had grown, and Subway’s spokesman, Jared Fogle, pleaded guilty to child sex and pornography charges. Mr. DeLuca’s sister, Suzanne Greco, took over as chief executive, inheriting a company that many felt had grown too fast and haphazardly. In 2016, for the first time ever, more Subway stores closed than opened. But while many franchisees shut down because of underperformance, others operating profitable locations began to feel targeted, too.

For many owners, Subway’s internal workings are a mystery. The chain, which is private, offers far less financial information than other global fast-food peers. In the most recent version of a disclosure document given to prospective franchisees, which is more than 600 pages long, the company notes that it can revise its rules “at any time during the term of your Franchise Agreement under any condition and to any extent.”

The document would be difficult for anyone to process. But Alexander Dembski, who trained many new Subway owners over a 34-year career, estimated to Fortune in 1998 that 30 to 50 percent of the chain’s franchisees were immigrants, and that more than a third of applicants scored poorly on proficiency tests in math and English.

[3Hotdogs]

3. We have Wawa in our area. Much better sandwiches.

[rownesheck]

5. I quit eating subway

once I found out their bread included the same ingredients as yoga mats. Supposedly, they have taken it out, but too late. Damage is already done.

I eat the hell out of other fast food, so I do realize my hypocrisy. But hey, that's me. I'm a hypocritical bastard.

[FakeNoose]

6. Subway made a huge error having that Jared porn-guy as their spokesman

I think he's in jail now, but Subway lost $ millions in revenue and customers over it.

There are too many better sandwich shop competitors everywhere in the US. Besides that Subway's stupid corporate policies really screw the franchise owners, whom they should be supporting as partners. Why would anybody buy a Subway franchise after this?

[Aussie105]

7. Subway as a fast food

is probably healthier than the other options out there in fast food land.
I go there once in a while.

I have a devious and subversive nature, and I like undermining corporate fooderies. I buy the ingredients, a French stick, and make my own. Costs a bit more, but I end up with a 2 foot sandwich!

$15K to buy a franchise? Then 8% of what you take in? Plus labor costs, material costs? Seems a recipe for hard work and no income for the owner.

[Blue_Adept]

8. I love that nearly all of the responses actually ignore the article and what it says

to complain about high subjective things like the taste of the food.

Keep missing the forest for the trees, guys.

[SharonAnn]

10. I noticed that, too.

[eppur_se_muova]

9. Subway has been known to sell too many franchises in the same area ...

... forcing franchisees to compete against each other for the same market. Maybe this is their "clever" way to thin the herd a bit.

[uponit7771]

12. +1,

[JI7]

11. These people should consider opening up their own indie sandwhich shops

that development guy in the article is a real piece of shit. i hope people boycott all of the locations he owns.