More than 100 Subway franchisees call on the chain's 'multi-billionaire' owner to fix the 'nightmare' business
Andrew Winning/Reuters
- More than 100 Subway franchisees wrote a letter to Elisabeth DeLuca, one of the chain's owners.
- Franchisees wrote the dream of owning a Subway franchise "has turned into a nightmare."
- Subway said the letter is not representative of most franchisees.
- See more stories on Insider's business page.
Subway franchisees are begging Elisabeth DeLuca, one of the company's owners, to fix a host of problems that they said are plaguing the sandwich chain.
On Monday, a group of more than 100 Subway franchisees released an open letter to DeLuca, who was married to cofounder and long-time CEO Fred DeLuca prior to his death in 2015. In the letter, franchisees said that the dream of owning a Subway franchise "has turned into a nightmare."
Franchisees said Subway has denied their requests for higher quality tuna and vegetables, cannibalized their sales by opening too many locations, and barred them from cutting operating hours during the pandemic so they could "make ends meet."
Franchisees also said in the letter that Subway expected them to use PPP loans and federal aid to subsidize a $5 footlong deal during the pandemic.
"We had to take away from our families so that we can pay royalties to you, a multi-billionaire who does not need a bailout or any federal aid," the letter reads.
A Subway representative said the letter is not representative of most franchisees' opinions.
A franchisee who owns Subway locations on the West Coast said that he and others wrote the letter to DeLuca because she is "the person who holds the purse strings." Franchisees previously told Insider that DeLuca and Dr. Peter Buck, a cofounder and owner, have distanced themselves from the company in recent years.
"She continues to live in the shadows," the West Coast franchisee, who asked to remain anonymous for fear of reprisal, told Insider on Tuesday.
"To actually effect a change, she has to come out of the shadows," the franchisee added.
The Subway representative said in a statement to Insider that the chain is committed to the long-term success of franchisees, "working hand-in-hand with them to ensure decisions are focused on maximizing their profitability."
"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," the representative continued.
Franchisees want a piece of the pot if Subway is sold
In the letter, franchisees asked for a cut of the sale if Subway is sold. Specifically, they asked for a royalty rebate of 8% of the sale, "as a sign of good faith for all of the turmoil, and heartache that we have endured." (Royalties are fees that franchisees pay to cover costs for advertising and other corporate services).
Insider reported earlier in April that rumors of Subway attempting to sell itself have been swirling amongst franchisees and corporate employees.
"What is confirmed through chitchat in the restaurant industry is that both RBI - Restaurant Brands International - and also Inspire, in the last year to year and a half, have done due diligence looking at Subway," John Gordon, a chain restaurant analyst with Pacific Management Consulting Group, told Insider earlier this month.
The franchisees who wrote Monday's letter represent roughly 250 stores, or 1% of the chain's US locations, the New York Post reports.
Two franchisees who were not among those that sent the letter told Insider on Tuesday that they believe leadership, lead by CEO John Chidsey, has not been receptive to franchisees' concerns.
"They are on target that leadership and ownership are completely ignoring the concerns, thoughts and suggestions of the franchisees and are unwilling to engage in form of good dialogue," a Midwestern franchisee said of the letter.
"They used to tout: Look, we have made more millionaires" than any other brand, a California franchisee told Insider in March.
"At this point, you've actually destroyed more lives than any other brand," the franchisee added.
Nancy Luna contributed reporting to this article.
If you are a Subway franchisee or employee with a story to share, reach out at ktaylor@businessinsider.com or get in touch via the Signal encrypted messenger app at (646) 768-4740.
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