World of Franchising - SUBWAY & NAASF

A discussion of issues affecting franchisee operators in the Subway franchise system and how the system may be improved. If you have any comments and wish to contribute to this web page; feel free to email the author.

My Photo
Location: Canada

My background is in Research and Development (Science) as well as Economic Development (Business). Currently managing my own businesses. My degree; B.Comm, Finance Major.

Monday, May 03, 2004

If you had not noticed; it is already May! How time flies.

Before I continue with my post here are a few of quotes from a Board Member and a NAASF member (to read the complete post go to the NAASF web site):

On How has NAASF benefited me:

"For clarification, the recent announcement in STS that DAI would withdraw $2,200 for each store from 313 accounts 60 days prior to installation completely blindsided NAASF. Since the announcement, NAASF has worked hard to get this decision reconsidered. No success yet, but we're still trying."

On Get rid of the SubClub program:

"In a recent survey conducted by NAASF through its website, the overwhelming majority of respondents (86%) indicated that they wanted to eliminate the existing paper loyalty program, the SubClub card. Based on that information, and on feedback from franchisees in meeting after meeting, your NAASF Board of Directors took a strong stand at the recent SAC meeting in February for eliminating the SubClub program."

"Because of NAASF's position, DAI agreed to allow testing the elimination of the SubClub card. Within a week from now, ten markets will receive letters from NAASF inviting them to participate in the test to eliminate the SubClub card program. The test will begin in July-August and will go through the end of the year

On 90% Compliance:

"The Compliance Report is a standardized format that is used to paint all with with same brush to protect DAI from further law suits. Some DA's use this as an excuse to visually improve a location by brow beating through the evaluation process. However, the DA location is always exempt from having to improve.

We are led from the top and it's unfortunate that we are being led in this manner. I not only appreciate the committees and boards that are set up, I commend their efforts in trying to change things with their hands tied behind their back. I don't believe they can cut to the real problem regardless of all their efforts. It is my wish that we had more professional skills in our leadership

Are there anyone out there who believe that DAI respects the franchisee? Are you coming to the realization that DAI is increasing the micro management of your store?

To withdraw $2,200 from each of your stores' bank accounts more than 60 days before you have the equipment is absolutely unreasonable. The fact that DAI will have your money, totaling for 17000 stores over $37,400,000, for at least 90 days (they will not be disbursing the money the day they receive it) means they will make a windfall profit of about $230,000. Do you think you will ever see this money? Do you think it will be used for programs benefiting the franchisees?

The fact that there are stores out there which do not have a free $2,200 sitting in their account does not seem to matter. So what if they will bounce a few pay checks or some supplier's checks does not matter. Just because you may have 10 stores does not mean that you will have a free $22,000 sitting there! Then there is the other problem, some people with the money certainly do not have it in a checking account but most likely tied up in some form of saving account. These individuals will have to transfer monies from their saving account with no certainty of the exact date that DAI will take it.

It does not seem to matter how hard our friends at NAASF work with DAI at SAC. They present a reasonable position and, when it fits the needs of DAI, they are listened to. Otherwise they are just ignored or lied to. Lied to may be to strong a statement; possibly mislead deliberately would be better.

Not withstanding what NAASF board members may feel; I believe, as others have also observer, that we need stronger leadership from our Board and CEO. Possibly the CEO is just doing the bidding of the Board but I suspect that the current person does not have the backbone to go head to head with the Board and DAI! Yes, I said the Board. I am of the strong opinion that many of the current Board members are not too interested in taking on Fred and Pete. I'm sure they feel that they are making a difference and improving the lot of the franchisee. However, is in not possible that maintaining the status quo is exactly what Fred wants? Is SAC possibly just a safety valve for venting franchisee frustration? Think about it from Fred's point of view. Here is a controlled environment where he can point to and say; look at us, are we not democratic? We have all the sister organizations of Subway meeting and working together at a team. Did someone from the Board say they were blindsides? More than once possibly? It this team play? I don't think so. It is more like a King playing with his subjects, for fun. If an overwhelming majority of respondents (86%) indicated that they wanted to eliminate the SubShop program, why in the world do you need a test?

If DAI and NAASF really wanted input on decisions there are some excellent tools on the web to conduct a survey. Let the majority, in a democratic way, rule. If they make a mistake I'm sure another vote will correct it.

First of all, we need strong leadership from our NAASF board. This can be manifested by employing a very aggressive CEO who will find ways to take on DAI in a direct way. The CEO will isolate the Board from DAI as the board can then play the good cop scenario while the CEO does the bad cop part. Maybe this will make some sparks fly. You know, you can't bend steel without letting some sparks fly. In the longer term; we need to find a way to improve the franchise agreement. On the way there we need to install some fairness in the system.

We need a fully independent auditing process of all matters related to any conflict involving DAI and DA. When an audit is performed it should not be punitive unless there is clear evidence of fraud.

If there are encroachment conflicts they need to be reviewed by an independent body or, at least, by a body representing the franchisees and DAI equally.

If there are unresolved compliance issues they need to be settled locally without the need to go to Connecticut at a tribunal selected and controlled by DAI. The first step in settling a compliance problem would be for the DA and the franchisee to sit down and discuss the problem at the store location where the problem exists. If this does not result in a resolution then a board of the franchisees peers should be convened and all the matters reviewed and discussed. The cost for this should be paid equally by the franchisee and DAI. If this does not work then the DA needs to file a complaint with the courts in the area of the franchisee or, at least, in the territory of the DA.


Post a Comment

<< Home

!--WEBBOT bot="HTMLMarkup" startspan ALT="Site Meter" -->