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.

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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.

Tuesday, September 07, 2004

It has been a few days since my last update to the site. Many things have happened, most for the better.

For one; I now see more activity by some NAASF Board members in their own Discussion Site. It can still be improved but this is a good start. It would be nice if they would formalize this with the establishment of a communications committee. This committee should be responsible for the monitoring of the site and to answer questions, in a timely fashion, of members.

I note that Fred DeLuca has made a trip to the Mid West and that he observed some serious problems with our store operations. For a change they were not being identified as being caused by owners but rather DAI. Our menu is too complex and we have too many items in inventory. My question is; why did it take a trip to identify this? Why did not Research identify these problems? Oh, (a little sarcasm here) this department is run by Fred’s sister! No wonder there is so little accountability and correction of errors at DAI.

Where is NAASF in all of this? No mention was made by any input that we had on these matters. I guess that DAI does not really have much respect for NAASF or there would be a bit more than just cursory recognition and participation in SAC. NAASF needs to fight for respect. It will not be handed to it without a fight. NAASF has to have legitimacy. This can not be won with free membership. If it remains free it needs to have close to 100% participation of members. I believe that membership has stagnated at about 70%. With paid membership this would be excellent.

I will, again, make mention of web based survey tools. It is imperative that NAASF use these to get input to survey questions. In addition we need to use a professional question designer. It is not easy to design a survey which gets to the truth in an unbiased fashion and then ensures that the results are interpreted with some statistical significance.

Why is this important? We need to develop a database of issues which are important to the franchisee. Only the franchisee can legitimize the stance of NAASF and with a firm base on which to build will NAASF be able to say to DAI that these items will have to be corrected. It not, alternate action will be necessary. A strong bank account is also an important tool of strength. Without both franchisee support and the ability to act NAASF will be like a dog on a chain. We can bark all we want but that is about it!

If you want to send NAASF a letter address it to Jim Hatfield, Chairman NAASF. I’m sure they will appreciate any input, positive or negative. Let them know your opinion and your willingness to support NAASF in extracting justice from DAI.

In my last posting I expressed my desire for change within NAASF. Here is my wish list of items I would like to see improved at DAI:

1. Independent audit by an independent audit company.

2. A random generated number for stores selected for audit. What this would entail is the selection of stores for an audit not by the whim of the DA or any other individual but by a random process. The exception would be where fraud is suspected. In this case it would have to be shown why this was suspected and the auditor advised to transmit the reason for the audit to the owner.

3. The selection of a new store location also needs to be farmed out to an independent agency. Only then will store owners feel less threatened by new business development. If an existing owner wants to appeal the decision then it should be handled by an independent audit firm and all matters kept confidential. Any cost for an appeal should be shared equally by DAI and the store owner fighting the appeal. In any case, there needs to be a maximum amount set for all costs.

4. When DAI wants to add a new menu item it should remove another which is not selling well in a market.

5. All new inventory items must be consumed in the production of sales. If it is found that stores are throwing out product due to low sales then the sales item must be removed from the menu in order to reduce food cost.

6. The menu board needs to be simplified. A standardized pricing system should be developed which is less confusing to the customers as well as simplifying the job of the staff.

7. Research and Development needs to do real research in the field. It is not sufficient to sit in an office and brains storm new ideas. They need input by franchisees before any testing actually begins. Then it has to be shifted to a new set of testers with a new group in a new location. Staff and owners need to be surveyed (see my comment above regarding survey questions) to see if they are interested in the item. All aspects of the product need to be discussed. The taste, the cost, the time to prepare and any technical difficulties. It is also important to develop a way to track the new product with an update to the POS system.

8. In building new stores more attention needs to be given to future growth and development. Is there sufficient capacity in the design for new products and equipment, etc?

9. The construction department also needs to develop store view perspectives which show the design of the store in a three dimensional view both inside and outside. This has to be integrated with the geography of neighboring businesses and tastes.

10. Finally we need a long term and shorter term plan as to future development and direction of the system. Where are we headed? Why?

That is by no means a complete list but it underscores the lack of current planning and development of Subway. It is possible to grow the brand with no more stores. Focusing on internal items which will enhance sales will be a better and wiser way to grow the brand. With stronger stores we will be better able to face change and improve our operation. In the longer term it will be the strength of the store which will result in a stronger and more vibrant Subway.

Take care.


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