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.

Saturday, August 13, 2005

Subway web links and other interesting stuff:

It is time to repost the link to an excellent Subway Franchisee Site

http://www.subwayla.com/ohcal/

One of the new items on this site are some excellent pictures of the Kiosk which have been mentioned by Fred Deluca on voice mail. In addition there is some additional information which may be downloaded for free and used by your store to improve its efficiency.

I also see that some markets are offering pizza. It is unfortunate that we get this advertising in our area, it is a small world on satellite TV, but we can’t offer it, thus taking advantage of the money we spend through FAF in a more efficient way.

In our area we are being hounded by DAI to reduce the cost of our menu items even though all our costs are going through the roof. No consideration to profitability is made as the only thing of importance is market share. After all, did you not know that Quiznos is gaining on Subway. They must be stopped at all cost – that is, the cost to the franchisee.

To achieve ‘compliance’ on pricing the usual tactic of intimidation and threat is being employed. Here is an example of what you will receive if you do not follow the Subway mandate to the letter, damn profits:

RE: Termination of Franchise Agreement #

Dear Franchisee:

You received correspondence from the Operations Department dated 2005 indicating that compliance violations were observed. You were directed to correct the issues immediately. The current evaluation indicates food safety violations. Due to the potential negative impact to your
restaurant, your investment, the public and the Brand, we find it necessary to take further action.

On behalf of Subway Franchise Systems, this letter is to advise you that pursuant Paragraphs 5.b. and 8.b. of the Franchise Agreement, Subway Franchise Systems hereby elects to terminate the above-referenced Franchise Agreement between Subway Franchise Systems of Canada Ltd. and the above-referenced individual, dated June 5, 19xx, because you have failed to comply with Paragraphs 5.b. and 8.b.

You have failed to maintain the store in compliance with the SUBWAY Operations Manual. Specifically, according to the July 18, 2005 evaluation, your store is out of compliance in the following area(s):

Food Safety / Glove Usage

Approved Products & Packaging, Products Offered For Sale

Food Quality & Preparation

You may cure this default by correcting the above-specified conditions prior to the sixtieth (60th) day after your receipt of this notice, and be in full compliance. In any event, if the corrections are not made by the sixtieth (60th) day after receipt of this notice, your Franchise Agreement may terminate on the ninetieth (90th) day after receipt of this notice without further notice to you.

The aforementioned corrections shall include any and all compliance issues.

This notice of termination of your Franchise Agreement is separate and apart from any other notice of termination issued, for any reason, by any other department of Subway Franchise Systems or its affiliates. Please be aware that you may be responsible for legal costs and/or filing fees associated with this case if further action is necessary.

If you should have any questions, comments, or concerns, please contact either of the Case Administrators, Sharon Rook-Fallgren at extension 1578 or Renee Dinnean at extension 1553.

Sincerely,

Barbara Mehan
Compliance Coordinator

I particularly find it interesting that Subway is so concerned “Due to the potential negative impact to your restaurant, your investment, the public and the Brand, we find it necessary to take further action.”

They are concerned about the negative impact to my restaurant and my investment that they find it necessary to take further action. Talk about B.S! I will tell you that this store is well run and can be put up against almost any in the brand for quality and cleanliness. In fact, I have compared it to others in the market and found that it is actually better run! However, there is that one small item of pricing. This store is in a very high labor cost area and also has an incredibly tough time in attracting any help at any reasonable price. For example labor costs have increased by about 30% over the past year but we still can’t find staff. We are not alone as others are in a similar boat.

In contacting Subway to try to get some relief, by reducing the hours of operation, we are ignored. In contacting Subway to get any form of help, we are ignored. The only way we are not ignored is if our pricing has increased by any amount over the past couple of years. In other words, we are not allowed to recapture higher rent, labor, taxes, food or any other costs through pricing increases!

It sure is difficult being positive regarding Subway when they see no benefit in working as a team. I can understand why Subway is running into difficulty in attracting new franchisees into the system when they really do not respect the existing ones. You can count on Subway to give you a helping hand out of the system if you have any troubles, of any kind. No help is offered in correcting any problems which may cost DAI any money.

I guess Quiznos and other franchise organizations are quite happy with this policy of beating up on franchisees by Subway. It must provide a very good source of new franchisees for their brand. After all, any Subway franchisee that leaves Subway will go somewhere. They don’t just disappear into the ether. Sad to say, Subway either does not see this or just does not care.

How does it go again? A happy customer is a repeat customer while an unhappy one will tell 10 friends about the bad experience.

Should not the same thinking apply to franchisee customers of DAI?

I guess not!

Take care.

4 Comments:

Blogger blogdollar3 said...

I like your blog. Its really good.
I have a website about owner finance note Stop by and visit some time.C
Ciao for now..
D

1:54 AM  
Blogger subwayguy said...

Hi,

We own a Sub Franchise account also and I feel exactly the same way. I am a college student and will do the same as you and post my gripes about how Subway is turning into some greedy market-share, run-you-down-at-whatever-cost kind of franchise and hope people read it. Nice site & keep up the good work. If you need any help with anything, let me know and I will help you out any way that I can.

-Annoyed Subway employee/manager/owner, etc.

8:16 PM  
Blogger Tina said...

Its frustrating that subway doesnt have a place for owners and managers to interact with each other. I have suggested that they place a forum on partners so we can all exchange ideas and gripe about things that just dont work. Needless to say they dont want anything to do with that. This seems to be a good start.

www.subwayowner.com

10:17 AM  
Blogger sammythebull said...

It has been 4 years now since I sold my Subway. But the way we where treated was disgusting. Since we were not the type of owners that kissed Ruth Senders ASS..she made it so tough on us to run OUR bussiness.. although the county of LA rated our store with a A compliance grade Ruth would send in her cronies to find some way to mark us out of compliance until we gave up and sold the damn store!! They really crushed our dreams!!

4:22 PM  

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