Fresh Tensions Arise Between Subway Corporate and Franchisees

“Subway continues to downsize its domestic footprint, closing more than 1,000 restaurants in the U.S. last year, about twice as much as originally planned, according to CNN,” reported Restaurant Dive. With “836 closures in 2017” and “359 closures in 2016,” the made-to-order sub brand is now at its “smallest footprint since 2011,” according to the article.

It’s not only a shrinking footprint that has Subway making waves, however. Amid the closures come allegations from Subway franchisees “accusing the company of going after them for minor infractions, such as smudged glass, in an attempt to put them out of business and restructure the organization,” the article said.

According to the article, “As one Ohio-based operator told the New York Post this week, the company's inspections led to complaints about coats in the backroom, while another was found out of compliance for slicing his vegetables in a choppy manner. Stores found in violation have been sold to the company’s development agents who are in charge of the inspections, the plaintiffs allege.”

The article also said that franchisees are now accusing “the development agents of attempting to acquire those stores themselves to facilitate a system restructure.”

“As the New York Post reports, Subway initiated 702 arbitration actions against U.S. franchisees in 2017, compared to one by McDonald’s, two by Dunkin', and none by Pizza Hut, Burger King or Wendy's,” according to the article.

Subway insists that “these inspection failures are simply to ensure high standards,” the article said.