For quite a while now, the international sandwich chain Subway has been in the news for all the wrong reasons. Rumours that it was planning to sell the business off has not resonated well with observers and more so with franchisees.
Heartache for business owners
Across the world, Subway is represented in the thousands. Their franchise business model has carried them through various financial crises and the same is expected from the recent COVID-19 pandemic too despite having thousands of branches closing down ever since.
The crisis among the crisis
A group of Subway franchisees recently banded together and wrote an open letter to Elisabeth DeLuca, whose late husband Fred DeLuca co-founded the international chain. This comes amidst the ongoing rumours that they are planning to sell off Subway soon. The franchisees have voiced their concerns and have not been happy with how they are being treated by the master franchise holder. The letter was signed by 250 branches. There are more than 2,500 branches in the United States.
In the letter, they claimed that they felt ‘short-changed’ on how the Franchise Agreement allows Subway to do anything it pleases without any form of notification to them. This include the clause where the franchisees are not allowed to reduce their operating hours in light of the pandemic. They raised 6 issues (or demands) in the letter related to helping them cope and trying to stay in business because of the situation.
Not doing the situation any good
What makes the scenario all the more distressing is that a report recently claimed that Subway’s revenue dropped by more than 18% in 2020. In 2019, John Chidsey was appointed as the CEO of the group in an effort to turn things around after experiencing a sharp drop in sales before COVID-19. Since his appointment, more than 1,700 stores have been closed while hundreds of workers being laid off. If his record is anything to go by, Chidsey was the CEO for Burger King back in the 200s where he closed stores and retrenched employees before finally selling the brand.
These are signs and if such similarities are anything to go by, it seems that Subway is on its way to being sold. Reports that some restaurant companies have put Subway in their radar and carried out due diligence only gravitates the situation. To this end, Subway has recently announced that Subway is not for sale to dispel any of such rumours circling around.