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Subway, America’s greatest restaurant chain, is doing harm management with its personal franchisees after a 26-minute phase on HBO’s “Final Week Tonight with John Oliver” sharply criticized its remedy of them.
Oliver criticized Subway for exploiting its franchisees and being maybe the nation’s worst franchisor throughout the episode on Might 22.
“For many years, franchisees have complained about Subway permitting places to open close to one another and cannibalizing their enterprise,” he mentioned. “A Subway may open proper subsequent to yours and reduce your gross sales in half. And none of this actually impacts Subway company. They nonetheless get their charges on any sale, plus a $15,000 franchise charge for each new retailer that is opened. That’s the reason these shops are f***ing all over the place.”
Subway fired again after the phase went viral, having been seen greater than 4 million instances on YouTube. The corporate mentioned Oliver primarily based his phase on outdated information and that since John Chidsey took over as CEO in 2019 it appears out extra for the house owners of its roughly 21,000 US eating places.
“We’re disillusioned {that a} current episode of Final Week Tonight with John Oliver inaccurately characterised Subway and the help we offer to our franchisees,” Subway mentioned in a message to its franchisees and shared with the media this week.
The chain noticed 1,043 extra Subway eating places shuttered in 2021 than it opened, making this a sensitive topic for Subway throughout a time when the corporate is having issue retaining eating places and discovering new franchisees. Subway owns none of its personal eating places.
The British funnyman additionally poked enjoyable at allegations Subway doesn’t use actual tuna and possibly not even actual meat in its meatballs.
He put a tray of Subway sandwiches on his desk and famous the odor.
“This whole studio is about to odor like a Subway, which, as everyone knows, is the precise odor of “What if bread may fart?’”
Turning severe, Oliver cited a 2019 New York Publish story that detailed how space managers (“growth brokers”) usually discover franchisees out of compliance for minor infractions and shut their shops to allow them to purchase them for artificially low costs or resell them and acquire extra charges.
“There’s an incentive for growth brokers to be overly harsh, as a result of if a retailer will get a number of violations, that franchisee’s settlement might be terminated and the shop might be re-sold, generally to the enterprise growth agent themselves at a reduced value. One former inspector even described a growth agent telling her the precise retailer house owners that he needed to fail, including, “I used to be sort of his hit man.” , regular sandwich stuff. “
Public filings present Subway in 2018 took 718 actions towards its franchisees and 955 the prior 12 months. That compares to lower than 10 per 12 months throughout that point filed by McDonald’s, Burger King and Wendy’s.
Subway took solely 13 actions in 2021 towards franchisees as extra of the retailers struggled to make a revenue, a long-time franchisee mentioned.
New York Metropolis Subway space supervisor Restaurex despatched his personal Might 25 memo to native franchisees it oversees, which was reviewed by The Publish.
“The phase included misinformation and damaging remark about our meals,” it mentioned.
Restaurex additionally gave solutions on how to answer prospects who say they watched the phase, particularly the half about how Subway exploits its franchisees.
“A lot of the info on the present was from greater than a decade in the past,” it mentioned. “That is not how Subway works immediately.”
“A Subway may open proper subsequent to yours and reduce your gross sales in half. And none of this actually impacts Subway company. They nonetheless get their charges on any sale, plus a $15,000 franchise charge for each new retailer that is opened. That’s the reason these shops are f***ing all over the place.”
John Oliver on ‘Final Week Tonight’
Oliver additionally mocked Subway for implementing a brand new franchise settlement final 12 months that forces franchisees to be open day-after-day besides one barring “an act of God” — a strict authorized time period that tends to incorporate solely essentially the most extreme of pure disasters — or danger being taken over by the guardian firm.
Franchisees can prolong their present franchise agreements and pay a lot larger royalties if they don’t wish to adjust to the brand new guidelines which are unusually harsh for the quick meals business, The Publish reported on the time when breaking the information in regards to the agreements.
“They not too long ago up to date their contract for brand new and renewing franchisees, which, amongst different issues, expands the non-disparagement clause to incorporate subjecting the Subway model to ridicule, which, come on, Subway. You are the one who made your new brand two arrows 69-ing one another. The decision is coming from inside the home right here,” Oliver quipped.
The HBO host requested rhetorically why anybody would open a Subway.
“And look, plenty of the issues you’ve got seen tonight exist in some kind with virtually all franchises,” Oliver mentioned. “However Subway specifically looks as if absolutely the worst.”
Subway advised its franchisees it’s frightened how Oliver’s phase may damage them.
“We’re involved that the deceptive characterizations made on Final Week Tonight with John Oliver could have a unfavourable affect on our franchisees — 1000’s of small enterprise house owners whose livelihood is serving visitors, day-after-day of their communities,” Subway mentioned in its franchisee memo.
“Franchises are key to our success — once they succeed, we succeed. It’s our high precedence at Subway to make sure our franchisees have the instruments they should thrive.”
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