Peter Romeo writing at QSR asks "how long can Subway stay on its [expansion]tear?
Differences in the answers have led to battles over the years between the franchisees and franchisor, which has traditionally operated just one unit, a training facility near its Milford, Connecticut, headquarters. "You have franchisees who aren't too happy when they're opening a Subway a half a mile away from their stores," says Technomic's Henkes.
Tensions have also escalated when franchisees feel a home-office initiative boosts sales, the base of the franchisor's royalty revenues, without increasing their profits.
Most recently, about a third of the operators resisted the addition of breakfast, says Loren Goodridge, a 17-unit franchisee (with two under construction) and past head of the North American Association of Subway Franchisees (naasf). The a.m. menu was rolled out in May after being extensively tested in more than 7,000 restaurants.
"There was a concern among franchisees about losing money on it," says Steve Forbes, a two-unit Vermont franchisee who serves on NAASF's board. He counted himself among them.
Nonetheless, all parties attest that relations between licensee and licensor may be at an all-time high."
There are several important parts to this story, relevant to all franchisee associations. First, NAASF is willing to talk about their concerns about the Subway Breakfast Menu in public, and second the concerns are still grounded in a good working relationship. NAASF making the public know that individual franchise owners may lose money on the Subway breakfast menu, which might explain why not all Subways' franchise owners will be on board with the Subway breakfast menu. Kudos to NAASF for bringing up the dispute in a respectful manner, defending their members and the brand.
