Subway Franchisees Demand Concessions From Owner Deluca In Scathing Letter

More than 100 Subway franchisees released an open letter on Monday to Elisabeth DeLuca, an owner of the company, alleging the franchisor is turning their dreams of owning a Subway franchise into a nightmare.

The letter, authored by franchisees who represent 250 Subway stores (approximately 1% of the entire franchise), outlined several major issues such as corporate denying their requests for higher-quality ingredients, being forced to open too many locations that cannibalized their own sales, and having stores re-possessed by Subway Development Agents for seemingly unfair inspection results such as window smudges and the thickness of cucumber slices.

The letter also said that Subway franchisees were forced to participate in a profit-losing $5 footlong promotion during the COVID-19 pandemic. The franchisees said they had to cover their losses on the promotion with funds from PPP loans. They were additionally barred from reducing store hours during the pandemic, which they say would have helped reduce overall costs.

“We had to take away from our families so that we can pay royalties to you, a multi-billionaire who does not need a bailout or any federal aid,” the letter said.

DeLuca was married to Fred DeLuca, co-founder and former CEO, until he passed away in 2015. Since then, franchisees say she has been absent and unwilling to communicate with franchisees.

A West coast franchisee told Business Insider, “She continues to live in the shadows. To actually effect a change, she has to come out of the shadows.”

The letter proposes five distinct changes Subway corporate can make to improve the situation, which include allowing franchisees to directly lease their stores, allowing franchisees to source fresh vegetables and offer higher quality ingredients, and preventing Subway corporate from gathering royalties in the form of PPP loans and federal aid.

Franchisees also made sure to address the rumors about Subway’s imminent sale, requesting “a royalty rebate of 8% of the sale, to be proportionally distributed to the Franchisees by gross sales, as a sign of good faith for all of the turmoil, and heartache that we have endured throughout Subway’s 40+ year history.”

When asked to comment on the letter, a Subway representative told Business Insider that the letter was not representative of most franchisees’ opinions and that Subway is committed to "working hand-in-hand with them to ensure decisions are focused on maximizing their profitability."