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<a href="https://www.subway.com/en-GE/OwnAFranchise/FranchisingFAQs?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-happens-to-franchisees-if-subway-sells-for-10-billion-2721842" target="_blank" rel="nofollow">Subway</a>, the fast-casual restaurant chain that famously offers footlong sandwiches, has reportedly hired financial advisors and is seemingly looking to sell the company to a private investment firm. That’s according to a recent article from&nbsp;<a href="https://www.wsj.com/articles/subway-explores-sale-that-could-value-sandwich-chain-at-more-than-10-billion-11673480236?mod=hp_lead_pos7&utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-happens-to-franchisees-if-subway-sells-for-10-billion-2721842" target="_blank" rel="nofollow">The Wall Street Journal</a> citing “sources close to the matter.” The journal claims Subway’s leadership team is eyeing a potential sale of the company, which could be valued anywhere from $8 billion to $10 billion.&nbsp;But what would happen to the brand’s thousands of franchisees should Subway get sold? Before we get into that, it’s important to examine the current state of Subway as a franchisor.&nbsp;The Current State of Subway&nbsp;Subway was founded in 1965. Up until just recently, it was run under the ownership of its two founding families. Since its inception, Subway has become one of the largest privately held franchising networks in the world. As of 2022, the brand has around 20,000 locations in the U.S. and more than 35,000 franchise units globally. Despite this, the brand has been on a relatively downward path over the last few years. Subway has struggled to keep some of its franchise locations in business, an issue that has been attributed to the brand’s eagerness to open up too many units near one another without territory protection protocols in place.&nbsp;This business model has drawn criticism from the likes of political talk show host John Oliver, who dedicated an entire segment to the franchise on an episode of his show “<a href="https://www.youtube.com/watch?v=jDdYFhzVCDM&utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-happens-to-franchisees-if-subway-sells-for-10-billion-2721842" target="_blank" rel="nofollow">Last Week Tonight</a>.”“For decades, franchisees have complained about Subway allowing locations to open near each other and cannibalizing their business,” Oliver said. “A Subway could open right next to yours and cut your sales in half. And none of this really affects Subway corporate. They still get their royalty fees on any sale, plus a $15,000 franchise fee for every new store that’s opened.”But the proximity of Subway franchises to one another isn’t the only challenge faced by the brand over the years.Franchise Struggles&nbsp;There’s no question that Subway is one of the largest franchise brands in the world. There are Subway restaurants seemingly everywhere you go. As a positive, they can be relatively inexpensive to open. In fact, the initial investment required to open a Subway can range from $116,000 to $263,000, including a generously low franchise fee of $15,000. Reports claim Subway has been waiving its franchise fee in some cases in order to attract buyers at new locations.&nbsp;But because there are so many near each other, the brand slowly began to report underperforming sales figures. In recent years, CEO John Chidsey has been working to revitalize the brand, and his efforts seemed to be making progress. From 2020 to 2021, the brand reported an overall 13% sales increase. The brand also began to shift its franchising strategy from working with single-unit operators to targeting multi-unit franchisees.&nbsp;However, with the news of a potential sale of the company, many franchisees have started speaking out about their overall discontent with the brand. In a recent article, the&nbsp;<a href="https://nypost.com/2023/02/26/subway-clamps-down-on-franchisees-as-chain-eyes-8b-sale-sources/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-happens-to-franchisees-if-subway-sells-for-10-billion-2721842" target="_blank" rel="nofollow">New York Post</a> claimed that Subway has been forcing its current franchisees to pay for mandatory store upgrades on expensive equipment such as ovens, toasters and digital cash registers. The Post also claims Subway has started clamping down on individuals who are looking to close unprofitable locations and have suddenly changed their policies on expiring leases.&nbsp;Citing an anonymous East Coast-based franchisee who operates more than a dozen stores, the Post claims the source wanted to shut down two of their unprofitable stores but was told by Subway that he would have to sell all of his restaurants, including the profitable ones. This has brought up concerns for franchisees who are worried about their eventual exit strategy.&nbsp;With the mandatory store upgrades, policy changes and the consolidation of some restaurant locations, it appears Subway may be taking strides to make the brand look more appealing and presentable to investment firms or potential buyers.&nbsp;However, in response to the potential sale and news of franchising changes, Subway issued a statement, saying:&nbsp;“We continue to be focused on moving the brand forward with our transformational journey to help our franchisees be successful and profitable.”In Conclusion&nbsp;What will happen to franchisees if Subway sells for $10 billion? Given the history of Subway’s relationship with its franchisees, it remains unclear what’s going to happen and any guess on what’s in store would be pure speculation. For now, Subway appears to be mum about the potential sale, leaving franchisees unsure about the future of their livelihood.&nbsp;

What Happens to Franchisees if Subway Sells for $10 Billion? 

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Subway is reportedly eyeing a sale of the company, which is valued at nearly $10 billion. However, it remains unclear what will happen to the brand’s franchisees if the sale goes through. 

what-happens-to-franchisees-if-subway-sells-for-10-billion

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