Where Did Subway Go Wrong?

Subway, the fast-casual sub concept that encourages guests to “eat fresh,” was founded in 1965 and saw remarkable growth in the following decades. However, the brand has had a challenging few years, and its name is not always favorable within the franchising space or the larger public opinion.

Now, with record closures and what many are calling a broken franchise system, the Subway brand continues to struggle. So what went wrong?

The FDD Is Riddled With Issues

The franchise disclosure document (FDD) is meant to be a source of information that empowers prospective franchisees to make the choice that best fits their needs and goals. For many brands, the FDD outlines a breakdown of initial costs, earning potential for franchisees with different unit counts and build-outs, rules about suppliers and other regulations, and expectations that impact the franchisees’ practices.

One stipulation included in the FDD is that a franchisee’s territory isn’t exactly protected. Subway and its affiliates have “unlimited rights” to compete with any one franchisee. This, in part, explains why there may seem to be an unreasonably high concentration of Subway units in some areas.

The brand’s FDD is also missing an Item 19 and Item 21, two crucial sections that include financial representations. Many franchisors will provide contact information for individual franchisees who may be willing to discuss their business with a prospect, but the complete lack of system-wide data reporting creates a major gap.

Subway’s Food Quality Is Questionable

Conversations regarding the food quality at Subway are another point of contention. The brand’s tuna salad had a moment recently, and the issue was even escalated into a lawsuit. After careful analysis, 19 of 20 samples of tuna from 20 different Subway locations were determined to have “no detectable tuna DNA sequences whatsoever."

There is also a larger debate regarding the truthfulness of the brand’s “eat fresh” slogan with allegations that the brand’s food is riddled with preservatives. Not only is this contradictory, it has also degraded the relationship between franchisees, the franchisor and public confidence in the quality of Subway’s food.

Poor Brand Partnerships

Jared Fogle, a now-convicted child predator, was a Subway spokesperson for over a decade. He initially gained traction by telling his weight loss story and promoting meals from Subway as a crucial factor in his success. However, because his name is so strongly associated with the brand, allegations of predation against Fogle himself also tainted the Subway name.

Like many facts of a franchise network, there is a place in the FDD for franchisors to disclose celebrity partnerships and other spokespersons. However, having this disclosure does not necessarily protect the reputation of the brand or success of individual units should something go awry.

What’s Next for the Brand?

Though Subway has undergone record store closures in recent years, it continues to offer franchising opportunities. As long as businesspeople continue to invest and the public continues to eat at Subway, it is likely that the brand will continue along. However, its strength has seen a major decline compared to the popularity it enjoyed in its earlier years.