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Subway franchisees are demanding their fees to headquarters be slashed as the coronavirus pandemic dries up business. The North American Association of Subway Franchisees — a group representing roughly 23,500 Subway store operators — sent a letter to Chief Executive John Chidsey over the weekend begging for “relief” from weekly fees that add up to …
Subway franchisees are demanding their fees to headquarters be slashed as the coronavirus pandemic dries up business.
The North American Association of Subway Franchisees — a group representing roughly 23,500 Subway store operators — sent a letter to Chief Executive John Chidsey over the weekend begging for “relief” from weekly fees that add up to 12.5 percent of their sales.
“NAASF has sent a request … for relief for the franchisee community regarding the effects that the COVID-19 situation has had and will have on the franchisee community,” the group said in an internal post on Sunday, according to documents obtained by The Post. “We will let you know when we receive a response.”
Subway declined to comment, and franchisees say they were charged their weekly dues as scheduled on Monday. In addition to an 8 percent royalty for the right to operate under the Subway brand, store operators also fork over 4.5 percent of their weekly sales to build the advertising budget.
The request for “relief” comes as the already-troubled sandwich chain gets hammered even further by the fast-spreading virus, which has led to a statewide restaurant ban in Washington and a ban on all restaurant activity except for takeout in the tri-state area.
Franchisees say their sales have plummeted between 40 and 80 percent in recent days as fears of the virus, which has killed more than 7,000 people globally, have tanked the stock market and prompted President Trump to declare a national emergency.
“The problem is, even if Subway said, ‘We are going to suspend royalties,’ I’m not sure that is going to save people,” a Subway franchisee, who asked to speak on the condition of anonymity, told The Post.
“Our rent will still be there,” the franchisee added, and so will utilities and insurance payments.
The coronavirus is just the latest blow to Subway, whose franchisees have been suffering sagging sales and mass store closures since 2015 — the year its longtime spokesman Jared Fogle was arrested for kiddie porn.
More than 1,100 Subway stores closed on a net basis in both 2018 and 2019, leaving Subway this year with just about 23,500 stores in the US — its lowest numbers since mid-2010.
The company famous for the $5 footlong doesn’t own any stores and makes all its money on royalty payments.
“Stores are closing and franchisees are going bankrupt. All we get are crickets. This is more serious than anything else. Stop royalties NOW,” one franchisee said in response to the NAASF’s letter.
