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Subway Restuarant Chain, New Haven, CT / predatory franchiser!

1 New Haven, CT, United States Review updated:

I've been involved with the Subway chain for a long time. They used to be legitimate, but over the years I have seen drastic changes. Today Subway headquarters (AKA Doctors Associates, Inc.) is the worst bunch of crooks and con artists in the industry, and they are ruining store owners lives. Much of this can be verified on line by following the links to published documents, articles, congressional reports, forums and court hearings.

Read Fortune magazine archives on how this chain led by president Fred DeLuca has caused a record number of unhappy franchisees, defrauded landlords and violated laws. Discover why after a six year study, U.S. House of Representatives' Dean Sagar concluded: "Subway is the biggest problem in franchising and emerges as one of the key examples of every abuse you can think of." Says Cliff Marshall, a franchise consultant for more than 30 years: 'If anyone in my family ever asked whether they should buy a Subway, I would say absolutely not, no way. A Subway franchisee who asked to remain anonymous for fear of retaliation said the system "is a total mess." Go here learn more: http://nextraterrestrial.com/pdf/FDeluca-Fortune%20March%2016%201998.htm

Learn how DeLuca violated Connecticut's Unfair Trade Practices Act by pressuring independent SFAF board members to block owners he didn't like from running for office. Apparently he has no respect for legal statutes or fair play. Go here to learn more: http://franchisepundit.com/index.php/2005/05/28/what-to-learn-from-this-subway-lawsuit/

Read how DeLuca's franchise agreement forces owners with a legitimate grievance to submit to arbitration where there is no jury, few rules, and the outcome is binding. Arbitration companies compete ferociously for Subway's business and DeLuca knows how to stack the deck in his favor. Florida attorney Keith Kanouse says, "I've seen over 300 franchise agreements, and Subway's is the worst." Go here to learn more: http://franchisepundit.com/index.php/2005/07/05/subways-deluca-loses-battle-with-franchisees/

In a perfect example of poetic justice, the Wall Street Journal recently announced that DeLuca lost a NASD arbitration claim, in which he alleged the UBS caused him $193 million in damages. Not only did the DeLuca trusts fail to recover any of their losses, they also were ordered to pay $50, 000 to reimburse UBS for document-production costs. Store owners were delighted to hear DeLuca got a taste of his own medicine, but some worry that it will only fire his drive to abuse them more. Go here to learn more: http://markjakubik.com/2007/07/10/subway-founder-loses-nasd-arbitration-not-a-big-surprise/

If you think Subway owners make good money, think again. A store owner in the US nets less than $26, 600 in profit, barely above the poverty level for a family of five. To earn a decent income, they must often work 60 to 70 hours a week and invest in multiple stores. The main problem is encroachment of stores. Even with more than 28, 000 Subway's already open, they keep building more. The result? Average revenues per store are down some 8% from when they peaked way back in 1994! Go here to learn more: http://books.google.com/books?id=yNFN1OpnkBkC&pg=PA100&lpg=PA100&dq=subway+franchisees+lowest+paid&source=web&ots=l-dgtBas1-&sig=Of1ObbDdfXuZsckQcO2Vp54RAV4&hl=en

Consultant Marshall estimates that 25% of franchisees are unhappy and suffering, while about 40% are "just getting by and making a few dollars. Barely a third are happy and doing fine, though many of those owners are also development agents who control the number of competing Subways in their vicinity." Steve Sager, a departed Subway agent estimates that half the franchisees in the Northeast are suffering. What does DeLuca have to say about this? "It bothers me that people lose money, but I don't lose sleep over it. This is America." I imagine DeLuca and co-owner Peter Buck sleep pretty soundly indeed, both being ranked by Forbes as the 207th richest men in America. Go here to learn more: http://www.forbes.com/lists/2005/54/BNPG.html

For most people, reaching billionaire status would be enough, apparently not for DeLuca. He recently rewrote the franchise agreement, stripping owners rights and doubling already inflated royalty fees for stores out of compliance of written guidelines. It also eliminates protection against encroachment, encouraging development agents to stack stores. He even added a loophole to take back the lucrative Subway advertising trust which he vested to owners decades ago. Owners can't renew their agreement or open a new store unless they agree to the new terms. Almost immediately field inspectors began bloating corporate profits through increased compliance fines. Ignoring past policy, inspectors now mark owners out of compliance in several areas for each deficiency! Go here to learn more: http://findarticles.com/p/articles/mi_m3190/is_23_40/ai_n16463127

Even more unconscionable, DeLuca devised a scheme to rip off owners by claiming high internal loss is royalty theft. Using proprietary software, he sniffs out owners suffering from excessive shrinkage and forces them to undergo intense internal audits. Owners who can't account for every portion of lost, wasted or stolen meat are labeled thieves and fined up to $50, 000! Those who fight DeLuca's illicit attacks are threatened with criminal prosecution or store seizure. Coincidentally, "shrinkage", a term prevalent in the restaurant industry has been stricken from the Subway training curriculum since DeLuca's royalty theft crusade began. Go here to learn more: http://subwayfranchisee.blogspot.com/2005/04/compliance-issues-at-subway-real-or.html

What help can store owners who suffer from chronic shrinkage or compliance problems expect? Does DeLuca offer additional training and support to help them get their losses under control and their stores back into compliance? Just the opposite. He dangles eviction notices over their heads and charges them huge fines! The U.S. Small Business Administration even stopped lending to Subway owners until DeLuca removed a contract clause that gave him the power to seize any store without cause. Go here to learn more: http://nextraterrestrial.com/pdf/FDeluca-Fortune%20March%2016%201998.htm

Franchisees fear that DeLuca may have bolder plans to cannibalize the chain. For years he pressured owners to abandon cash registers in favor of computer POS systems, despite dependability issues and a higher cost to own. When he encountered resistance, he simply ordered POS systems mandatory. Then he required all owners to connect their POS systems to headquarters, giving DeLuca access to every store's transactions. Using his custom software to monitor stores chain wide, now DeLuca can efficiently target owners ripe for royalty theft audits and spot inspections, boosting corporate revenues. Go here to learn more: http://storefrontbacktalk.com/story/081006Subway.php

DeLuca appears intent to use more new technologies against franchisees. Some owners suspect that the Subway Technology Department's pet video surveillance vendor DTT USA has conspired to help DeLuca spy on owners through live camera feeds being installed in stores. If DeLuca can tap into ring ups and video evidence then use it against them, they might as well kiss any hope of a profitable future good by. Is this the reason DeLuca's new contract gives him full rights to transmitted data? If you're a Subway owner, here's a hot tip; If it seems every time you have a minor compliance violation, a field inspector mysteriously shows up on your doorstep for a spot inspection, Big Brother is probably watching! If this happens to you, obtain a copy of your DSL provider's server logs and have them scrutinized by an IP expert. If you are being spied on, take your findings immediately to the FCC or your State Attorney.

Want more proof that Subway corporate is corrupt? Investigate Subway's legal beagle Leonard Axelrod (nicknamed Lenny the Ax), the architect of Subway's contracts. You'll have to dig deep, the evidence is buried. If you're diligent, you'll uncover how Axelrod was disbarred for brainstorming a scheme to defraud landlords. An Illinois appeals court concluded that there was 'overwhelming' proof that Subway had committed "far reaching fraud". An Illinois jury awarded a landlord $10 million in punitive damages after concluding that Subway had defrauded him. DeLuca spent $1.3 million to resolve 72 similar claims. Go here to learn more: http://findarticles.com/p/articles/mi_m3190/is_n49_v29/ai_17847096

Once landlords wised up to Subway's shell game, Axelrod brainstormed his dirtiest trick; a way to skip arbitration by signing leases with landlords and then subletting stores to unwitting franchisees, unaware they were being used as de facto landlords. This way Subway can quickly evict a store owner in a lease dispute and DeLuca is off the hook for the balance of the 20 year lease. An Illinois court has called the eviction/ arbitration provision "unconscionable". Go here to learn more: http://nextraterrestrial.com/pdf/FDeluca-Fortune%20March%2016%201998.htm

What effect has DeLuca's predatory actions had on the Subway chain? At a recent franchise convention & trade show, it was all too obvious. Attendance and morale were at an all time low. Store owners sulked by, all emotion drained from their faces, not unlike holocaust survivors. Some wore shirts printed with "I Survived a DAI Audit". They huddled in small groups, searching for some relief from this nightmare. Sadly, Subway was once the greatest opportunity in the industry. Today it's just the greatest con job in the industry.

If you're a Subway franchisee and believe you've been victimized, your franchise contract prevents you from litigating, but you can take your complaint to your state attorney. Many states are moving towards franchise reform laws, some have already passed legislation. At the very least I urge you to post a report on https://www.complaintsboard.com. Their posts are monitored by numerous law firms around the country. Your identity will remain confidential but will allow them to contact you in the event a class action suit or criminal complaint is imminent. Any criminal act that Subway staff may be guilty of negates the arbitration clause you are currently bound to. If you're considering joining any franchise, do your homework first! Predatory franchisers are popping up everywhere, forcing states to enact anti-predatory franchise reform laws.

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Comments

  • Ka
      17th of Mar, 2008
    0 Votes
    Subway - Terrible service!
    Subway
    Clarion
    Iowa
    United States
    Phone: 515-532-6917

    This is nasty I have been to subway several times at this location. While some service is great friendly clean some are not. There is only 2 reasons i will go into this subway location now and one is if A blond who just had a lil girl, very courteous friendly fast and very helpful and clean is working and another older blondish brown haired lady at night who is also friendly courteous clean fast are working other wise the other ppl are ### or not washing there hands and if weren't for these two ladies i would not go into the subway in clarion. The number 1 reason is They don't wash there hands and one time a girl with red hair blew her nose and then gloved and made food. Thats nasty.

  • Bi
      18th of Mar, 2008
    +1 Votes

    When you aren't looking they spit on the meat.

  • Ri
      30th of Mar, 2008
    +1 Votes

    Hmm... think you might be taken more seriously if you weren't posting as Mike Hunt?

    Richard Quick, Esq.
    www.FranWorst.com

  • Ap
      31st of Aug, 2008
    0 Votes

    This comment was really written by Jashanna King of Clarion, IA

  • Mr
      29th of May, 2009
    0 Votes

    I am sure some of your highlighted complaints are legitimate. For some odd reason we hold this franchise to a very high standard of ethical business behaviour and many times its actions defy common sense or at least our perception of fair play. Yet there are many franchise systems out there suffering from complaints. This one just takes it to another level
    Having said that, we have current owners embedding themselves deeper into the system by buying more stores. Aamzing how you develop an immune system to franchisee abuse! It's all about the money right?...

    mrfranchiseman.com

  • Co
      19th of Jun, 2009
    0 Votes

    I was a 3 store owner with Subway. I was franchisee of the year for my region. Then our Development Agents changed and with in 14 months I was forced to sell all 3 locations because I was all of a sudden considered a bad operator. All the while, my stores out performed the market, and the stores of my new Development Agent. In a period of 14 months over 40 stores in our Southern California Market were flipped. All were forced to sell due to "compliance" issues. Most of the stores were above market average. The new Subway Development Agent, the Marwaha Group, in its role of Development Agent has the responcibility to do the Compliance Inspections. Interestingly, they or their immediate Indian Family members were the only approved "buyers" in the 40 locations that flipped.

    When Subway Corporate was questioned, the response was that the old Development Agents (who were DA Market of the Year in 2001), Subway Corporate said that the old Development Agents were scumbags, lazy, etc. When local franchisees visited the locations of the Marwaha Group, they found that their seemed to be a very clear double standard on inspections. It was discovered after interviewing Marwaha Group employees that they were not being inspected at all. The mandatory inspections were being forged by Marwaha Group inspectors.

    Amazingly the Marwaha Group itself was awarded Development Agent of the Year at the Subway 2008 Franchisee Convention. This clearly indicated that Subway was not only aware of the problems, but actively condoned the following potentially ilegal behaviour: Price Fixing, Racketeering, Fraud, and Forgery

    • The user did not respond to the messages. The review should not be taken into consideration.

  • Fo
      19th of Jun, 2009
    +1 Votes

    Five... Five dolla... Five dolla foot looooggggg

  • Ki
      9th of Jul, 2009
    -2 Votes

    In Subway $0 + $1 = $4

    I think the subways owners deserve all they get. In wantgah, new york when my 10 year old was handed a free 6" sub certificate from his grade school from one of the local subways on wantgah ave about 2 blocks north of the long island railroad, we took it there as we ususally do on a sunday right after church. Now keep in mind that the 6" sub is $4 which the cerificate was for and a 12" is $1 more or for you indians $5.
    I ask the store owner could I use this to upgrade to a 12" and he said yes so we ordered 3 foot longs as we ususally do. When came time to pay he said I give you the special which was 3 12" for $13. I said no, why are you charging me so much? The certificate was for a 6" worth $4 and you said I could upgrade to a 12" which should have cost me only $1 more since the certificate covered the first 6".
    He argued with me. I told him here I was trying to teach my 10 year the value of certificate and money and this indian was trying to rip him off. We should have paid only $11 for the 3 12" sandwiches, not $13. He wanted to charge me the $4 for the first 6" and get the second 6" for free. I said this certificate was worth $4 not $1.
    The poor indian slob cintinued to argue so I tore up the certiifcate and put it on his counter and told him to stick it. I paid the $13 and left the store saying I will not be back, nor anyone else if I can help it.
    My older son a few weeks later forgot what I said about not visiting that store and that he should drive about 10 blocks more to the other subway north of the sourthen state parkway was told by the store owner that he was wrong and asked my son to tell me he would give me a free sandwich if I come in. First I reminded my son what I said about buying there (kids today need to be taught right from wrong and standing up for values) and next if this robbing indian ### wanted to do the right thing he should have given my son right there the free sandwich. I really don't need the freeby... Never again for this subway located on eastside of wantagh ave a couple blocks north of the long island railroad in the 5 & 10 store shopping center...

  • Pb
      2nd of Oct, 2009
    0 Votes
    Subway - Charging over listed price
    Subway
    5205 Leesburg Pike
    Falls Church
    Virginia
    United States
    Phone: 703-820-4374

    I work at the Skyline Towers and I went this morning to get a steak and cheese sammich on flatbread. Mind you its 8:00 in the morning so its cleary still breakfast. They have this sammich listed as 3.99. When I go to checkout, the lady says 4.50. Being somewhat savvy on taxes, I asked why the tax was 50 cents. She said the sammich went up. I asked for a copy of the receipt and the sammich price came up at 4.29 then with the tax took it to 4.50. I yelped because that is false advertisement. She was mad and said the sammich went up but they forgot to change the price, whose fault is that, surely not mine. I requested to have the difference back even if it was only a few cents and she just opened up the register and gave me back 50 cents. So she would rather get me outta there, than give me proper change. She basically charged me 3.98 for the sammich as the list price with no tax, so her register is going to come up short.

    Not really pressed, but these companies are making a fortune off of our backs and they already overcharge, but to not even change the sign is so misleading, and everyone is always in such a hurry that they pay. Not the kid. Never going back down there again. They are crooks. Managers name is Moofi. Figures.

  • Li
      2nd of Oct, 2009
    +1 Votes

    Do you mean "sandwich"? I hope so but I am not entirely sure what a "sammich" is.

  • Cr
      3rd of Nov, 2009
    0 Votes
    C.Hall - fraud
    Subway
    663 Lyons Rd
    Dayton
    Ohio
    United States
    Phone: 9374391000

    Went to Subway today and my drink cup already had game pieces removed, did not notice until I got to work.

  • Su
      16th of Jan, 2010
    0 Votes
    Subway Shops - false advertisement
    Subway Shops
    4909 Walkingfern Drive
    Rockville
    Maryland
    United States

    The sandwiches advertised and displayed on Their TV ads don't even remotely compare to the skimpy understuffed sandwiches they sell. Something should be done about the false advertisement. I believe their subs are by far and away the worst and skimpiest subs sold anywhere I have ever been. I think the reason they stay in business is because many of their locations are in remote areas in small towns reststops on highways stc. The lack of surrounding competition keeps them afloat.

    Carl C. Huber

  • Tr
      15th of Feb, 2010
    +2 Votes

    is 50 cents worth the argument? Even 3.99 + tax that means it was at most like 30 cents.

  • Ti
      3rd of Nov, 2010
    0 Votes
    Subway - no food
    subway
    southhill loacation
    moosejaw
    Saskatchewan
    Canada

    You can go into the store, and want a sandwich and they are always out of the required food stuffs three times a week to make it, Are they really a bussiness?, Not really, As a bussiness you would assume that they would have ordered the supplies needed.I have seen where they will make your sandwich, then you can't pay cause the debit is out of order.
    The southhill location, Don't goto this location first thing in the morning as you will stand around waiting, As the staff that works nights is leaving all there work till the morning before there boss gets there, , so you are left waiting for service.
    We have three locations in the city and the only one that seems to be able to do the job they advertise is the main st location, Could this be because the main manager for all the subways in the city works there..
    Complaints fall on deaf ears as nothing ever seems to be done to rectify the problem...thankfully there is numerous other fast food places in the city that are more than willing and prepared to take your order, Get it right, Say thankyou, And actually have staff doing there job.

  • Mo
      10th of Dec, 2010
    0 Votes
    Subway - refusal to take order before closing, rude person
    subway
    union park
    Orlando
    Florida
    United States

    this subway sucks, or some of the employees do sometimes. I called in around like 10:50 to try to place an order for a sub...I had been trying for like 15 mins and no one picked up. Finally someone picked up and i asked what time they closed. He said 11...then I asked if i can order a pick up order...the idiot on the other end of the line was just so rude...he said "wellllll I was ABOUT to close"...im thinking...ok if you were about to close, why did u say u close at 11 ? he said...its 10:55, i said...its 10:50 ? he then just seemed frustrated and hung up...wtf? what a lazy jerk...i mean if youre working at a place and youre not closed...then take someone's order...how hard can it be...if you're closed then dont say u close at 11...and for the people who say oh its the end of shift...its not...ive been to lots of places that close at the right time and even that place...anyhow it was just rude incompetent and stupid... just bad service and attitude...

  • At
      30th of Dec, 2010
    +1 Votes

    Yea who the hell are you supposed to be. You should have gotten your [censor] there at 1030. No one is going to wait on you hand and foot. Don't be mad if you call 5 mins before closing time. People have been working all day and want to go home to sleep.

  • Th
      24th of Jan, 2011
    0 Votes

    You're kind of an idiot. If you had an idea of the amount of work required to close a Subway, you'd quit whining. Especially at 11. If you really wanted a sandwich that bad, at bloody 11 at night, you should have hauled your [censor] to the restaurant and ordered in person.

  • Mr
      9th of Feb, 2011
    0 Votes

    I am in the same postion as you, I agree with your complaint. If you can please email me at sawhney85@yahoo.com to discuss the matter further.

  • Fa
      9th of Feb, 2011
    0 Votes

    As a Subway Consultant and Valuation expert, I have seen and heard many stories over the past 23 years. I used to be a Development Agent and multi-unit franchisee with Subway. There is some truth to every one of the threads above, but also remember Subway has many, many success stories. What would be interesting is an exit interview of all those who have left the system to evaluate the positives and negatives. Any business school graduate need a subject for a College paper??

    fayaz@mrfranchiseman.com, 800-401-6424, or 949-253-4610

  • Do
      27th of Mar, 2011
    0 Votes

    How about this one- I was told by my business consultant that all of the "twenty year" people should very worried about our stores. That Fred Deluca and his cronies want us out so they can turn the stores over to make money on the start up costs. He suggested that I start keeping a journal about my inspection expirences, which by the way have gotten horrible. They are so bad that I have started to video tape my stores after each inspection to protect myself. I have a couple of stores that do way, way over the territory average in sales. Fred makes a lot of money off of me in royalities every year. So instead of giving me a pat on the back and a "good job" I get this... You have syrup on your trash can, the handle to your toaster oven has sauce on it, the pvc pipes under your three bain sink has dust on it, your microwave is dirty your bathroom smells, there are straw wrappers on your floors, etc... all of this during a lunch time where the customers are line up into our parking lot!!! So Ok Should I post a note(hand written ofcourse) on the trash can that says you must consume all of your drink before disposing of your cup! Please do not [censor] in my bathroom!, sorry people I know that the pvc pipe that you don't see has dust on it and it has no doubtly left you with a horrible customer experience. ??? Excuse me you little twit, Its lunch! Sauce does gett on the handle, yes the microwave is a little dirty we have been using it all day! And sorry my customer are not the Michael Jordon's of Straw wrappers! It is not enough that I work all day everyday, that I have higher sales than most others in my territory, that my customers go up to this twit as he sits in my handicapp seating typing crap that he is making up half the time, telling him that my stores are the best that they have ever been to (by the way he doesn't mention that in his report). What he does mention is that my places are dirty and marks me out of compliance. I then get a letter from the legal department threating to take my stores. I for one am sick and tired of it. Im stressed all the time. Way back when Subway use to be a great opportunity for all but now it's like doing time each and every time I walk through my doors. I could go on about my other expirences that I have had but I may have said too much already. I fear that I will get sued for talking about my issues and this company. I have a spent 70, 000.00 to protect myself in the past and will now have to spend more for an attorney because the syrup on my trash can has now put me at three months in a row that I hve been written out for cleanliness. Last month my table legs had some crumbs on them and yes it was at lunch time. Is there anyone out there that can help me and I'm sure others like me??

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