The home of the footlong sandwich, Subway, has been closing stores across Australia and to further their woes, franchisees are complaining about the treatment that they have received from head office.

A few days ago, we reported that Subway may be in trouble – with the number of Subway stores dropping by almost 10 percent.

However, more issues for the “Eat Fresh” fast-food chain are emerging with grumblings from franchisees and alleged wage underpayments made to staff.

Business professor Jenny Buchan has spoken to A Current Affair saying there were “deep-rooted problems” with the company, including how it treated its franchisees, as reported in 9News.

“They control the prices of basically everything and they control who franchisees can buy products from,” Professor Buchan said.

An example of this was provided by a franchisee, who has claimed that a Subway-approved supplier charges $7 a litre for dishwashing liquid, while a similar product can be bought at a supermarket for less than $1 a litre.

We Can’t Escape!

One franchisee has said that Subway has made life “hell”.

“People are terrified,” he said. “I feel threatened because I’m scared if they target us.”
Franchisees claim that they want to sell their franchise but head office flatly refuses, unless costly refurbishments are made. So it has become impossible for many franchisees to escape.

In addition, Professor Buchan said that some desperate franchise owners make be underpaying their employees as an effort to cost-cut and survive.

A former franchisee has claimed he was sold a lemon and lost $200,000 after his business failed.
“I was working seven days a week,” he said.
“I was asking for help from the head office, I was not getting any help.”

What Subway Says

Subway has responded with a statement, telling A Current Affair that it supported the Fair Work Ombusdman’s investigation, and said it was committed to the “long term success” of all franchise owners.

“Subway is a much-loved brand that is evolving its menu to meet the changing tastes of Australians with an exciting pipeline of new menu items, fresh restaurant designs and convenient online ordering,” a spokesperson said.
“These recent innovations are driving restaurant growth and increased franchise owner profits.
“All food, décor, equipment and services used in Subway restaurants are procured by a non-profit, independent purchasing company that is owned by Subway Franchise Owners for their benefit.”

Would you be sad if Subway closed down? Tell us in the comments below.

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  • I would be sad for the employees and their business owners but not really sad about the food.

    Reply

  • Just horrible. I don’t often go to Subway so I wouldn’t miss it to be honest (I am happy to make my own salad rolls etc at home) but I do know it is very popular. I hope they do keep the ones nearest to me.

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  • Thats sad that they are stuck and will lose out after working so hard.

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  • Franchise chains always make being a Franchisee an affordable small business. Most franchise business end up going into debt because once you sign that dotted line there is no back up from the Chain Owners like they promise in their spiel to get you in. Almost all franchise businesses do have to employ staff to run smoothly on a daily basis but even paying just one employee in some cases leaves little to no income for the Franchisee owner.

    Reply

  • That is disgraceful how they treat their staff.

    Reply

  • I would never get involved in a franchise. One of my friends owned a franchise and it actually cost them a dollar every time they made a pizza! They never made a profit and lost their home. All because of the the business owners forcing them to buy from certain suppliers etc.

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  • This seems to be the way all franchise’s are going, these people are losing their life savings and the staff are treated so bad

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  • Similar things are happening to many franchises owners of other chains too, goes to show all they care about is profits and nothing else.

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  • It would be disappointing if they closed, it’s good to have healthier options available to everyone

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  • It’s always a shame to lose a reasonably healthy option.

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  • I will be sad because subway offers different variety of food for veg and non veg at such a great price.

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  • Very disappointing news but I hope that the bad publicity can help resolve the issues and no one else will be affected.

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  • I’d definitely be sad. I love their veggie patties.

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  • Yes I would be sad and I bet many employees who lose their job will be sad too.

    Reply

  • feel sorry for franchisees


    • I feel sorry for the franchisees and the employees.

    Reply

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