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Unformatted text preview: , Subway’s whole system seems “almost as geared to selling franchises as it is to selling sandwiches.”
It costs about $100,000 to open a Subway restaurant, the lowest investment required by any of the major fast food chains. The annual
royalty Subway takes from its franchisees — 8 percent of total revenues — is among the highest. A top Subway executive has acknowledged
that perhaps 90 percent of the chain’s new franchisees sign their contracts without reading them and without looking at the FTC filings.
Roughly 30 to 50 percent of Subway’s new franchisees are immigrants, many of whom are not fluent in English. In order to earn a decent
living, they must often work sixty to seventy hours a week and buy more than one Subway.
In November of 1999, Congressman Howard Coble, a conservative Republican from North Carolina, introduced legislation that would
make franchisors obey the same fundamental business principles as other American companies. Coble’s bill would for the first time obligate
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This note was uploaded on 02/25/2014 for the course MGMT 120 taught by Professor Litt during the Spring '08 term at UCLA.
- Spring '08