“I was kind of his hit man,” she said, sipping an iced tea at a Starbucks in the Bay Area. Ms. Husler worked for the regional supervisor for nearly a year, she said, and she has come to regret the role she played in pushing a group of store owners out of their investments. The light-bulb moment with Mr. Tripathi, especially, gave her pause. “We’re ruining these people,” she said.
Subway is the largest fast-food company in the world by store count, with more than 24,000 restaurants in the United States alone. It got that way thanks in large part to entrepreneurial immigrants. Unlike at chains such as McDonald’s and Burger King, where many franchises are operated by investment firms, Subway owners are mostly individuals and families. The company’s co-founder, Fred DeLuca, made stores easy to open; most new franchisees are charged a $15,000 initial fee, compared to $45,000 at McDonald’s. In exchange, Subway operators must hand over more revenue than at many other chains — 8 percent of gross sales — while also agreeing to other fees and stipulations.
For half a century, the system worked to mutual advantage. Subway’s value hit $12.3 billion, and countless first-generation Americans bootstrapped their way to success, one foot-long at a time.
By the time Mr. DeLuca died in 2015, though, the company was struggling. Rivals like Jimmy John’s and Quiznos had grown, and Subway’s spokesman, Jared Fogle, pleaded guilty to child sex and pornography charges. Mr. DeLuca’s sister, Suzanne Greco, took over as chief executive, inheriting a company that many felt had grown too fast and haphazardly. In 2016, for the first time ever, more Subway stores closed than opened. But while many franchisees shut down because of underperformance, others operating profitable locations began to feel targeted, too.
‘My blood is boiling’
For many owners, Subway’s internal workings are a mystery. The chain, which is private, offers far less financial information than other global fast-food peers. In the most recent version of a disclosure document given to prospective franchisees, which is more than 600 pages long, the company notes that it can revise its rules “at any time during the term of your Franchise Agreement under any condition and to any extent.”
