America’s Largest Sandwich Chain Is Overhauling Its Franchise System

After "refreshing" its entire menu in 2021, Subway is now turning its attention to its franchise system. The sandwich chain is embarking on a "multi-year transformational journey," which will include updating its roster of franchisees, according to a recent company statement.

Specifically, Subway is hoping to swap out a portion of its single-unit franchisees, many of them first-time business owners, with larger franchising companies. "The brand is actively inviting well-resourced, multi-unit franchisees to join the company . . . and to discuss the potential acquisition of restaurant portfolios with existing operators," reads the statement.

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The transition to larger-scale contracts is part of Subway's longer-term goal of becoming an "experienced-focused" company. The chain says it wants to improve customer experience at its restaurants and believes that well-financed multi-unit operators are its best bet in achieving that goal. Planned improvements include system-wide store remodeling and investment in off-premise formats.

"To ensure we remain competitive for years to come, we're scaling up with high-caliber multi-unit franchisees who bring operating expertise, development capabilities, and capital," said Steve Rafferty, Subway's SVP of development.

It's big news for Subway. The brand's 21,000 locations are mostly run by single-unit, mom-and-pop operators, thanks to the fact that it offers some of the lowest startup costs in the fast-food industry. Initial franchise fees at Subway are as low as $15,000—about a third of what McDonald's charges, according to a 2019 estimate. It's a selling point that's helped the chain become the largest fast-food company in the U.S.

But with its new focus on customer experience, Subway is putting its famous growth strategy to the side, in the hopes of transitioning to a sturdier, more consolidated franchise system, better positioned to deliver a "consistent, high-quality guest experience." Whether or not the chain will be able to attract that kind of high-caliber client remains to be seen.