Subway, the world’s largest restaurant chain, said in a statement that it would reduce royalty payments by 50 percent for franchisees.
The brand is also suspending advertising funds for the next four weeks and supporting franchisees with rent abatement, reduction, and deferral.
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Earlier in the week, the New York Post reported that the North American Association of Subway Franchisees sent a letter to CEO John Chidsey, asking for financial relief from weekly fees. The Association represents about 23,500 franchisees.
A Subway spokesperson said the brand was discussing ways to assist franchisees prior to the letter being sent.
Franchisees said they were charged weekly dues, per the publication, as scheduled Monday. In addition to an 8 percent royalty for branding rights, franchisees also give Subway 4.5 percent of their weekly sales to an advertising fund. Franchisees said sales have dropped between 40–80 percent in recent days, according to the New York Post.
Subway said many franchisees nationwide, in coordination with the corporate office, are also helping to feed children who are out of school as well as assisting healthcare workers and other first responders.
“Supporting our network of franchise-owned businesses during this unique circumstance is a top priority for the entire Subway team, and we will continue to assess and respond to the rapidly changing landscape,” the company said in an email to QSR.
In a similar move, McDonald’s said in an SEC filing earlier this week that it was considering rent deferrals for its franchisees, and working with suppliers to ensure continuous supply.
More than half of states have mandated that restaurants close their dining rooms, restricting them to takeout and delivery. Subway hasn’t made any announcement in regard to closure of dining rooms in places where it’s still legal, but in a letter on the company’s website, Chidsey said stores are increasing the frequency of sanitation, temporarily removing dine-in sandwich baskets and serving trays, reinforcing health and safety protocols, and reinforcing its partnership with third-party delivery providers.
