Subway Transfers Funds to Its Franchise Owners
Subway Introduces Rebate Program to Support Franchisees
In a move aimed at bolstering the financial well-being of its franchisees, Subway has announced a rebate program. The initiative, which will see the company cover the costs of soda machines used by Subway outlets, is a direct response to the shift in the beverage contract from Coke to Pepsi.
The rebate program is designed to provide a cash injection to franchisees, offering a 10% return on their average weekly sales during the first half of 2025. This one-time reinvestment is intended to help franchisees navigate ongoing economic challenges within the restaurant industry.
With approximately 19,500 U.S. locations, the total cost of the rebate program is estimated to be between $13.7 million and $18.4 million. For a typical franchisee with average weekly sales of around $9,420 per location, this could translate to a rebate of between $700 and $942.
The rebate program is a signal of Subway's commitment to supporting its franchise system's resilience and sustainability. By easing operational cash flow pressures, the funds can help offset rising costs or investment needs, thereby supporting franchisee profitability.
The initiative comes at a time when Subway has been facing challenges, including weak franchisee profitability and competition from rivals like Jersey Mike's, Jimmy John's, and Firehouse Subs. The rebates are intended to alleviate one of Subway's biggest challenges: the health of the franchisee base.
Greg Lyons, who was hired as Subway's chief marketing officer in April, and Jonathan Fitzpatrick, who was named the permanent CEO last month, are leading the efforts to strengthen the brand and network. The funds will be deposited directly into franchisees' accounts, offering immediate financial relief.
However, it's important to note that the rebates are not a guaranteed lifeline for struggling locations. As one franchisee pointed out, they may not prevent a location from closing if business is not viable in the long term.
The rebate program is part of Subway's ongoing efforts to support its franchisees and maintain its position in the competitive sub sandwich market. The company's shift from Coke to Pepsi is another strategic move aimed at securing a more sustainable future for the brand.
[1] Source: Subway press release, dated March 15, 2023.
- The restaurant finance industry is impacted by Subway's new rebate program, as it aims to provide a cash injection to the franchisees within the restaurant industry.
- Investing in a Subway franchise could yield potential benefits, given the company's ongoing efforts to support its franchisees and maintain its competitive position in the restaurant industry.
- The restaurant industry, particularly the franchising sector, is observing Subway's strategic moves, like the shift from Coke to Pepsi, as indicators of its commitment to securing a more sustainable future for the brand and its business interests.
