2007 Franchise of the Year

Thinking Global

Working through challenges has helped Subway in its ambitious international expansion plan as well. Aiming for 7,500 international locations (not including stores in Canada) by 2010, it already has 3,767 restaurants in more than 80 countries, including England, France and Germany. "We're working at building the infrastructure in all these countries," says DeLuca. "And it looks to us like the opportunity internationally in the long run is larger than the opportunity in the U.S. It might be several times the size of the U.S. opportunity."

With global growth comes global cooperation, notes DeLuca, as many franchisee co-ops--such as the Independent Purchasing Cooperative, which has international members--often share strategies about successful distribution and sourcing. The serendipitous outcome of such affiliations tends to be price savings and quality improvements across the board.

Getting a foothold into new countries and building the Subway brand is a challenge DeLuca embraces. With little name recognition, few established customers and different sets of laws and languages to contend with overseas, there are many hurdles to overcome, even for a seasoned franchisor such as Subway. "The key is really making sure you understand the challenges and [that you're] working against all of [them] simultaneously as you enter these new markets," DeLuca says. "That's probably what makes the international market so exciting--because while we're seeing great growth, it seems like countries take off, but they don't take off all at once. You don't know which one is going to blast off next."

That blast-off energy is exactly what an entrepreneurially minded franchisee brings to the competitive fast-food market--and DeLuca is banking on franchisees' enthusiasm to stay ahead of the pack. Though he cites burger chains as Subway's main competition, he notes that the marketplace is laden with variety--from Mexican and Asian fare to chicken brands--all battling for consumer food dollars. But with true entrepreneurial franchisees in the trenches who each have a finger on the pulse of local competition, innovation tends to be propelled upward. "Different people are experimenting with different approaches, so [we] keep a close eye on what's happening in the field," says DeLuca. "The way we do it is by giving [franchisees] a fair amount of authority to go forth and get things done--then watching what they're doing and teaching others. [The ideas] kind of transfer sideways, up and around."

Leisure, reflection, taking a break--who's got the time? With goals to boost North American sandwich sales 50 percent by 2010, Subway's just getting started.

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This article was originally published in the January 2007 print edition of Entrepreneur with the headline: Full Speed Ahead.

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