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Sub-Liminable

Growing Strong

Still, serving good food is just one part of the puzzle--one can't underestimate the growth. Subway restaurants are expanding in places like Boston, New York, Philadelphia and San Francisco. "We're starting to make inroads in areas where it's been difficult to develop stores in the past," says Fertman.

Not content to stop in North America, Subway has seen its international presence increase enormously as well; most recently, it's moved into England and Germany. "What we're trying to do," says Fertman, "is follow the same [rules] that made Subway what it is today in North America: Keep the investment low and the operation simple, and make it appealing to a lot of people who couldn't get into business before--people who wouldn't have a shot at something larger and more expensive."

Serving about 731 million customers worldwide, Subway has made the kind of impact any business would naturally envy. Domestic franchisees can join the North American Association of Subway Franchisees (NAASF), an independent organization of franchise owners that meets regularly with Subway management. Taking care of advertising at both national and local levels is the job of the Subway Franchise Advertising Fund Trust (SFAFT), another franchisee group. And if franchisees have something on their minds they'd like to share with the company founder himself, they can call a toll-free, franchisee-only number to leave a voice mail for DeLuca or anyone else in the company. "We're talking about how every franchisee counts," says Fertman. "Any franchise owner can talk to Fred and make his or her ideas known."

In fact, strong internal communication and franchisee input spawned the Subway Club sandwich--it was a franchisee's idea that eventually went systemwide. "Everybody matters," says Fertman. "That's how our system works." Subway also greatly encourages franchisees to open multiunit stores by reducing the franchise fee and providing financing programs for owners to expand into more restaurants.

In recent years, Subway has also met with its fair share of negative press detailing the dissatisfaction of some franchisees. Fertman strongly advises potential franchisees to investigate both negative and positive publicity by talking to real franchisees and getting their take on things. "In a franchise system, you can't make all the people happy all the time," explains Fertman. "The question is, How is the company doing? How are the majority of franchisees doing? [If someone] talks to franchisees and finds one unhappy person--he could make a story about that. But what about the other 99 people? Happy people simply aren't news."

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This article was originally published in the January 2001 print edition of Entrepreneur with the headline: Sub-Liminable.

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