From Zero to Hero

The Franchisee Factor

Over the past 25 years, DeLuca has watched the pool of franchisees grow tremendously-today, Subway receives about 130,000 requests for franchise information per year, with 25 percent of those people applying for a franchise. The communication between franchisors and franchisees has improved as well. "Back in the early days of franchising, there was more of what I'd call downstream communication. The parent company would make a new policy and send that policy out across the system-that was pretty much the way franchisors did things," says DeLuca. "Over the course of time, many companies have involved the franchisees in the decision-making process."

Subway certainly has: It has meetings every four months with the system advisory council. The council encompasses the franchisee advertising group, the purchasing co-op, the development agents, the international franchisee group and the North American Association of Subway Franchisees. "That's very helpful, especially when you have a large organization that's geographically spread out with a lot of different people with different points of view," DeLuca says.

He often points to Subway franchisees as a main source of the company's success. "The important thing for me and for anybody in this business is to appreciate the abilities of the franchisees and what they can do to improve a company and help a company grow. Here are a lot of people with a lot of good ideas who are really devoting their energy to helping the system grow. It's important for a franchisor to have structure and systems to tap into that creativity."

With plans to continue expanding internationally and to increase average store profitability, Subway has seen the addition of more than 2,400 stores over the past year, which averages to about 47 new franchises per week. "It looks like the coming year is going to be equally strong," says DeLuca. "It's a really good time for our franchisees-I see a lot of excitement in the franchisee community."

Looking back over the past 25 years of franchising, DeLuca has seen where it's been and can't help but look toward where franchising is going. "Twenty-five years from now, the most successful franchise companies will have 50,000 outlets worldwide," he predicts. "Wherever franchise brands are today, they're just scratching the surface. There's a big opportunity for the future-especially for those companies [that] are able to develop not only the domestic market, but also an international brand."

Full Steam Ahead
Through the years, Subway has seen consistent growth in the number of franchise units it has operating domestically and worldwide, and that trend is expected to continue.
2003 19,238
1999 13,892
1994 9,240
1989 3,586
1984 360
1979 134
SOURCE: Entrepreneur's Franchise 500® (1980-2004)


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This article was originally published in the January 2004 print edition of Entrepreneur with the headline: From Zero to Hero.

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