Subway will now be forcing its franchises to sell discounted sandwiches, and many are not happy about it. Starting December 28, 2023, the fast-food company will be demanding that all stores (roughly 19,000) honor digital coupons and promotions. In August, the family-owned company agreed to be sold to the private equity firm Roark Capital, which also backs Arby's, Dunkin' Brands, and Jimmy John's. However, this recent mandate could potentially be the icing on the cake for federal regulators who are trying to put a stop to the near $10 billion sale.
“It’s puzzling to say the least that this is the time Subway is deciding to do this,” Georgetown Law Professor David Vladeck, a former director of the FTC’s Bureau of Consumer Protection, said in an interview with the New York Post. “There may be an economic justification but it’s hard to justify a requirement."
The coupon mandate could put into doubt Subway CEO John Chidsey’s argument that all store operators are independent at the same time as the Federal Trade Commission intensifies its antitrust probe, experts explained. Subway has declined to comment on the policy change.
In the past, Subway franchise owners were able to decide whether to accept coupons in their stores.
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“If consumers widely use these coupons, yes, forcing franchisees to accept them could impact the case,” said Seth Bloom, a former general counsel to the Senate Antitrust Subcommittee. Many of the franchises are upset over the mandate. “It costs me $7 to make a turkey sandwich when you include labor and rent,” one multi-store Subway operator explained. “So I make a $2 to $3 profit.”
