Subway Owners Fight Parent
The North American Association of Subway Franchisees Inc. sued Doctor's Associates Inc. which owns the Subway trade name.
August 31, 2006 at 08:00 PM
2 minute read
The North American Association of Subway Franchisees Inc. (NAASF), based in Coral Gables, Fla., sued Doctor's Associates Inc. (DAI), which owns the Subway trade name, July 18. NAASF alleges that a new franchisee agreement that gives DAI more control over the franchisees' advertising budgets conflicts with a 1990 Trust Agreement.
“The new franchise agreement introduced by DAI on April 1, 2006 ?? 1/2 threatens to erode the foundations of the Subway system, by destroying franchisees' trust in the good intentions of our franchisor, and violating one of our foundational documents, the 1990 Trust Agreement,” said Kevin Brough, chairman of NAASF, in a statement.
According to the 1990 Trust Agreement, franchises had the power to control their own advertising budget through a trust fund into which individual Subway operators contribute. However, the new agreement would give DAI control over the trust fund, a move that franchisees fear could cut into their profits. NAASF represents more than 14,500 Subway restaurants.
The North American Association of Subway Franchisees Inc. (NAASF), based in Coral Gables, Fla., sued Doctor's Associates Inc. (DAI), which owns the Subway trade name, July 18. NAASF alleges that a new franchisee agreement that gives DAI more control over the franchisees' advertising budgets conflicts with a 1990 Trust Agreement.
“The new franchise agreement introduced by DAI on April 1, 2006 ?? 1/2 threatens to erode the foundations of the Subway system, by destroying franchisees' trust in the good intentions of our franchisor, and violating one of our foundational documents, the 1990 Trust Agreement,” said Kevin Brough, chairman of NAASF, in a statement.
According to the 1990 Trust Agreement, franchises had the power to control their own advertising budget through a trust fund into which individual Subway operators contribute. However, the new agreement would give DAI control over the trust fund, a move that franchisees fear could cut into their profits. NAASF represents more than 14,500 Subway restaurants.
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