What Are The Challenges, Economic Impact Of Franchise Industry?

Published: Tuesday, January 9, 2018 - 4:45pm
Updated: Wednesday, January 10, 2018 - 8:31am
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(Photo by Christina Estes - KJZZ)
Subway sandwich shop in downtown Phoenix is taking part in national promotion featuring discounted foot long sandwiches..

MARK BRODIE: Some people who own Subway sandwich franchises are finding themselves in a financial pickle. This month, the chain launched a national promotion offering certain footlong sandwiches for $4.99 each.

While it may be a good deal for customers, some franchise owners say they can’t afford it. KJZZ’s Christina Estes has been looking into this and joins us now. Christina, I understand, there’s an online petition asking Subway to withdraw the deal. How many people have signed it?

CHRISTINA ESTES: At last check the petition had been signed by more than 900 people from 39 states. In Arizona, nine Subway locations are listed. The franchisees say the footlong promotions do not build traffic or increase sales. Instead, they say deep discounts devalue the product and strain their budgets.

BRODIE: What does Subway say?

ESTES: In a statement to The Washington Post, Subway said the petition does not represent the majority of its franchisees and add the promotion is optional. The optional part can be tricky for franchisees. Because if you own a store and people see ads for a certain price, they come in expecting to get it at that price. If they find a particular store doesn’t offer the deal they can get frustrated, leave and may be never come back.

Franchising has been growing in Arizona. The International Franchise Association is a trade group that puts out annual reports. It says Arizona has 15,000 franchise locations that support more than 150,000 jobs.

I talked with the group’s spokesman, Matt Haller, about the challenges and economic impact of the franchise industry.

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