•
•
DlSCLOSURE DOCUMENT
Doctor's Associates Inc
A Florida Corpormion
700 S. Royal Poinciana Blvd, STE 500,
Miami Springs, FL 3J 166
Phone: l-800-888-4848
www.sub"'"' .com
fmnchise!W;ubwav .com
You wi II sell foot-long and other sandwiches, salads and other food items tram a retail store.
The initial franchise fee is $15 ,000. The initial franchise fee for additional franchises may be lower if
you qualil)· The total investment necessary to bcgtn operation of a SUBWAY" franchJSC is estimated
to be from Sll6,200 to $262,850 (S85. 700 to S202, !50 for a non-tradittonallocation), assuming that
you lease the equopment for your restatJrant from us. This sum includes an est•mated $14,020 to
S39,920 that must be paid to us or our affiliate. This sum also includes initial sta,·up expenses for 3
months but do~s not r~fl~ct any sale> re>~nue you may ~am to hdp pay th~se ~xp~nses. This sum do~s
not include any salary for the owner during the initial sta,·up period. For a detailed explanation of
your total Investment and all fcc amounts, you should consul! hems 5 through 7 of this Franchise
Disclosure Document (''Disclosure DocumenC').
This DlSc Iasure Document summari~e< ce,am pron<i~"s 0f your franchise agreement and other
information in plain English Read thlS Disclosure Document and all accompanymg agreements
carefully. Yau must rece1ve this Disclosure Document at least 14 calendar-days before you sign a
bmding agreement with, or make any payment to. the franchisor or an affiltate in connectLon wnh the
proposed franchise ;ale. Not~, howncr, that no governmental agenc, ha• verified the information
contained in this document.
You may wish to receive your Di.lclo>ure Document in another format that is more convenient for you
To discuss availabil iry of disclosures in d tfferent fonnats, contact Heidi Goodhue of the Development
Team at 325 Die Driv~. Milford. CT 06461 and (800) 888-4848.
The terms of ym>r contract will govern your franchise relationship. Don't rely on the Disclosure
Document alone to understand your contract. Read all of your contract carefully. Show your contract
and Disclosure Document to an advisor, like a lav.yer or an accountllnl.
Buying a franchise is a complex investmem. The information in thi_, Disclosure Document can help
you make up your mind. More information on franchisin& such as "A Consumer's Guide ro Bli)'ing a
Fra11chise." which can help you under.> land how to use this Di.>elosure Document, is available from the
Federal Trade Commi<Sion You can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at
600 Pennsylvania Avenue, NW., Washington, D.C. 20580 You can also vi.> it the FTC's home rage at
"WW lie gov for additional information. Call yotJr <tate age,cy or VIStl your public lthrary for other
sources of mfonnation on franch tsing.
There may also be laws on franchising m your state. Ask your state agencies about them_
ls.>uedon· May 1.2013
STATE COVER PAGE
Yom >tat~ may haw a fran chis~ law that requires a franchisor to register or lile with a slat~
franchise administrator before offering or selling in your stale. REGISTRA TlON Of A
FRANCHISE BY STATE DOES t\OT MEAN THAT THE STATE REC0).1MENDS TI-lE
FRANC.HISE OR HAS VERlFIED THE INFOR.\1A TION IN THIS DISC.LOSURE DOCUMENT_
Call the state franchi;e administrator listed in Exhibit H for infonnation about the franchisor, or
about franchising in your state.
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW
Ul\CONDITIONALL Y AFTER THE INITIAL TERM EXPIRES. YOU MAY 1--lAVETO SIGN A
NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIOt-;S IN ORDER TO
CONTINUE TO OPERA! E YOUR BUSINESS_ nEfORE YOU BUY, CONSIDER WHAT
RIGHTS YOU I-lAVE TO RENEW YOUR FRANCHISE. IF ANY. AND WHAT TERMS YOU
MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.
Plea>e consider the following RISK FACTORS before you bu; this franchioe:
I.
THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES
WITH US BY ARBITRA T!Ol\ ])',' CONNECTICUT. IF A COURT DETERMII\ES
TilE ARBITRATION CLAUSE IS 'lOT ENFORCEABLE, THE FRANCHISE
AGREEMENT PERMITS YOU TO SUE. US ONLY IN CONNECTICUT_ OUT-OFSTATE ARBITRATION OR LITIGATION MAY FORCE YOU TO ACCEPT A LESS
FAVORABLE SETTLEMENT FOR DISPUTES_ IT MAY ALSO COST YOU ).10RE
TO ARBITRATE OR LITIGATE WITH US IN CONNECTIC.UT THAN IN YOUR
OWN STATE.
2.
TI-lE rRANC!IISE AGREEMENT STATES THAT CONNECTICUT !.A W
OOVER"lS THE AGREEMENT, AND THIS LAW \1A Y NOT PROVIDE THE
SAME PROTECT!OJ'-,'S Al\D BENEFITS AS LOCAL LAW. YOU MAY WANT TO
COMPARE THESE LAWS.
3.
THERE MAY BE OTl-!ER RISKS CONCER"llNG THIS FRAI\C.HISE.
We use the servi~es of one or more FRAL\'CHISE BROKERS or referral oomces to assist us in
selling our franchi;e. A franchise broker or referral .>Ource represents us, not you. We pay this
person a fee for selling our franchise and referring you to us_ You should be sure to do your own
in•estigation of the fi-anchise_
Effective Date: See the next page for state effective date_,
The following states require that the Franchise Disclosure Document be registered or filed with the state, or
be exempt from regtstrallon: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Mmnesota, New
York, Nonh Dakota, Rlwde Island, South Dakou, Virgmia, Washington and Wisconsin.
This Franchise Disclosure Document IS registered, on file or exempt from registration in the following
states having fmnchtse registration and disclosure laws, with the following elfective dates:
State
Effecti.-e Date
California
Hawan
Illinois
Indiana
Maryland
Michigan
Minnesota
New York
Nonh Dakota
Rhode Island
South Dakota
Virginia
wa,hmgton
Wisconsm
May1,2012
Pending
Mayl,2012
May 1,2012
May 1,2012
May 1,2012
May 1,2012
May 1,2012
May 1, 2012
!\1ay 1,2012
May 1,2012
May I, 2012
May I, 2012
Mayl,2012
for all other states where registration, filing or exemption from registration is not required, this Disclos"re
Document is e l'fectivc as of the date of issuance_
05113
JTEM
TABLEOFCONTEKTS
PAGE
I.
THE FRANCHISOR AND AKY PARDJTS, PREDECESSORS AND AFFILIATES. _______ ..... ..
'
'
'
,,'
BUSIK£SS EXP£RIENCE._
-------- --- ---·-· 12
LITIGATION
... ·----- --·-·-- ................ 27
BANKRUPTCY .. ___________ -·-······_
. ···········-········ 27
INITIAL FfES_
----- ------28
······-·-·-······· .......... 34
OTHER rEF.S ..... ------- -·-·············
ESTIMATED INITIAL I?>JVESTJ.-1ENT ..
---- 46
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES.········-·····-·-·······-····
FltANCHISa"S O!lLIGA"I IONS __
. ·-·----_,_58
.. 60
FINANCING ....... - ___ -·-···············
I I_
-··-·-·-·-·--·-·-····52
FRANCHISOR'S ASSISTA:-JCE, ADVERTISING, COMPL:TER SYSTEMS AND TRAINING .................. _6-1
TERRITORY._
---------.78
13.
TltADEMARKS _
14.
PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION ...
15
OBLIGATION TO PARTICIPATE fN THE ACTL'AL OPERATIO~~ Of THE FRANCHISE BUSINESS .... 33
"'
RESTRICTIONS ON WHAT THr FRANCHISEE ).1A Y SELL
...... 81
"'
85
RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION .............................................. 86
PUBLIC FIGURES ..................... ..
----- - - ---- -- - -- 9<1
19.
HNANClAL PERFORMANCE REPRESEN IAI 10:-JS ....
20.
OUTLETS AND FltANCHlSE INF0R).1A TION
21_
FINANCIAL STATEMENTS ..
22.
CONTRACTS ....
23.
RECEIPTS .
. 95
"
'"'
- -- 107
" 107
EXIIIBITS
A
A-1
A-2
A·3
A-4
A·l
A-6
A-7
A-8
A-8-1
A-9
/\-1~
/\-II
A-12
A· l)
,\. 14
A-1 I
A-ll>
/\·17
A-18
/\-19
[I
B-1
H-2
Frar.chL~e Ag"ement
Frnnchise Dr>do,or< Quesoionna"'
~atelllte Rider
Non-T:-aditionall.ocotion Entoty Rider
Non-T 11\d 1110nal Locooioo Individual Rid<r
School Lunoh Ride<
Specifoc Locat,on Roder
Co·B=d Location Rider
Su~ Shop/2000'~ So~wan: '-"'""' 1\g«<m,nl
SUBW ,\ Y~ POS End U'<' Ll<,nso .~g"ern<nL
llider for EnliT) F,-anoh1$e< Qp<tallng Tr:tdiiiOnal LOCOIIOn
Sohool Lunch Ad Fe< Rider
Planned ]X,·dopmeno Rider
DirectL,as<:Rider
VPS So~ware Participation /\grcemM
Ad>o~i>mg F ce Roder for Theme Park. ~ationa: Park. and /\i!]lon T <rminal Locai'O"-'
l"ood 5,,.;,< Pro,;dec Ri<J"
Dual Location T'" llidcr
CommJnity Development Program Rider
Slloro Term Satclhte Rid"
SU[IW,\YCAfE~ProgrnmRider
L"t of SU[IW AY~ Franchi'" as of IJ'ccmbcr ) I, 20 12
LiS\ of SUBW A,_.., Outl,t< with Multiple Ownmh1p Chang<' do~ng <am< I"IS<al Y«lr for Yettr' lO 12. 201 I. and 201 0
l."t of SIJllWA Y~ franch«<e' who Cc:.sed Operating during th< h>Cal Ye..- ended Uecembor J I, 20 12, 2011. and lUlU
C
D
D-1
[
E-1
F
G
H
I
1
K
l
M
N
iluditod F~nancial S<atemen!< fur !he fl'cal \ "'" Ended Uocomber J I, lU 12, lO II. and 2Ul 0
Subki!Se
Subl10onse
In"'" to Sublease
In""' to Sublicense
l'ro·Autttori><d Elan< Fom1
[quipmcnt l.<a;c A~rccmcnl
S"te Agenm>
A~cnt< For Service of l'roce'<.l
Cnnf<dcnllallly Agrumenl for Di>do>ure of Oporation< Manual
Di\1 ~ooo
Uttgalion
D,\[ and F\liH Franchi<" Pnv•cy Pultms
Soc"l Mcd" Gu1dehn<>
Item I
THE FRANCHISOR, AND ANY PARENTS, PREI>F:CESSORS A/'.'D AFFILI.4. TES
To Slmphfy language in this Disclosure Document, "we··. '·uS' or "DAI" means Doctor's Assoctates Inc., the
franchisor. "You" means the person or persons who buy the franchise. Only natural persons may sign the
Franchise Agreement. lf2 or more persons sign the Franchise Agreement, "'you"' mcludcs each of the persons
srgnmg as franchise ov.ners.
The F ranchiJ'(JT, Its PredeceJ'J'(J' and Its Affiliates.
DAI is a Florida corporation. incorporated on June 3, 1991 and does business as "SUBWAY"' DAI was
ongmally fonned as a Connecttcot corporation, incorporated on October 17, 1967 as Doctor's Associates, Inc
and was moved ti"om Connecticut to Florida on July l, 1991 by a Type F reorganization under Section 36~ of
the Internal Revenue Code. The address of DAI1s 700 S Royal Poinciana Blvd, STE 500, Miami Spnngs, FL
33166. DAI's agents for servtce of process are dJSclo;ed 111 Exhibit I. As ofDeeembcr 31, 2012, there were
40,197 franchi>e> sold, of which 26,3 lJ arc open and 1,203 in development As of December 31, 2012, there
were 665 satellite franchiSes sold. of which I 09 are open and 8 are in develop men!. DAI oiTered plush toy
business franchises from 1982 to 1983 but did not sell any. DAl has neverofTercd franchises in any other line
of business.
S.,hway FrMchi>cc Advertising Ftmd Tr<J~t Ltd. (''SF AFT"), a tn1st cst~blish~d i1' C0nnct:tict1t by its Se1tlor.
Doctor's Associates Inc, pursuant to a trust agreement excctltcd 011 November 14, 1990. It was converted to
aComtecticut statuto!) trust on July 30,2008. SF AfT's address is 325 Bic Dr1vc, Mdford, CT 06461. SFA~T
provides advcnisinl! services to SUBWAY~ franchisees and operates as an advertising fund It currently
administers all of the advert ising contributions paid by franchisee; in the United States and its territories and
mtcracts with local advertising fund entities around the world that arc associated with the SUBWAY'"' brand.
See hem II.
We are affiliated "ith the following companies that may provide goods, services, or both, to us, our franchisees,
our affiliates, or our affiliates· franchisees:
Franchise World Headquarters, LLC is a Connecticut limited liability company, fanned on May 26, 2009
("'FWH"). The principal business address of FWH "3~5 Bic Drive, Milford, Connwicut 06461. FWH is
l1censed to use the SUBWAY~ trademark FWH prov1des services to DAI and DAI's franchisees, and to
affiliate franchisors and their franch isccs, including research and development, marketing franchises, franch isec
training, retail technology, POS system support, store des1gn, legal and accounting scrvtces. See Item 8.
FWH also pro,· ides services to DAI's affiliate leasing entitles around the "orld, inelt>ding but not limited to
negotiating real estate leases and licenses for SUBW A -1" franchisees, administering the leases/licenses, and
lease/] iccnse renewal for restaur am premi;es to DAJ" s affiliate leasing entities to Sublea;e or Sublicen;e to
franchisees.
Franchisee Shipping Center Co, Inc. is a Delaware, T,;.S.A. corporation incorporated on September 6, 1994
(""FSCC "). FSCC offers various adverttsing, promotional, and operational materjals to SUBWAY" franchisees.
See Item 8. FSCC's addre;s is 500 Brc Drive. Milford. Connecricut 06461.
The Franchise De>elopment Team, Inc is a Florida corporation jncorporated on February 2, l 993 ("FDTI'')
FDTl provides consulting services to us. FDTI's address is 4581 Weston Rd. #188, Weston, FL 3333 I.
Subway Real Estate, LLC is a Delaware limired liabilny company fanned on August 20. 2009 ("SRE"). SRE
assisrs franchisees of DAI and other affiliates in negoriating real e.> tate leases or licemes and in rhe
administration of the lease or license renewals for all restaurant premiSes that they lease or Iicense to
franchisees. Until January I, 20!0, these serv1ces were provided solely by Subway Real Estate Corp., v.hlCh
continues to provide these seP..ices in limited circumstances. SRE's addre>' is 325 Bic Drive, Milford,
Connecticut 06461.
In addit1on to SRE, the following, real estate leasing, corporations may lease the restaurant premises and enter
into a Sublease with you;
Subway Real Estate Corp. is a Delaware corporation incorporated on Jul} 19, 1989 ("SREC''). In limited
circumslllnces, SREC assists franchisees of DAI and other affiliates in negotiating real estate lca>es and in the
admimstration of the ]ea>es and lease renewals for all restaurant premises that they sublease to franchisees. See
Item 5 and Item 10. SRECs address is 325 Bic Drive. Milford, Connecticut 06461.
SBlJ Ventures, LLC, a Delaware limited liability compan} fonncd on November 19, 2012 ("SBDV''). SBDV
assists franchisees of DAI and other affiliates Wtth reviewing requests for proposal for certain wm-traditwnal
locations. SBDV may enter into the primary lease agreements for these non·traditionallocations and may
sublease or assign the right to operate these locations to franch•sees.
Subway Restaurants, Inc. is a Delaware corporation mcorporated on September II, 1986. The address of
Subway Restaurants, Inc. is 325 Bic Drive, Mtlford, Connecticut 06461,
The followtng entities each own and lease a restaurant location to a franchisee: Powder Spnngs Partnership, a
Georgia general partnership fanned Marcl1 I 0, 19R9, Fn:rl & Peter'' Re" I E!tate, " ('onnecl icut general
partnership fanned January I, 1991; Avon Colorado LLC .. a Colorado lim1ted liability company formed on July
30, 2009; Binghamton New York Realty, LLC , a New York ltmited liability company formed on July 31, 2009;
193 Whalley Avenue Realty, Inc., a Connecucut corporation fonned on October I 0, 2002; atld 291 0 B iglcr
/\venue Realty, Inc. fka 1253 Naugatuck Avenue Realty, Inc, a Delaware corporatmn fanned on November 19,
1993, and Amwiler Road Realty, LLC, a Delaware limited liabtltry company fanned on March 21, 20 12_ See
hem I0_ The address of each enttry IS 325 Bic Dnve, Milford, ConneCtiCUt 06461
Donaldson Augusta Realty, Inc. is the landlord of a restat,rant location. Donaldson Augusta Realty, Inc. is
a South Carolina corporation incorporated on March 13, 1995 with an address at330 Mills Avenue, Greenville,
South Carolina 29605.
DAI or a licensed affiliate licenses the following affiliates to usc the SUBWAy® trademark and to offer
restaurant franchises or, 10 one case, sub Iicenses These affi liatcs may offer franchises through separate
Disclosure Documents. None of the following afftliates have offered franchises in an} other line of business
Subway Systems International Anstalt is a Liechtenstein establishment fanned on December 5, 1997,
and grants sublicenses to master licensees to license SUBWAy® restaurants all over the world, except in the
Un1ted States, Canada, Australia, Colombia, Brazil, India und South Africa. Subway Systems International
An stall gmnted Sill V a sub Iicensc to sell franchises and sublicense others to sell franchises for SUBWAY"'
restaurants all over the world, outside of the United States, Canada, Australia, Colombia, l:lritZil, lnd ia and
South Africa. They have an address at Steinert 642, Postfach 120 I, FL·9497 Triesenberg, FUrstentum,
Liechtenstein. They do not grant and have never sold individual franchises.
Subway International B.V IS a Netherlands lim1tcd liability company, incorporated on December 16,
1997. H began franchising in 1998 {''SIBV"). SIBV offers and sell; franchises all over the world, except in the
United States, Canada, Australia, Colombia, Brazi I, India and South Africa. The company has an address at
Prinsengracht 13, 1015 DK Amsterdam, The Netherlands. As of December 3 I, 2012, II ,066 franchiSes were
sold, of which 8,292 are open and I ,6JR are in development. As of Decem her 31, 2012, 97 satellite franchises
were sold, of which 64 are open and 12 in development.
Sub,..ay Partners, C. V _ is a Curacao limned partnership. fanned on September I 0, 1990 ("Subway
Partners" or "Sl'CV'T The address oft he limited partnership is Schottegatweg Oost44, P.O. Box 812,
Willemstad, Curapo_ SPCV offered and sold franchises and also granted sublicenses to master licensees to
license SUBWAY" restaurants all over the world, outside of the United States, Canada, Australia, Colombia,
Brazil, India and South Africa from 1990 to 1999. Addltionally, from 1993 to 1997, SI'CV had a third party
master licensee that sold franchises in Brazil. We cannot vcnf)-' any of this master licensee's franchise
information_ SPCY ceased offering franchises and granting sublicenses to master franchisees in I 999. The
Argentine branch of SPC V, estab Iished on January I0, 1997, continues to accept roy airy payments from
franchisees in Argentina. The pnncipal addreos for this branch i> Marva], O'farrell & Mairal, Av_ Leondro N_
AI em 928, 100 I Buenos Aires, Argentina. All franchises sold by SI'CV were assigned to us, Subway l'anners
Colombia C. V., and Sandwich and Salad franchises of South Africa (PI]') Limited_
Subway franchise Systems of Canada, Ltd. is a Canadian corporation, incorporated on June 19, 1986 It
began franchising m 1987 ("SFSC"). SFSC has a registered office in care of Monarch Registries, Main Floor,
11210-107 Ave NW, Edmonton, Alberta, Canada, 1'5H OYI. SFSC offers and sells franchises fnr SUBWAY"'
restaurants in Canada, leases equipment to SUBW AY"'franchisees in Canada. and sometimes owns and
operates SUBWAY"' restaurants in Canada that had been previously franchised_ As of December 3 I, 2012,
5,122 franchises were sold, of which 2,729 are open and 238 are in development_ As of December 31, 2012, 77
satelhte francluses were sold, of which 9 are open and 2 are in development.
Subway Systems Australia Pty. Ltd. ("SSA '')is l West em Australia ccrpa..rion, incorporated on
October 21, 1987. lt began franchising in 1987. The corporation's address is Level I, 42 Amelia Street,
Fortitude Valley, QLD 4006, Australia. The corporation sells franchises and leases equipment for SUBWAY~
restaurants in Australia. As of December 31, 2012, I ,645 franchises were sold, of which I ,203 are open and 40
are in development. As of December 31,2012, I satellite franchise was sold, of which 0 are open and 0 arc in
development.
Sandwich and Salad Franchises of South Africa (Pty .) Limited ("SSF") is a South African corporation,
incorporated on Cktober 24, 1996. It began franchising in 1997. The corporation's address is Office 311, 3rd
Floor, Standard Bank Building, 304 Oak Ave., terndale, Randburg, 2194 South Africa. It sells franchises for
SUI3W A Y" restaurants in South Africa As of December 3 I, 20 12, 53 franchJSes were sold, of which I 6 are
open and 4 are in development. As of December 31,2012.0 satellite franchises were sold
Subway Parmers Colombia c_y_ is a Colombian branch ofSI'CV formed on December 20, 1996. It
began franchising in 1997 The branch's address i< in care of Paniagua y Tovar Abogados S_A, Calle 107 A
No_ II A- 69, Bogota, Colombia_ It sells franchises for SUBWAY" restaurants in Colombia. As of De~mber
3 I , 20 I 2, 205 franchises were sold, of which 95 are open and 48 are m development. As of December 31,
2012. I satellite franchises was sold, of whidt I is open and 0 arc in development.
Subway Systems do Brasil Ltda. ("SSB") is a Brazilian limited partnership, formed on April 14, 1998.
It began franchising in 1998. Its address is in care of JMSilveira & Associados, f\v. l\'ove de Julho4954, Siio
Paulo, SP, 01406-200, Brazil. It sells franchises for SUI3W Ay® restaurants in Drazil. As of December 31, 2012,
1,600 franchises were sold, of which 976 are open and 354 are in development. As of December 31, 2012,2
satellite franchises were sold, of which 2 are open and 0 are in development.
Subway Systems India Private Limited {"SSIPL") is an lnd ian corporation incorporated on September
10, 2002. It be)!,iln franchising in 2002. The corporation has a principal business address at Level 2, Elegance,
Math ura Road, Jasola, New Delhi, l~d ia I I 0025. Subway Systems India l'ri>ate Limited offers and sells
franchises in India. As ofDecember31, 2012,676 franchises were sold, of which 304 are open and 146 are in
development. As of December 31,2012, 13 satellite franchises were sold, of which 7 are open and 6 are in
development.
We disclose the followmg compamcs that now offer or have offered franchises as our affiliates, because Dr.
Peter Buck and M r_ r rederick A DeLuca, the founders of DAI, invested in them, directly or mdirectly. They
are not officers or directors of these companies and we do not represent that they control all of them. Dr. Buck
and Mr. DeLuca may invest in other franchise companies in the future. The active franchise companies listed
below offer franchises through separate Disclosure Documents. Our Development Agent> listed in Hem 1 may
sell or own franchises for these other companies and some employees of FWH or other affiliates, may assist
their employees and ti"anchisees_
ProForma Franchise: PFG Venrures 1s an Ohio limited partnership doing business under the name "Proforma"
or "'PFG Ventures" {"PFG Ventures"'l- PFG Venl<ne; is a fran~hising ~ornpany that sells fran~hise; for a
business named ProForma", specialtzing in the sale and distribution of printed business products, including
busine;s forms, commercial printing, advertising supplies, and related business supplies. We and our affiliates
recommend, but do not require, that SURW AY"' ti"anchisee> purchase supplies from PFG Ventures'
franchisees. PfG Ventures' address is 8800 East Pleasant Valley Road, Independence, Ohio 44131 As of
December 3 I, 20 12, PfG Ventures sold I ,556 franclnses. and of the total franchises sold by Proforma and PfG
Ventures, 719 are open and 0 are in development
Mama DeLuca's Restaurant Franchise· MD Pizza, 1.1_ C {"MOP") is a Delaware llm1ted liability company,
fanned on December 7, 2006. The principal huStness address is 325 B1c Drive, Milford, Connecticut 06461.
MD Pizza, LLC is the owner of a proprietary system for establishing and operating restaumnts featuring
specialty pizzas, bread sticks, and chicken wmgs under the trade name and service mark MAMA DELUCA'S".
As of July 16. 2012, 22 restaurants ~"'open and 6 arc in dcvc!opmcnt. MOP M~s nc'.'er offered frat~chi$CO i~
any other llne of business.
HomeVestors of America franchise: HomeVestors of 1\merica, Inc., is a Delaware corporation, formed on
March 14, 1996. The principal business address is 10670 N_ Central Expressway, Suite 700, Dallas, Texas
75231. HomeYestor:; of America, Inc_, lS the owner of a pmpnetary system for establishing and operating a
busines. to buy, sell and rehabilitate re>idenual and commercial propen1es under the tradename and service
mark 1-!0MEVESTORS". As of December 31, 2012, 474 franchises were sold, of which 268 are open and 0
are in development. HomeVestors of America, Inc_ has never offered franchises in any other line of business.
Personal T rainmg ln;titu\e Franclnse. Personal Training Franchise Ventures, LLC, is a Delaware limited
liab1ltty company fomtcd on July 16, 2008. Jt began franchising in 2008. The principal business address is 500
Nonh Broadway, Jericho, NY I 17 53. PT! offers franchises operating under the trade and service mark
l'loRSONAL TRAININli 11'->STITUTE'", which provide one-on-one, individualized personal training and
nulrltion guidance. As of December 31, 2012. 36 franchises were sold, of which 17 are open and 2 are in
development_ Personal Training Institute Franclnse Venhtres has never offered franchi;e; in any other Ime of
business
Taco Del Mar franchise in the United States and its territorJes: TOM franchising, LLC ("TOM") i_s a Delaware
limited liability company, formed on October 8, 2010. It began franch1Sing in December 2010. The pnncipal
business address is 325 Oic Drive, Milford, CT 06461 with a concept office located at 1133 164'' St SW 11201,
Lynnwood, WA 98037. TDM is the sublicensor of a proprietary system for establishing and operating
restaurants featuring a variety of Mexican-style food items, including but not 11maed to tacos, quesad ill as,
burritos, and nachos, under the trade name and .>ervice mark TACO DEL MAR"_ As of September 30, 2011,
141 rcsta<lrants were open, with 0 in development. TDM Franchising, LLC has never offered franchises in any
other line ofhu<iness.
Taco Del Mar Franchise in Canada: TOM Franchising of Canada, ULC. ("TD:,i Canada") is an Albena
unhmited Iiability company, formed on October 26, 20 I 0, and "'hich began fi-anchising in 10 I 0, under the
Alberta Busjn~.1·o Corporation.> Act. The princ1pal business address is 1 121 0·1 07, Avenue :--JW, Calgary, A Iberta
TSH OY I. TDM Canada is the sub licensor of a proprietary system for establishing and operating restaurants
featur.ng a variety of Mexican-;tyle food items, including bu1 not limited to tacos, quesadillas, burritos, and
nachos, under the trade name and service mark TACO DEL MAR"'. As of September 30, 2012, 36 restaurants
were open, with 0 in development. TDM Franchising of Canada, ULC has never offered franchises in any other
line of business.
Tile Frt~nchisor 's Business. We offer and sell franchises for SUB WAY10 restaurants for locations in the
United States and its territories. We have also granted affiliates the right!O sell franchises 10 operate
SUBWAY"' restaurants outside of the United States and its territories: and to sublicense to other> outside of the
United States and its territories the right to sell franchlSes to operate SUBW AY"'restaurants Though our
current policy is to establish all restaurants as franchises, sometimes we or an affiliate may own or operate
restaurants previously owned by franchi;ees until we find a new franchisee. We lease equtpment to our
franchisees. You must purchase through us or lea>e from us sub.>tantially all major items of equipment for your
restaurant. We have limited real estate holdings. which include the loca!lon of one SUBWAy® restaurant that
we lease to a franchisee.
w~
are not
enga~ed
in any other busines;.
T!Je SUB WA Y" Resrauram F ranc!Jise. Under the Franchise Agreement (the "Franchise Agreement"), which is
E>.hibit A. we offer qualified purchasers the right to establish and operate, from a single location, a retail
establishment preparing and selling foot-long and specialty sandwiches. salads. and other food items. The
>andwich categories include cold cuts, seafood, steak, chicken and meatballs. Customers have a choice of
chce~e, on ions, leltuce, <oma<oe•. pickl~s. green p~ppers. blac·k oliv~s. sa!!, pepper, oil, and other condiments on
their custom-made sandwich. The breakfast menu is required for all restaurants in the United States and its
terri tones and features egg sandwiches. bacon, muffins. juice, coffee and other breakfast items. The Frnnchise
Agreement gives you the right to operate the restaurant under the name and mark SUBWAY"' and other marks
we de>Jgnate. You mu;t operate your restaumnt in accordance with the rules we establish, including those in
the Operations Manual (the "Operations Manual"), which we may update during the term of your Franchise
Agreement.
If you are an existing franchisee, signing the then current form of the agreement wi II amend all of your existing
franch i;e agreements in certain respects under Paragraph 14. See Ex.hibit A. The amendments under Paragraph
14 of the Frnnchise Agreement are effective even 1f other individuals sign with you on your new franchise
Agreement or on your existing Franchise Agreement, as long as everyone who signed the existing Franclme
Agreement also signs a Franchise Agreement containing the amendment language in Paragraph 14.
Non· Traditional Locations We also sell franchises for non-traditional locations. Examples of non-traditional
locations include convenience stores, gasoline service statiOtlS, highway rest >tops, department stores, hospitals.
parks, untversities, schools, sports arenas, convention centers, airports, theme parks, national parks, bus and
rarlroad t~rrninals, military bases, business complexes, ass<Sted living/nursing homes and other srmilar
locations. Typ,cally, non-traditional locations are full service restaurants and v.e license them under our
standard fonn of franchise Agreement. In some cases. we may waive the initial franchise fee or a portion of
the advenising fee and modify the Franchise Agreement to address the different conditions inherent in the
operation of a non-traditional location. See Items 5, 6, and 17 and Exhibits A-3, A-4, A-14, and A-15.
We may enter into and negotiate franchise Agreements with large institutional-type franch isces that operate
non-traditional locations. In certain instances, we will also negotiate the Franchise Agreement where we make
arrangements with convenience store operators, food sel""ice management companies, large institutions (deflncd
as entities which provide their own food services with 50 or more available units, or have a net "orth of at least
$10 million as ;hown on an audited balance sheet), cooperatives. foundations, hospirals, colleges, other schools,
Indian nations, or governmental agencie.> or entities. We will not negotiate the Franchise Agreement Wlth
individual franchisees who do not represent large institutional accounts, chains, cooperatives, non-profit
corporations, foundations, hospitals, colleges, other ;drools, Indian nations, or governmental agencies or
entities. In view of the different conditions encountered in operating these locations, we have to modify our
Franchise Agreement to afford ourselves and our franchisees the opportunity to compete in this type of market.
Attached as Exhibit A-3 (Non-Traditional Location Entity Rider), Exhibit A-4 (Non-Traditional Location
Individual Rider) and Exhibit A-15 (Food Service Provider Rider) are the forms of Non-Traditional Location
Riders that we use to eliminate ambiguities. We may also agree upon certain variations to accommodate
differences in corporate operations and expansion goals. Some areas that may change include:
I. Timing of reporting sales by the franchisee;
2. Timing and method of payments of royalties and advertising charges, and interest on late payments;
3. Location ofarbitration hearings;
4. The applicability ofnoncompetition clauses;
5. Commitment to maintain the form of Franchise Agreement for future purchases;
6. Limitation on overall expenses for advertising;
7. Execution of Franchise Agreement with corporation or other entity (Exhibits A-3, A-5, A-9, A-15 and A17);
8. Training for the Director of Food Services and the restaurant Manager (new Managers may be required to
take the training course);
9. Elimination of the need for our affiliate to lease the premises due to your current control of the location;
I 0. Sale of additional franchises at the reduced franchise fee even if all existing restaurants are not in
substantial compliance (as defined in the Operations Manual), if at least 80% to 90% of the existing restaurants
are in substantial compliance;
! ! . Locking in of the franchise fee for additional franc.hises for a number of years or restaurants;
12. Permission for the franchisee to use a different POS system designed for their multiple operations;
13. Waiver of certain future amendments to the Franchise Agreement;
14. A fixed term without automatic renewal.
In situations where the franchisee of the non-traditional location will be a government entity and solely for the
purpose of accommodating state sovereignty, we may negotiate the following requirements of the franchise
agreement: arbitration, the venue of the site for settlement of disputes, the provision requiring waiver of trial by
jury, and the limitation on liability. Under no circumstances will these requirements be negotiated with an
individual or with a non-government entity.
Satellite Locations. We also offer to franchise qualified locations as satellite restaurants. Some satellites may
operate under the mark SUBWAY EXPRESS™. A satellite location cannot be a full-service restaurant and is
intended to operate only with the support of an existing full service SUBWAy® restaurant (the "Base
Restaurant") licensed to the same franchisee, unless we give specific written approval stating otherwise.
Generally, the satellite will not be able to bake bread, prepare product, or have adequate storage capacity for
product. It may often be in a non-traditional location. Satellite restaurants may be temporary, seasonal, operate
with limited hours, or be mobile. The satellite location usually has little or no seating and is for carry-out
service or delivery. To keep pace with market trends, we will consider applications for different types of
satellite locations upon written request. We alone will determine whether your proposed location and
restaurant operations qualify for treatment as a satellite location according to our policies.
You may establish a satellite restaurant only if you already operate a Base Restaurant near the proposed satellite
location. Your proposed Base Restaurant and all other restaurants that you own must be in substantial
compliance (as defined in the Operations Manual) and there must be no material defaults under any of your
Franchise Agreements. You must also otherwise qualify under our rules. We grant the franchise for a satellite
restaurant separately and under a different agreement from the franchise for the Base Restaurant that will
support the satellite location. If we approve the location, we will enter into a new and separate Franchise
Agreement with you licensing the satellite location only. The Franchise Agreement for a satellite location
consists of our standard form of Franchise Agreement and the Satellite Rider (Exhibit A-2). The Satellite Rider
amends the standard form of Franchise Agreement. In some circumstances, we may allow you to establish a
satellite location in a non-traditional location and you must also sign the Non-Traditional Location Rider.
6
Please note that the Non-Traditional Location Rider will amend and supplement the Franchise Agreement
including any provisions modified by the Satellite Rider.
We have a program to establish satellite locations that will operate for a term of one year or less, with the
option to renew for additional one year terms, if mutually agreed upon by both parties. The Franchise
Agreement for a short term satellite location consists of our standard form of Franchise Agreement and the
Short Term Satellte Rider (Exhibit A-18). The Short Term Satellite Rider amends the standard form of
Franchise Agreement.
Community Development Program Locations. We have a program to establish franchises within facilities
operated by organizations or individuals that offer support services within the community in which they are
located. We have waived the initial franchise fee for the Community Development Program through March 31,
2014. See Item 5. Examples of these facilities include places of worship, shelters, halfway homes,
rehabilitation centers, community centers, and disaster relief centers. Under the Community Development
Program, you will operate a full-service restaurant serving freshly prepared product located at one of these
facilities. The restaurant must be operated with the intent of providing job training to individuals with barriers
to employment. The Franchise Agreement for a Community Development Program location consists of our
standard form of the Franchise Agreement, the Non-Traditional Location Rider (Entity or Individual) and the
Community Development Location Rider (Exhibit A-17).
School Lunch Program Locations. We have a program to establish franc.hises in elementary, middle or high
schools. We will license school systems directly, Food Service Providers, or experienced individual
SUBWAy® franchisees. State law restrictions may prevent a qualified Food Service Provider from directly
operating a particular school lunch location. Under these circumstances, we may allow the Food Service
Provider to manage the school lunch location operated by a qualified school lunch franchisee. Under the school
lunch program you will operate a restaurant located in the school, serving freshly-prepared product. We have
waived the initial franchise fee for the school lunch program through March 31,2014. See Item 5. We will
charge school lunch franchisees the same non-negotiable royalty fee and advertising fees that apply to other
franchisees. For details regarding advertising fee reduction for qualified Food Service Providers, see Item 6,
Note 2 and the School Lunch Ad Fee Rider (Exhibit A-1 0). The Franchise Agreement for the school lunch
program consists of our standard form of Franchise Agreement and the School Lunch Rider (Exhibit A-5) or
Food Service Provider Rider (Exhibit A-15). If you are an individual, and not a school system or institutional
food service provider, you will establish the restaurant in the school as a satellite and you will sign the Satellite
Rider.
We may also negotiate with governmental and institutional franchisees purchasing a franchise for school lunch
a location, but not with individual franchisees. We may negotiate areas, such as the choice of governing law,
insurance, and indemnification provisions, to address the needs of school boards, school districts, and
municipalities.
If you are interested in a satellite, non-traditional, school lunch, or community development location, you
should read the riders for these locations and this disclosure document carefully. These riders amend the
standard form franchise agreement in several very important respects. We offer satellite restaurants, nontraditional restaurants, school lunch restaurants, and community development restaurants by this Disclosure
Document. We set out the disclosure differences regarding the licensing of these locations in the relevant
Items. Except where we point out these differences, references throughout this Disclosure Document to a
restaurant and a Franchise Agreement also apply to a satellite location, a non-traditional location, a school
lunch location, a community development location, and the Franchise Agreement for these locations.
School Lunch Delivery Program. We may give you permission to enter into an arrangement with a school
within a 20 minute drive from your restaurant's location, for the purpose of delivering freshly-prepared
sandwiches for resale in the school's cafeteria. You and the school must enter into an annual contract which we
7
provide to you. To qualify you must have owned and operated a SUBWA Y00 restaurant for at least six (6)
months and your restaurant must be in substantial compliance (as defined in the Operations Manual).
Additionally, you must have established a pre-authorized account and all of your accounts with us must be
current. If you are a school lunch delivery franchisee, you may have to modify the food items you offer for sale
and buy food products approved for the school lunch program in order to satisfy nutritional requirements. This
program is not related to the School Lunch Program discussed above.
SUBWAYt» Catering Program. All restaurants are required to participate in our basic catering program. The
catering menu features the following core items: sandwich platters, giant subs, SUBWAY to Go!™ box meals
and cookie platters. You may choose to carry an expanded catering menu that includes meat and cheese
platters, meatball trays, toppings platters, dessert platters and gallon beverages. You also have the option to
participate in the SUBWAY Fresh Catering™ Call.Center and Website Program to fulfill catering orders,
including large order opportunities, placed with a centralized call center or with the website,
subwaycatering.com (the "Call Center and Website Program"). The call center and website are managed by the
Independent Purchasing Cooperative ("IPC"; see Item 11) and its subcontractors. The call center acts as an
extension of the catering website. Catering orders placed with the call center or website will be routed to the
customer's preferred restaurant or if none is preferred, the nearest participating restaurant best suited to fulfill
the order. To participate in the optional Call Center and Website Program, you must register with the IPC,
adhere to insurance requirements and offer specific pricing for all catering items. If you participate, you will be
charged a fee equal to approximately 7% of each catering order to cover administrative expenses and includes
credit card processing fees. See Item 6. This fee may c.hange to reflect costs, and other fees may be charged in
connection with the catering program in the future.
Airport Terminal, Theme Park and National Park Locations. We also sell franchises for airport terminal
locations, theme park locations and national park locations. Each location is defined as follows:
An airport terminal is defined as a building at an airport where passengers transfer between ground
transportation and the facilities that allow them to board and disembark from airplanes.
A theme park location is defined as an amusement or similar park which meets the following requirements: I)
Offers a collection of rides and/or other entertainment attractions; 2) Is more elaborate than a simple city park
or playground, as it is meant to cater to entertaining large groups of people including, adults, teenagers, and
small children and generally uses architecture, signage, and landscaping to help convey the feeling that people
are in a different place or time; 3) Is a permanent and not a temporary facility; 4) Charges a fee for admission;
and 5) Has at least one million visitors per year.
A national park location is defined as an area of land declared or owned by a government, set aside for human
recreation and enjoyment, animal and environmental protection, and restricted for most development.
The Franchise Agreement for these locations consists of our standard form of Franchise Agreement and the
Advertising Fee Rider for Theme Park, National Park, and Airport Terminal Locations (Exhibit A-14). The
Advertising Fee Rider for Theme Park, National Park, and Airport Terminal Locations amends the standard
form of Franchise Agreement. In some circumstances, we may allow you to establish a satellite or nontraditional location in an airport terminal, theme park, or national park location and you will also sign the
applicable rider for those types of locations. However, the satellite location will not be approved if the Base
Restaurant is not located in the same airport terminal, theme park, or national park. Due to the limited value of
traditional advertising for these locations, the advertising contribution for these locations is lower than the
standard contribution for advertising. See Items 5, 6, 9, 11, and 17.
SUB WAr® Plus Program. The SUBWAY® Plus Program permits restaurants meeting certain requirements to
offer additional products under marks we own, with our prior approval. Some of these offerings may be test
8
programs. We also enter into agreements or licenses with third parties to permit you to add a third party's
franchise concept or branded products in your restaurant.
Currently, we have authorized a test for our own branded product line of snacks such as pretzels, nachos, ice
cream novelties and hot dogs. We will consider the snacks product line only for limited locations where the
lease or license requires these items. We may add, eliminate, or modify our additional menu items, which must
also meet our standards and specifications, and we may also limit participation in a test program. You may
offer additional menu items that are under test for between I and 5 years depending on your investment cost,
even if we discontinue the test, as long as you comply with our requirements and your Franchise Agreement is
in effect. The test period will be one year unless we grant you a longer term.
We reserve the right to offer our own branded product lines in the future under a separate license that may
.require you to pay an additional license fee, or to offer them as separate franchises that do not have to be
.
operated in connection with a SUBWAy® restaurant.
Currently, we are offering co-brand opportunities with our affiliates MD Pizza, LLC, the franchisor of MAMA
DELUCA'S® restaurants and TDM Franchising, LLC, the franchisor of TACO DEL MAR® restaurants. We
have also entered into a co-branding agreement with Auntie Anne's, Inc. to permit qualified franchisees to
establish AUNTIE ANNE'S® stores in connection with their SUBWAy® restaurants located in certain Walmart
and non-traditional stores, as approved by us. This co-brand opportunity is being offered to eligible franchisees
on a limited basis. We may negotiate agreements with other third parties and will give you the information on
any additional co-branding opportunities. You must review your lease to determine if there are any restrictions
that would prevent you from operating your SUBWAy® restaurant in connection with a third party franchisor's
concept. You must make your own inquiries about the third party franchisor and franchise. You will receive a
separate Disclosure Document from the other franchisor and if your co-brand location is approved, you will
enter into a franchise agreement with the other franchisor, which may have different term than your Franchise
Agreement with us. You will operate the other concept as a direct franchisee of the other franchisor. You will
pay a franchise fee, royalty, advertising fee, and other charges established by the third party franchisor for the
operation of the third party franchisor's concept in your restaurant. You will sign the Co-Brand Location Rider
(Exhibit A-7) to address the different conditions inherent in operating a co-brand location. If you are interested
in a co-brand location, please review Exhibit A-7 carefully so you will be familiar with how the Co-Brand
Location Rider will affect your Franchise Agreement with us. You grant us a release under the Co-Brand
Location Rider. Each franchisor will be separately responsible to you under its own franchise system. You
may pay these fees to us as collection agent if provided in the third party franchisor's Franchise Agreement.
The third party franchisor may pay us all or a portion of certain fees for services we may provide. You may
also pay us directly under the Co-Brand Location Rider a continuing fee of between 0% to 8% on your sales
from the other franchised concept. See Exhibit A-7. We will determine the continuing fee, if any, after we
finalize the master agreement with the third party franchisor.
We may enter into master agreements granting us a master license with the right to sublicense to you the right
to offer a third party's branded products. We may permit the third party to directly enter into license
agreements with you. The sale of additional menu items under our in-house branded product lines and the sale
of branded products licensed from third parties (but not under a franchise arrangement with the third party) will
be considered as the sale of approved menu items from your restaurant and you will pay royalties and
advertising fees on them.
You should thoroughly investigate any licensor and its products. Our consent to allow you to use or sell the
third party's products is not a guarantee of any kind.
A SUBWAy® Plus Program location may be larger than a location designed to offer only the traditional
restaurant menu but it could also be a satellite location. The additional product lines may have their own signs
and will usually have front counter space. Investment costs for a location that offers any products under the
9
SUBWAy® Plus Program will usually be higher than if you only offered the required restaurant menu. Each
additional product line will require its own equipment and food inventory and may increase your other
investment costs and expenses. See Item 7.
We do not generally approve the in-house branded product lines and their respective additional menu items for
all franchisees. We will approve them only restaurant by restaurant. You cannot sell a product that we approve
for another franchisee and you cannot expect us to grant you the right to include any of the in-house branded
product lines or to sell any of the additional menu items. We may, however, limit participation if the branded
product line is under test. You should also not expect that we will grant you the right to offer any third party's
branded product, either under a franchise agreement or a license from the third party. You may not sell any of
the additional product lines without our approval, which is granted only on a resta~rant-by-restaurant basis.
You should not assume that we will grant you approval, even ifyou meet our requirements.
To participate in a SUBWAy® Plus Program not designated as a Store, Marketwide, or Region Option Program
(see below in this Item I), you must be in compliance under your Franchise Agreement and the Operations
Manual and satisfy our requirements. Your premises must also have enough space to fit the additional branded
products. You will have to review your lease to make sure you can prepare and sell the additional product
lines. You will also have to review local regulations to make sure expanded menu would be allowed and would
not impose other requirements, such as additional permits or parking spaces. The availability of the
SUBWAy® Plus Program may depend on the participation of your Development Agent.
Any of these branded product lines or menu items could fail, whether in-house branded, third party branded or
co-branded, and there is additional risk if you participate in these programs. You may lose your investmentin
your restaurant or the additional investment needed for the additional product lines. You may also have to
make additional investments if we or the third party add to or modify the additional menu items. You should
thoroughly investigate any additional product lines, including a third party licensor or franchisor, as applicable.
Please note that we may not have reviewed, approved, or confirmed any information given to you by a third
party and our consent to allow you to use or sell the third party's products is not a guarantee of any kind. We
may modify or stop any opportunities to offer additional products, including third-party licensor or co-brand
opportunities, at any time.
SUBWAY CAF~ Program. This program offers qualified non-traditional restaurants the opportunity to
enhance restaurant decor and offer additional menu items. It combines an upscale decor with cafe-type
products including, specialty coffees, frozen drinks and baked goods. You must review your lease to determine
if there are any restrictions that would prevent you from preparing or selling any SUBWAY CAFE® items at
your restaurant. To participate in the SUBWAY CAFE® Program, you must also agree to use the SUBWAy®
METRO Decor (the "METRO Decor") and operate your restaurant in a non-traditional location. On a case by
case basis we may grant prior written approval for you to participate in the SUBWAY CAFE® Program in
another type of location. The Franchise Agreement for a restaurant participating in the SUBWAY CAFE®
location consists of our standard Franchise Agreement and SUBWAY CAFE® Program Rider (Exhibit A-19).
You may withdraw from the SUBWAY CAFE® Program at any time; withdrawal is effective 30 days after we
receive your written notice of withdrawal. Upon effective withdrawal, you will immediately cease all use of
SUBWAY CAFE® signage and program specific food products, equipment and materials. Once the
disidentification process is complete, you will be required to restore and continue to operate a traditional
SUBWAy® restaurant.
Store Option Programs ("SOP''), Marketwide Option Programs ("MOP''), and Region Option Programs
("ROP''). In addition to our SUBWAy® Plus Program, we have other product options that fall under the SOP,
MOP, or ROP, such as packaging materials, cleaning products and food items including but not limited to
pizza, cheese, mustard, soda, coffee, cookies, and pie. If we designate a product as a SOP item, we will approve
restaurants to use or sell the product on a restaurant by restaurant basis. Individual franchisees make the
decision on SOP items and these decisions impact only their store. If we designate a product as a MOP item,
10
we will approv~ restaurants to use or sell the product by advertising markets. If we designate a product as a
ROP item, we will approve restaurants to use or sell the product on a region by region basis. We designed the
MOP and ROP programs to promote consistency of items throughout an advertising market or region. Under
the MOP and ROP policies, the Development Agents and SF AFT Board chair-person make decisions together
that impact all stores in the entire market or region, as applicable. Voting procedures may be required
depending on the expense impact of MOP or ROP decision (see Item 16). If your market does not elect to offer
the MOP item, then you may riot offer it unless you were offering the item before the cutoff date or we grant
you a waiver. If your region does not elect to offer the ROP item, they you may not offer it. You must review
your lease to determine ifthere are any restrictions that would prevent you from preparing or selling any SOP,
MOP or ROP items at your location. You will have additional investment costs. See Item 7.
Exclusive Area Development Program. We offer existing franchisees in certain areas a limited right of
exclusivity for a territory. The goal of the program is to increase total revenue from all restaurants in the
territory, by increasing the number of restaurants and sales revenue from each restaurant. We will measure the
weekly revenue from all restaurants in the territory compared to the population of the territory, or what we call
"Cents Per Capita" or "CPC", to determine results. Territories will contain approximately 100,000 people.
Only territories approved by the responsible Development Agent to participate in the program will be offered
under the program. One or more franchisees may bid together for a territory. We will award available
territories based on the number of additional restaurants and level of CPC the bidder agrees to achieve. We will
also consider the qualifications of the bidders, and we do not have to award the territory to the highest bidder or
to anyone. Bidders will sign a general release to submit a bid; and will agree that any dispute regarding the
bidding process will be resolved under the dispute resolution provisions of their latest Franchise Agreement. If
we award limited exclusivity rights to a territory to a franchisee, we and the franchisee will sign the Exclusive
Area Agreement (the "Exclusive Area Agreement"). The limited exclusive rights granted under the agreement
and how they affect you if you are not the exclusive area franchisee, are described more in Item 12. If you are
interested in bidding on a territory, we will provide you with the Exclusive Area Agreement Addendum.
Nexcom. We have an agreement with the Navy Exchange Service Command ("NEXCOM") to operate
SUBWAy® restaurants at over 70 U.S. Naval locations, mostly in the United States. We will Sublicense our
affiliates to operate or subcontract to franchisees to operate international NEXCOM locations. The contract
with NEXCOM requires amendments to the Franchise Agreement and to this Disclosure Document. You must
receive a NEXCOM Addendum if you buy, relocate, or use an existing franchise, to operate at a NEXCOM
location.
************************************************* *
In addition to business laws and regulations, your restaurant is subject to federal, state, and local regulations
and guidelines governing the food service industry, including those established by the Food and Drug
Administration, the United States Department of Agriculture, the National Restaurant Association, and other
food industry organizations. You must be familiar with these regulations, as well as federal, state, and local
laws regarding health and consumer protection, food preparation, baking, handling, storage, "Truth in Menu"
concerning menu item names and product labeling, nutritional claims, compliance with the federal Americans
With Disabilities Act, and compliance with the federal Fair Labor Standards Act and other labor regulations.
Local zoning rules may limit where you can locate a restaurant and may affect design features, including the
building facade and signs. You should be aware that federal, state, territorial and local environmental laws may
affect the disposal of waste materials and packaging, and may require that you have a permit as a water
provider. Compliance with environmental laws and regulations at the site is especially critical if your
restaurant is located in a gasoline service station. Local law may require your participation in a waste recycling
or diversion program, for which you may have to register and make ongoing fee payments. If you operate your
restaurant from a location that sells tobacco or alcohol products, you must know the laws and regulations
governing the sale of these items, including age restrictions for purchasers and employees, as well as training,
licensing, and/or stamp tax requirements. If you operate your restaurant in a school, you must know the laws
11
and regulations regarding nutritional requirements, which may affect government subsidies. The details of
state, county and local laws and regulations vary from place to place. You must research these matters.
We and FWH have privacy policies for franchisees, attached as Exhibit M, which outline the purpose and use
for personal information that we collect from individuals in accordance with various US laws concerning
privacy. The privacy policies are also available to you in theE-library section of our website at
www.SUBWA Y.com. There may be instances where we may share your Personal Information, as defined in the
privacy policies, with our affiliates and third party service providers that can assist you in your business,
and with prospective franchisees when required by law or in relation to any transfer of your Franchise
Agreement and Restaurant. In order to comply with the various US laws concerning privacy, you must make a
similar privacy policy available to those individuals who provide personal information to you in the course of
your business. See Exhibit M.
People primarily between the ages of 16 to 50 purchase the menu items sold in SUBWAy® restaurants. You
may not sell any items to another vendor for resale without our prior written consent. You will have to compete
with other restaurants, and food outlets, including franchisees of non-affiliated and affiliated franchise chains
and other SUBWAy® restaurants.
Item 2
BUSUNESSEXPERIENCE
On January I, 20 I 0, FWH began providing services to DAI and its affiliates, including research and
development, sales, marketing franchises, franchisee support, retail technology, POS support, legal and
accounting services. In order for FWH to perform these services for DAI and its affiliates, all of DAI' s
employees became employees of FWH on January I, 20 I 0, with the same job responsibilities. Some of the
following individuals are officers and/or directors ofDAI, and may also be managers ofFWH or employees of
FWH providing services to DAI and/or its affiliate. They may also be directors and/or officers of our affiliate
franchisor, affiliated service company or real estate leasing company listed in Item I.
Director: Peter Buck
Dr. Buck has served as Director ofDAI since its incorporation in October 1967. He served as President ofDAI
from October 1967 to June 1991, and as Vice President ofDAI from June 1991 to October 1996. Dr. Buck has
served as Director, Vice President and Secretary ofFDTI, the affiliate that provides consulting services to DAI,
since its incorporation in February 1993.
Director and President: Frederick A. DeLuca
Mr. DeLuca has served as Director of DAI since its incorporation in October 1967. He served as General
Manager and chief operating officer ofDAI from October 1967 to June 1991, and has served as President since
June 1991. Mr. DeLuca has served as Director, President and Treasurer ofFDTI since its incorporation in
February 1993.
Director: Haydee Buck
Mrs. Buck has served as Director ofDAI since October 1967. She served as Secretary ofDAI from October
1967 to April 1999.
Director ofDAI and Vice-President of Operations and Research and Development for FWH: Suzanne Greco
Ms. Greco has served as a Director ofDAI since April1999; Vice-President of Research and Development
since November 20 I 0; and Vice-President of Operations since February 2013. Prior to that, she served as
Director of Research and Development since April 1999. She joined DAI in 1986. She became an employee of
FWH on January I, 2010.
Director: Curtis DiPasqua
12
Mr. DiPasqua has been a Director of DAI since August 1996. He has been a Development Agent of DAI in the
Orlando, Florida area since June 1981 as well as a multi-unit SUBWAy® restaurant owner since 1987. He was
Chairman of the DAI Development Agent Advisory Board from April 1996 to April 1997.
Director: Sandy Maple
Ms. Maple has been a Director of DAI since August 1996. She has been a SUBWAy® restaurant owner since
1991. She was Chairperson of the Subway Franchise Owners' Advisory Council from July 1995 to July 1997.
She was a member of the Independent Purchasing Co-op from July 1997 to September 2007 and its Chairperson
from July I 997 to 200 I.
Director. Executive Vice President and Secretary o(DAI: Executive Vice President o(FWH· Mildred Shinn
Ms. Shinn joined DAI in April 1980. She has been a Vice President since January 1990. She has served as a
Director ofDAI since March 1996 and as Secretary since April 1999. She was Director of Operations from
1982 until February !997. She became an Executive Vice President ofFWH in October 2010.
Manager o(FWH, Vice President a(International o(FWH: Patricia Demarais
Ms. Demarais has served as Manager ofFWH since May 2009. She has served as a Managing Director and
Secretary of our affiliate, SIBV, since March 1999. She joined DAI in 1986 and served as the Director of Store
Design from 1988 to March 1999.
Executive Vice President o(DAI and FWH,- Trustee o(SFAFT: Cynthia Eadie
Ms. Eadie has been Executive Vice President of DAI and FWH since October 20 I 0. She had been Assistant
Vice President ofDAI from 2004 until October 20 I 0. Ms. Eadie was Executive Director of the SF AFT from
July 1982 to September 2004.
Profit Building Consultant o(FWH: RichardT. Pi/chen
Mr. Pilch en joined DAI in its inception in 1967. He has been a Profit Building Consultant since January 2004.
He was Director of Marketing ofDAI from July 1978 until January 2004. He was a Vice President from
January 1990 to July 2000, and a Director from March I 996 to July 2000. He became an employee of FWH on
January I, 20 I 0.
Director o(Legal Department o(FWH: Leonard H Axelrod
Mr. Axelrod joined DAI in 1977 as Director of the Legal Department. He became an employee ofFWH on
January I, 2010.
Controller o(DAI and Manager o(FWH; Trustee o(SFAFT: David Worrall
Mr. Worroll joined DAI as Assistant Controller in 1990. He has been Controller since July 200 I. He became a
Manager ofFWH on January I, 2010.
ChiefDevelopment Officer o(FWH· Donald G. Fertman
Mr. Fertmanjoined DAI in March 1981. He became an employee ofFWH on January 1, 2010.
ChiefMarketing Officer o(FWH" Tony Pace
Mr. Pace became Chief Marketing Officer ofFWH in March 2012. Previously, he had been Chief Marketing
Officer for SF AFT since January 2006.
Chieflnformation Officer o(FWH: Carman Wenkotf
Mr. Wenkoffhas been employed by FWH as the Chieflnformation Officer since June 2012. Prior to that, he
was Deputy Chieflnformation Officer for the Independent Purchasing Cooperative from May 2005 to June
2012.
13
Director o(Reseach and Development o(FWH: Tricia Hetherington
Ms. Hetherington has been the Director of Research and Development since February 2013. Prior to that, she
was Senior Manager ofNew Product Development for DAI/FWH from 2008 to 2013.
Director o(Global Product Safetv o(FWH- Wendy Madu(f
Ms. Maduff has been Director of Global Product Safety since November 2012. Prior to this, she was the
Principal Microbiologist for ConAgra Foods, Inc., from April2009 to October 2012 and the Director of
Technical Services for Food Safety Net Services from March 2007 to April 2009.
President o(SREC and Manager o(FWH and SRE: John Devine
Mr. Devine has served as Manager of FWH and SRE since January I, 2010. He has served as President and a
Director of our affiliate SREC since June, 2005. He joined DA1 in December, 1987, and served as Vice
President of SREC from July, 1989 until June, 2005. Mr. Devine has also held various director/officer
positions of ourreal estate leasing company affiliates during his employment by SREC and FWH.
Manager of Training (or FWH: Deb McCarthy
Ms. McCarthy has been employed as the Manager of Training for FWH since June 2011. Prior to that, she was
a coporate trainer from April 2004 to June 2011.
Worldwide Profit Building Director o(FWH· Robert Wilker
Mr. Wilker joined DAI as Worldwide Profit Building Manager in May 2006 and was named Worldwide Profit
Building Director in August 2010. He became an employee ofFWH on January 1, 2010.
Sales Manager o(FWH- Ralph Piselli
Mr. Piselli joined DAI in September 1984. He became an employee of FWH on January 1, 2010.
Sales Manager o(FWH- Keith Cross
Mr. Cross joined DAI in September 1985. He became an employee ofFWH on January 1, 2010.
Area Sales Manager o(FWH: Mary E. Lee-Jackson
Ms. Lee-Jackson joined DAI in 1987. She became an employee of FWH on January 1, 2010.
Area Sales Manager o(FWH: Carola Malinowski
Ms. Malinowski was employed by DAI's affiliate, Cajun Joe's Development, as an Assistant Marketing
Representative from October 1989 to April 1992. In 1991, she also became a Marketing Representative
Associate for Franchise World Headquarters Inc ("FWHI") which merged into DAI in December, 1996. She
became an employee ofFWH on January 1, 2010.
Director o(New Business Development o(FWH: Elizabeth Rolfe
Ms. Rolfe joinedDAI as the Director of New Business Development in May 1989. She became an employee of
FWH on January I, 20 I 0.
Assistant Director o(New Business Development o(FWH: Allison Morrow
Ms. Morrow joined DAI in September of2002 and became Assistant Director ofNew Business Development in
May 20 II. She became an employee of FWH on January I, 20 I 0.
Manager of Global Account Services o(FWH: Janet Bencivenga
Ms. Bencivenga joined DAI in September 1989 and became a Manager of Global Account Services in May
2007. She became an employee ofFWH on January I, 2010.
14
Manager of Global Account Services o(FWH: Joanne Kilgore
Ms. Kilgore joined DAI as a Technical Assistant in September 200 I and became a Manager of Global Account
Services in May 20 II. Ms. Kilgore has also been employed by KLK Electric as a Bookkeeper since October
1995. She became an employee ofFWH on January I, 2010.
Global Account Manager o(FWH: Dan Vermilya
Mr. Vermilya joined DAI in August 1986. He became a Sales Associate in March 1987. Mr. Vermilya became
a Global Account Manager in March 2005 .. He became an employee ofFWH on January I, 2010.
Site Development Manager o(FWH: Richard Manley
Mr. Manley joined DAI in November 1988 as an Operations Assistant and became the Locations Approvals
Manager in August 2002. He became an employee ofFWH on January I, 2010.
Global Account Manager o(FWH: Charles deNicolo
Mr. deNicolo joined DAI in January 1993 and became a Global Account Manager in 2004. · He became an
employee ofFWH on January I, 2010.
Global Account Manager ofFWH: Liz Smethurst
Ms. Smethurst joined DAI in December 1989 and became a Global Account Manager in 2004. She became an
employee ofFWH on January!, 20!0.
Field Operations Manager ofFWH: Amy Holm
Ms. Holm joined DAI as an Operations Specialist in September 1996. She has been the Field Operations
Manager for DAI since February 2004. She was previously employed by DAI as a National Account Manager
from May 2000 until February 2004. From May 1999 until May 2000 she worked for the company as a Field
Staff Trainer. She became an employee ofFWH on January I, 2010.
FRANCHISE BROKERS/DEVELOPMENT AGENTS
Development Agents are franchise brokers. We have engaged Development Agents whose duties include
franchise sales, site location assistance, training, and operational assistance to franchisees. Development
Agents also make recommendations as to whether prospective franchisees in their territories should be granted
franchises and we take their recommendations into consideration. We generally recruit Development Agents
from existing franchisees. We pay Development Agents a portion of amounts we collect from franchisees as
payment for their services, including approximately one-half of the initial franchise fee, and up to one-third of
royalties, transfer fees and extension fees. We also pay them approximately one-third of any fees we receive
from a third party franchisor under the SUBWAy® Plus Program and any co-brand continuing fees, if they
provide services for the other concept. We may also pay them bonuses and penalize them depending upon
whether they are ahead or behind their development schedules for establishing restaurants in their areas. We
prohibit Development Agents from making any representations of sales or profits to you. Additionally, we
require Development Agents to abide by all federal and state laws in the performance of their duties.
Development Agents are independent contractors and not employees ofDAI or FWH. Development Agents
may be independently elected to the board of independent franchisee organizations such as the IPC. We and
FWH disclaim responsibility for any acts or statements made by Development Agents contrary or in addition to
the disclosures made in this Disclosure Document, or in the Franchise Agreement, the Operations Manual, or
related contracts.
The following list contains the name, contact information, contract number(s), and a description of the servicing
territory for each Development Agent for DAI in the United States and its territories, as of the effective date of
this Disclosure Document. If you discover that any of this information is incorrect, please send notice by
15
certified mail, registered mail or by a mail service which uses a tracking system such as Airborne Express or
Federal Express to: Franchtsc World Headquaners, LLC., 325 Bic Dr., Milford, CT 06461-3059.
JlO>'<Iopment
A~<nt
Nom< ond Contact lnformotion
Contcocl j T•rntoc)
~umber
;Adorns, Steve
'clo Subway D"<lopm<nl <>f ,\Ia> Ita
I 118 ""' 70'' A>e Sene 200
;Anol1orage. AK 995 18 (907) 563-~228
IAI,.ka- The countLCs of Alcu<ian !$lands. Anchorage Borough. lkthd. HriSlol
Bay Bncnu~h. Dtllingh.,.,. f •""""'' NMh ~"" Borough, Hain" Borough,
,Juneau Borough, Kcna, Penon>ulo Boro<Jgh. K"chikan Gatc"ay Borough.
oKohuk, Kodiak lsllll1d Borough, Mm:rnu<la-Su>i"·• Borough_ Nomt. l\'nnh
, Slo~o Boroug!1, P"noe of Wak>·Outcr Ko. Sio"' Borough, Slagv.•y-Yokota!·
:Angoon, Southo"'t Fa"blll1ks. V•lde<-Cordova. Wade Hamrton. WC111gdl' l'c·crshurg W>d \ ukon-Koyu,uk_
iNow M«ioo • The countL<s of Dona An:>. Gra111, I [,.J,Igu, Luroa. OL"o and
Serrao Tou> ·llle '""""" of B:-ev. >ler, Cull>moo, El P"-<o. Hudspoth, letT
Jlavi>. Peco> Presidio, Reeves a.1d Torrell.
I
]Arney, Somu<l
i<loSDI\ Limittd L.l.P.
119 N Vi,ginia Avo., Sui to B,
, El p.,u,l)( 79902-5720
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:Ne.ado -1 he counllo< of Clark. Esmmlda, Ltnooln W>O Nyc.
~Curr)', Donn•
:rio Subwoy De><lopmenl of L"' Vogas
: lOJ I W llnnwn Rtdgc Puk. Suite ll)(l Henderwn. NV
!S9052
:(702) 564-6701
IB•che,.i<z, JoA~~
do Sub""Y 1 & I D"olovm<nt
1 gg;~4;~:~;~~A;er.O<. :.""'"'~· ::
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'Benndt, "-ici<
:rio Tri Stott De,.lopment Entervmo• Inc
'3549 Menohcr Blvd ,
:John,nwn,PA 15905
'(814)255-6099
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Ponns~I•OnLO- Tho counli<> ofBcdford, Blair. C.omb""- Fayc~e. Fulton
,Hunlington. So morsel""' Wcstmor<IOild; We" Virginoa- The counties ol
'Bert. elcy, Grout. Hamp,J,irc. Hardy, !cffmon, Mon<<'ll aM Morgan; Morylond
!The counlie< of Allegany fLl1d Garret.
634
'Te>as ·111< count"' of Arkan<as. Au >lin. Bee. Broo~>. Co~houn. Cameron.
'Colorado De will. Golo•J. Hidalgo_ Jac,>on. hm We: Is, l(e,nedv. Kkhor~.
!Lavaca_ Mata.!lorda. Nueocs. Refugio. SW> Patricio. Victori:>. Whanon and
LW,IIacy
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do Sub"'Y De'Otortntnt of Missi,ippi
: l 05 Koth<rine Drive, llldg B. Bo' 5
ifln"ood. MS 39232
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.C'"' I loor.
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;Benton, Carroll, Co;s, Fuhon. Jasper Lol.e, L.al'orte. M"'""· 1'e"1on, Porter.
:rul:cit, S""ke and V.l1i\O-
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, Anoka. Carlton. Cho<ago, (.:ool, Dakota
Isanti,''"-"'" Kan•i>t"<, Koochichm~.
. Louis. Wabash:>, Waslomgton and
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I Humot:,
' Walton,
Rosa.
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"""• Fulton
1do Subway Dev<iopmcnt of Eut"n PA Inc .
. 77)) M'in Street. Fogclmlk,
.PA tROll
.(610 )66-8120
!Butler, Jr., Wit hom
elo Subwoy Dovolopment ofW. Teus
601 EMt Sloton Ro•d,
'Lubbock, TX 79404
'1806) 748-7821
632
'l'onnsyl-.nio • The count"s of Hrndford. Bucks, Carbon. Columbta_
:Laokawa~ona_ Lehi1;11, Luzcn>e, Lycom,.,g, Monroe, NMho1mpton, Ptke,
:schuylktll, Sulli>an. Susquehanna_ Tioga_ Wayne and Wyoming
62)
·Oklahoma .'(h, oountic. of Bca.·cr_ CimaJTon and T cxas, Toxas • Th' counttcs
:of-"""""''· An"strong. Ha>ley, Hor<len, Bri;co,, Brov.n. C"lloltan, Corson.
,C.asoro, C.llildrm, Cochran, Coke, Collongsv.onh. Coiemfifl, Concho, Lonlc,
:Crane_ Crocl<Li, Crosb)'. Dallarn, Dawson. Deaf Smith, Dickens, D<>nky, Ector,
!Edwarcs. f """· floyd, Foard, Ga'""· Garoa, Glasscoc>. Gray, Halo, Hail,
:Hansford, Hardeman, llmloy, llaskoli, I kmphill. llockiey, Howard.
:Hutohmson, lnon, Jones, h:enl Kimble, h:~ng Kinn,y. Kno>. Lamb. Llp>eomb,
:Lo,·,ng, Lubbo<k. Lyno, Man~n, Mason, Mcnor-d, McCulloch, Mldland,
iMitcheU, Moore, Motley, Nolan. Ochiltree, Oldham, Parmer, Pootor. R'-1dall,
Rcagao, RoOm~ Runnels. Schleicher. Scurry, Shockleford, Silcrman. Storliug.
'STonow.lll, Suuon. Sv.i1'oer. To} lor, Ten;·. Tom Green. Uplon, V .ll Vc;dc, IV.lrd.
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,<Jo Grand lsl•nd Subs In<.
!3221 Ramada Rd, Sle 10_
.Grand Island NE, 68801
661
'(308) 389-l2U
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Boyd, Box Butte, BroWI1, Buffalo. Buoler, Chase, Cherry Cheyenne, Clay_
iCOifo.,, Co>ler, Dawes, Daw:;on, lkucl. Dodge, Dun d)', Flllmor<. Franklin .
rronli<r, Fun> as. Gor-den, Garlleld. Gospet, Grano. Grod)', llail, lfamtlwn,
Harlan, I Ia yes. flircilcock. flo:t, Hooker. Howard, Keamc)', h:cirh, KC)-a Paho.
,f.:,mball. Knox, Lanc.socr, Lincoln, Logan, Loop. MadlSon, McPherson.
•MerriCk, Mom II,""""· Nuckoll~ Perktns, Phel]>l, P"r<e. Plane, Pol,, Red
:willo". Rock. ~aline. Saunde<S, Scotts Ilion, Soward, Sheridan. Silorman,
'Siou,, tbny<r, 1 homas. Valley 1\'eb<ter, v.-ncctor, Yor<; South Dakota ·oountoes of Aurora_ Beadle, BenneTt, Brown, Brule, Buffalo, Buotc, Carnpi>dl
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;Ms Antrobus tla> been a TerrHo<J Manager for DAI
:<~nee Ma)', 2005 She "'-' a Dtrecw ofOpera\wns and
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~~,~~i ~:t~,·~~~:J~~f"-""" Subway from
C•lifornia ·The counoies of Ama<lor. Bune. Coluso £1 Dorado, Glenn. Lmcn,
:Modoc, Mono, Ne>ada Placer. Plumas, SaonlfTl<nto, Sh.,oo, Sle:-ra S""you.
Soncr, Tehama Tnnit}', Yolo and Yobo, N"-.d' · l'ile counTies of Carson Cit)-,
'Churoilill, Douglas. llumbold~ Lander, lyon. Monera!. Persilong. ~'0")' and
•Washoe
Scptcmber,
'~'<><Monon
KonM has been a roeld ConsultanT for IJAI since
.c. 200>
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;ci,·k Cent<; Oflicc Compl<>, ~5~~ \Jt•co 1\>o, Suotc 100,
·Raocho Cueamonga, C/\ 91730
i(9(1'J) 940429
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jclo Subw•)' Oovelopm<nt Corp.
19800 Shdard l'hy S<e 205. PI) mouth, MN 5 544 t
:(76.1) 540-0788
!D•Iton, Rogor
[Ciu Dalton G&ng, Jne.
! I 140 W_ Carnpholl Road,
RICh<.--dson, TX 750~0
-(97:')644-)986
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:Jetfersomolk IN 471)0
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iSibky, ~«""''· S:eole, Todd, Wadena. Wascco, Wmonwan nnd W"gh:.
i Louisoano -I he Pot~shes of C•ddo. Bo«i<r and Wchstcr:
Tho coun""
iof Anderson, Camp, Cas<, ChcNkee, Collm. Dalla>, Delta Ellls, Fanmn,
: F""Lone, Fnrnklm, Gregg, Grayson, H._.,,"'''· HenderSon. Hopkms, Hun~
: Kaufo"""· ~_.,.,.,, Manon, Morris. Naeogdoehcs, N>varro, PMol-. Rain<. ~cd
!River. Rockwall, RU<k, S•h•ne, s., AugusHne. Shelby, SmiLh. I itus, Up>hur.
;van lando Md Wood_
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;lhceol-. Pol\,_ Seminole. SumLer and VoluSia.
O'""~e.
,Di1on, BnanfT uri, .lim
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Group Inc.
533
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·. Ma,.achu""' • fhe counlies of Barnstable. B~><ol, Du~es, 1\'anwcke< and
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'(H8)645-7777
' Mcil'mdale. "''" lloS<on, NorHl\'ilk, PI; mouth
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: Southgm, ';umpocr To"nshtp, To; lor. T ""ion,
Buren T
w,no,
I Westland. 1\'oodhal'en and Wvandonc
Penn•ylvanio • The counties of Adam~ n.,ks. Cuml>orlm>d, Dauphin, Fran~lin,
.Jun101a. Lanca>tcr. Lchanon. Mifflin. Momour. Nonhumhcrland. PcrTJ'. Snydc:.
'Urllor> and York.
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lclu Central PA Subway Development Corp.
i2400 Par~ Drove,
· f-!arrtshurg, PA 1711 0
pl7)540-1045
IF orr, Thuma> G./Goodrid~e. Loren
;352 \hrren A1·e Unit 7
:ronland ME 041 OJ
20
ISuDway Development Cor]>Orotion uf W.,hinglon
clo Feldman, Lawrence
760 I LewirlSI'ilk Rood. ~uLie 31 0
McLean, VA 12101
{703) 79G-IOIO
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Carolir.e, Tolbo' Do"h'"'"· Wicomico, Somer"'· Worcester
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ll'c5tmorcland and :he coty of Abandria,
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]Carmi I, Cass_ Cedar, Cerro (oordo, Cherokee, Chi<~"-"'"· Clarke, Clay, Cla)10n,
:crawford. D•llas, DO'' I~ Decatur, Dcla,.are. De> .'1olnC>, Dtckinson_ Dubuque. ·
;Emmet, fO)Olto, floyd, frMkl1n, Gt<.-<no, Grundy, Guthrie, Htutllhon, Hanco,k,
•Hardin, I knr;, Howard, llumboldt, Ida. Iowa, Jaokson. J"'p", Jefferson,
:Johnson. Jones, Keokuk, Ko,uth. Lee, Linn, Loui>a. Lucas. Lyo.,, Modhon,
j Molraska. M:tr10n. M""hall, Mitchell. ~lonona. Monroe. O'Brien, Om:ola. Polo :
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Gilmer, Grocnbricr,
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:(304) 759-1206
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i , Lincoln, Logan,
l'cndlcton, Por.JlMI.i>,
, Upshur. Wayne.
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is P•v<lopmtnl
Cuml>erla.1d, DeWiu,
~uile !\
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Subw•y De.elopmon< Comp•n) ufS.E Te.a•
Torrey Chase~""' 190
77014
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. !ciTc:son. Jcrom,, Lcmhr.
Ll. Power. T"on. Tw1r.
Ll
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Surlr 101
'Humphries, Thomas II
-Sub~<'OY D<v of\\'e>l<rn MI.
~60J 3'' St. NW
'Gran<! Kap1d~ Ml 495(14
56(1
1Michigan • fhe countr<$ of Al]<gan, [larry, [Iemen, Colhoun, Ca:ss. Ea<oo.
Ionia. Koloma.wo. Ken' ).l«:o"a. Monlmlm. Mu>kegon, Newo:•go. Oceana
:ouowH. Saml Joseph and Van Buren.
'(616)956-6310
; llumphri" Dev<lopmenl of Norlh<rn lnrH•n•
!<fo Humphri«, Wrll"m
! \646 Coven<')' Looo.
']FI Wayne, IN 4M04
·(::60) 434-0055
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Indiana·
"
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. Blackford. DeKalb, Ell!-.art. Granl.
Mar<h.;ll.
Joseph, S<cuboo.
,,
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rlu Hunt"
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ISS I E State Road, ),« 20 I,
lAm""""' For,, U1' 8400)
!18()_1_1 492-434~'Hurley, Rob<rl
•olo Subway Development or All>ony
IS29 Western ~v"""'·
I
12203
I
659
I
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;-;ow York • 'I he oountd<< of Albany. Chnwn, Columbia. Dutchc11.
;Frankhol, Fulion, Groene. H.tm1lton. Mont gomer;·. Omnge, Rcm><la<r. Saratogo._ 1
:sohen«:!Od)' SottohaJio, S<. Lawrence. Sulil>an, Ul<tcr, \VarTen and
,Wa.<lun~ton.
1 ]no.
"
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626
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• Ttte counties
For«L, (.reen Lake. lroo,
"
Marathon. ,\{ori<eet.e.
. Pmc Sha"ano,
, ~nod
Racine, ll'alv.onh,
;c.lilorni• • 1 he co""''" of Mon1my. San Benito, Sa.ota ('lar• and ,,.,,. Cru>
rJo Four (.ounty lle>·elopment, LLC
'JOOI Gu1Cwa)' Place. Suite 210.
;San Jose, CA Y51 10
1(408) 4S2-97i0
I,"M'- Ka.-¥ioo ""-' Vice i'res>dent ofOhCal Foods. Inr ,
a De>·clopment Agent for DAI m Woodland Hill,. CA.
·from 1985 untCI O<tnher 2001 She became a
~De~"'""' A~cnt m l'ov''~C''C"C·'''"'"''~~·-~~~~~"'~·OCCCCCC'COCC
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1
ll<loplen;l<in. Kop
621
t~khigan • The countie~ of ll'""'"· Chnton. Hillsdal,, lngttam, Jaoksool,
:c/o s~bwoy De;elopment of Central M I, In<.
!L<na"'"'• Livmglton. Monroe and Wa.<htenaw,
: Ill ~o~h Union Strcc~ [lo' 119,
Panna, Ml 49269
I
!_(517) 531-} 1?1
i Lonrlino, Poull'.:lusou, John
!<lo SU8CO:'l Jnc.
•75 W.,hington Aver.ue,
'~orth Haven, Cl 06473
:{20l)2l4-22J2
S72
618
··-;;81
720
-- I -
IConnt«icut •Ttte cocn10" of New Haven and Middlc-;cx
Conn<<ti<ut •Ttte counli" off airfield and Litchfield_
, l'ew Yor~ •The county of Queen,_
iN<w \ork· The counties of Rockland, Wc,.cile>tor, PutndiT1. llronx and the
-~~~~~~'-- 554··-!'l''1'"'01"'"o'cMii'"'C''"'~O;·ccc,c;;;~,c-o;'"cc'"'
-;~;;;Oi;;-~~!Florida -The counties of Dewto, Hardee. Hernando, Pa"o,
Pinol!as,
-~
,LoSolla, Mike
clo Subw•y Dtvolopmeot orT om~• Soy Inc.
24 71 MoMullen-flooth Road, ~uo!< J 16, Clearwa1er, ft
:JJ759
!Hollsborough. Manotcc and Sara1ota.
l
1(?17) 714-9559
!Ltbo~s: O;v-;~-·
·c/o Subwoy De._ of CNY, LLl
1168 Water Street, Suote 5R,
,Binghamton. NY 139QI
·t607U23.J.I2.L_ ______ . _____ ,.
Lec, O"'id
!<lo Sul>woy Development nf K<ntuoky
pSI 0 Ne"town l'ke. ~"'" 1 12,
; Lningto" K Y 40S II
I{SS9) 233-0337
'
'
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5.16
- ..
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'
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-
·Now York • Tl-.e couoties of Br<W110, C.yug.-., Chemung, (.hcnango. Cottlaro:l,
DeiOivOTO, Her~omer, Jefferson, lc"'i>, Madison, ()"c'd"- Qnondoga, Oswego.
Otse~o,lioga aJod lompkins.
I
-~-------·---·--
602
--~--
··-----
___,'
: l<<ntucky • rne cou""" of Adair, Anderson, Bamon. !lath. llcll, Bourbon,
'llo;·<l. Hoyle, Brae''"· Brcothitt. Carroll. Co.-;er, Casey. Clark, Clay, Clinton,
iCumbcrland, Elholt, !'stoll, l'•yette_ Fkmin~. Floyd, Fr.lllklin, Gallaton, Gormrd
rGtant. Green, Greenup, Harlan, Harmon Ha~, H'nf}. ),c,son, Je""'"inc.
Johnson, Knott, Knn•. I arue, Lourel, l.awrence, Lee, Loslic, !.etcher, L<"'is,
Lincolol. Madi•on. Magomn. Marion, M""•n. M~'on ..\lcCreary, M"Hfoe.
Meroer. MC1calf<, Monroe, Muutgomer;, Morgan. 1-id<on, NlChol~,, Oldhano
~~~-''"""''""'' 0"'31c), Pendleton, Perry, l'ike, l'ov.ell. Pul~'kl, Robmson, Rod;c~'tlc,
I
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'R"wan, Russell, Scon, Shdhy. Sponcet, Taylor, Tnmble, Washington, Wayne.
'-c;;c;;;.-,;;;;;;~;c;co:;c;<;---------~<C>O_C·,Wh"lcy, Wolfe "''d Woodfood.
·nhard, Junll..o•·e Jr, Julius K.
521
!Florida • Tho caunli<S of Al"hua, Baier, Br,,dfanJ, Cia). Columbia. Di""·
. Subway South<05t l>m Co U.C
!Duval. C,ilchri>t. Hamilton. Lafayetk, L<l)', Mo.JO<o,, N=au, Pulnilltl, S<·>671 Temple ~o-•0,
'Jack"'m·illo. Fl. .12207
(904) 616-61 JO
'loho's. Suwannee, ra,lor and Union: Georgia -The counlies of Apphng.
;Aikrmun,l;locon.
H1ll, Berrien. Blccklcy, B=tky, Brook~ Ill)'""- B·,lloch.'
.camden, Chandler, Charlton. O.athaO>. Clinch, Coffee, Cook IJOOgc. Echols.
~~ffongham. EmM.ud, Evans. Glynn, Irwin, kff D>Yi~ Jen,ins. Johnsrm.
Be,;
iAn"'·
'Laurens. Lrl><n)', Long, Lowndo<, Mcintosh, Montgomc!)·, Pierce. Pulaski.
r•Hn•ll, Tclfmr, TJI\, roornh,, Treurlcn, Turner, Ware, Wayne,
'
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"
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·of l'cemo"'· Harri>on, Mills.
;Mar<hoii,John R.
do Cleorston< Dev.lopmont I no.
).11 0 H,vt.<cl ])~"·
·Colorado Sprmgs. CO 80920
-19jl90-il02
iM orwoho, RoghuiM•rw•h•, Rohit
iSBMG,LLC
1217111J Oxnar<i Sire" SuHe 550,
'Woodl"'"d Hills(il 91361,
:1Bl8) 227-2800
Morwoho, ll.ohitf.'>1orwoho, ll."·inder
: ''" Subwoy De>'tlopment Corporation of S.n Diogo
!696J Fn.r:; Rd. Su11c 200
. SOll
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rUS Vicgin lslonds (St Croi,, S! Julm ll Sr rnnma,<).
l46
iColorodo- The oounrrcs of ,\rapi!hoc .md Den,·cr, e<eludmg the Denver
j lntomational/\lrporl
llJ
•Colorodo • 111 e oounrre> of Al.unosa. Arch ulera. B·dOa, Bont,
:Conejos, (osrilla, Crowky, ("""·Dolores, Dougl"'. El Paso, Elbe~, Fr<monr.
:llin><iale, Huerfano, Krowa, K!t Carsoo, L• Plota L~< "-nima>, Lmcoln. ~Metal,_
IMon«wm•. Orcro. Ou,.)', Pruwors_ Pu,blo, R1o Grande, Saguaoho, San Juan.
San Mo uel ""d ]'olier
__
·. talrforn" • The counties of ]r.)o, Ken1, San•; Barbara. Sar> LuiS Oh~>po ..,d
1,Vcotum
515
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jColiforni• - Tho wunl)' of S..-. D1ego.
ir _
li , •
; • Cook cour.l}' south of Rtc 290 e"opr <iT)'
l7J
ofChicogo
t
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Corp ofChi"golond
1
"1~) JB(I-)_!14(1
,·ors. Daryl
, Mover> Development, Inc.
l1
county
AYenuo.SuncJI4,Ch~e•go.IL
!6063!
'
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Now \'or~ - The county of Koogs
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C(JIS)290-926~
iMitchell, Mork
,cJo Franchise Conoepl.S of Ok!ahoma
;2917 S Ilry""' Sre B.
!Edmond, OK 7301)
·r40.IJ J.\9-an:.
o.'<loo", E:rir
e/Conquor Eorth Inc
•801 JawnWa;,
'Yankroo. SD S7078
.(60S) 66s-ono
•IMoschoum, Nick
.,tlo Subwa) Eastern Wa)·ne Count! Dtv<lopn,.nt
: 1260 Library St:ee:, Suoto )00
:Detroi~ MT 48226
'(313)202-2)00
'!'loemi, Noghi
cio Subway De>elopmenl Corp. of J.a<l<rn MO
'2100 Collocr Cnrpor"• Parkway,
~1- Charles. MO 63303
i(636) 940-9449
iOklahomo. The'"""'"" of Alfalfa, Hookhiltl1. Bla~ne, Bry·an, Co~do, Canadra•
Clevoland. Comanche, Cotlon, Cwer, 0<1""), Elli<, Garfi<ld, Gat\·rn,
i(imd;, Granc Grec., H<rrnon, HOl]Jer, IJOk>on, !effmoo. ]ohm Lon Kingfisher.
jKiowa, Lincoln, Logan, [.nve. MaJOf, Marsh oil, Mcr:la,n, Mucro), OldMoma.
'1Pootowo, Polto1"aoom~e, Rog<r Mrll,, Scm mole, Stephen I, TrllmaJr, Wa_<hi'"·
I Woods and Woodword
689 -~ M;n·~·;;~(a · Tl>< '""""" of ri,~ S>onr, O.oppe"'· Cotton Wood, Douglas,
jG:anl, Jackson, Lac Qui I'Mk Lincoln, Lyon, Muml)', '<ohle, P•po><une_ l'ope,
!Redwood, Rod. St.:wn<, Swift, Traver<e an~ Y eloow Mediome, Neb<a>ko •
ITilo oounties of Cedar, Cummg Dal..ota. Dixon, Stallton, Tbmton and WOI)-n<
:south Dakot. • llle count"' of Bon Homm,, Brooking<. Clarl., Clay,
.Codington. 1);!)'. Deuel. Grnm, Kamlln. Hanson, Hutohm>on. Kmg,hury, Lokc,
.Lmouln_ Mar:shall, Me Coo" Moner Monnehalta. Mood)', ROhcns. Tume:, Unionian~ Y>t.klon.
6S8 - - ~~li'Oi.ig•n- Tlle ~Q;r\~· ~f w~}·ne, the citoc< of li~t~oii, Q;ri<« -,;oir\te c,;:.
~Gro"c Pointe farms, GrosS< Poon\c Par', GrosS< Pomte Shores. Gros>C 1'oir1e
; Wood;, HamLromc,, Harper Wood<, Highi!Uld l'ark !Uld Maoomb coumy.
6))
;ca~or.
I
550
'
1lllinoi• • T.oe counues of Aba."dcr, Bond, Cal'loun. Clay, Clmton, Cra~ford,
Edwards, Effingham, I'
,-,.,,klin Ga:lotin, Greene, ][,,milton. Hard1n.
IJa<k>on. Jasper, Jeffcr<on, Jcrsc)', John >On. La"r<nco, Ma<Oupin. Mad>Son,
~Marion. M~«oc. Monroe. Montoomcrv. l'em. Pone. l'ulas'i Randolph.
IR,ohland. St Clair, Sahne, IJnlD-;,, wabash, Wa.,niogion, l>ia)ne, While and
. WLlilJillson_ Mi,ouri • 'lllc Counri" of !lolhnger, Ilutlcr, ca.., Girardeau.
MissmLPP'- Ne'l Madrid, l'emisco~ l'en)', St.
SrO<!da.--d, Wot "" •m! the ci!y of So Lour;_
a)""·
o:
5BZ
'·
u Boone, CollawO)', Carter, Clar,,
Hol'oel •. Iron, Kno<, Le"i;,
1
Orc~on, Osage. Phdp,
Ripley, So Churb, St Lnui;,
W<lrrcn and W..,hmg<on
['it
:~olen,
!'om
,c/o SuhWO)' Developmon! of TN. Inc.
2601 l;lm Hlill'1''· Sullo E,
l'eorr. Purndm,
Trou>Oalc, Vao Ilurco,
·Noshville, TN ]7214-) I))
:(615) 391-5540
'
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'
j Non n om o ~er/N on n om ako r/Non n om ok<r
~<lo
Consullmg Prore.,ionolo Inc.
5441 Glohal Gateway.
·"'Mh Canton. OH 44 720
:(3301563-0123
'
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l.:rk,F ·o,1i
and Warren; 011io • n.e counties ofTrumOull,
ni
'·
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'·
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'
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IPa~e,
.'lac!)'
:o~o Subway De>·elopmen! Comp•ny, • Division of M.
' ··g• r.nt«prim, Inc.
j j Alluvial Avo Sle 112
;~lo•i< CA 93611
11~~?1 2:16:±!_00
1Pa!el, Chi<>yu
1
14)02 Redwood Hwy #200
iSan 1\afoel, CA 91903
·.i~P 491-llOO
iRobil, SomWaddoul, Ghui
olo G & S Development Jn<.
;6100 Rocb1de Woods Blvd. Sui10 #307. Independence
'011HI31
j(21_6) H_l-~(1_~ I
iJI.athDun, Ru•ry
]Oio Kansas Wtsilno.
il72U N Rodgewood,
529
6).0
%Grog
--
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'.California - Dtt cnu" '" ()[I) cl None, Humboldt, Lal:e, Marin, MendoCino,
:~apa, Solano. ;onoma '"'d rhc p<mion ofT nmt)- Coun:; ~est of the Trinity
""ionol rorcst
Ohoo. Thr coun!le.< of A'htahulo_ Lake, George and «•stem Cuyahog' county
(all"" east of Route J7 unnl 77 intm«ts with Route 9!1, ftom H"l poont ""to :
:we Lric all ar<a casr of I 00 feet eost of East 9" Stre<t)
!~:~~·~4~~2~~220
:Role}', Rick
jolo lri<h ltl••• lno.
l!llaneu Nonh hecutiY< rem",
112042 !llanoo Road Suite 102_
'San Antonio, TX 7S216
1(210) )40-6365
Caltfocnia -The coun11c> of Alpine, Calavcra>, Fr<sno, Kings. Mader"- Merced_
;Maripo<a, Stamslau<, Tu1:1fc and TuolurT.nc.
511
528
iKonm -The coumi« offlarber, Barton, Butler, Chast. Chautauqu~ Cheyenne.
:u...-k, Clay, Cloud, Coma.ochc, Cowk~. D'cotul. ll10k.nson. Edv.".,-ds, m.,
·Ellis, !oll<"·o~h. finn<). ford, Gclil}'. Govc. Grahan1, Grant, Gra;, Greele~.
',Greenwood, llamilron, Horper, Harvo~. Haskell, Hodgcman, Jew<! I, Kcame~,
IK~ngman. KJOwa. Lane, Lincoln, McPherwn, MMion. Meade. Mitchell, Morris.
;Morton. Ness, NMon, Osborne, Onaw:; Pawnee. Phillops. PfOit, Rav.l'"'· Reno,
jRcpublic, Rice, Riley, Rocks, Rush. Russell, Saline, ~cott, Scdgw~el., ~ew>rd,
Shcn<!an. Shemum, Smith, Slaffotd, ~!anton, Stevens. Sumner, Thomas. T1t_oo,
1
~Wallace, Washington and 1\'i'-h_tta.__ _
:luas -The count1<s of At=:o•o. ~andwt, llasorop, Boll, Be<dt, Blanco.
BoSGUe, Brazos, Bu;lc>On, Burnet. Caldwdl, Co mol, Comolftchc. l'oryell .
. Dimmlt, Du,·al, falls. fa)'ene, f no, G1lie>pie. GonZllles. Gnme<, Guodalupe,
·Hamilton, flay,, Hill, Jtm flogg, Kames, Kendall, Kc,-. I ,,JnpiiSa.s_ LaSalle. Lee,
L'm'"""'· Li>e Oak, Llano, Maverick_ Mclennan. McMullen, M<d<oa. M•~•"'·'
,Mills, Real, R 00ert<oo, San ~:tbo. S1arr, T ra,;,, U,afdc. Wash tngton, Webk,
:willlam>On. W1lson, Zopata and J.avol>.
,\Ji»i!>iPI'i •The counll<> of Alcorn, llemoo, l'oahomo. l)eSow. ILawrunba.
... o Rmg En1.r]'dsts, Inc.
;Lafayene. Leo. M""'hall, P.lflala. Pontoloc, Prenli», Qu<tman. Tme. T 1ppall,
'7599 Pop I..- Pike,
: llshommgo. Tunica and Union: Ttnno~... - The countOes of Cumll. Chester
.Crockett. D~er. Fayeue, G1bson, Hardeman, Haywood. llcndc«oo, H'nr}', We, ·
, L'uderdale, Madison, Mc~"'Y· Ob10n. Sl>elb)·, T 1pton ..,d Weal.!<~-
1
Germantown, '11',· JSIJS
:190ll794-n5s
liiQiio", SteveiDon~lds~-~: Do~gla,:lli~p;~y; Dorb>ra
Ido Subwo)' Dovolopmon! of New £nglond
1167 HM!<r Roo<!,
iStorrs. (_ T 062M-I 323
'][860) 429-8455
isaifo, Ali
olo Sut.way Dovelopment ofS C !no
Mehd1 Bu1lding
•llO \\,]b A •·couc,
:Greenvoll<, 'iC 29605
[_@§!)_~42-46~~ ----
" ---- - - - - - - - Samra, Sordool Singh
400 0)'51" Point Bh·d, Sutl< 3,
l~?"'h San Fr.,.mco. CA 940~0
[!.>'~>XH-1600
-----------'.SoOOh u, Konwall>rW ISoadhu, Jangmohon
.llal1imo10 Subwuv Group Corporation
iJOO Wat« ""''~ 2"' Floor.
'Baltimore. MD 21202
:14~_1727:6?§0_, _______ - - ------------Cur(;>
,c/o Suhw•)' Dov•l•t•m•nl of Nor!hern M ichtgan, In<.
!o' 6 1\'oshing"'n A venue, Suite 21 0,
.-Cn;,M148708
mgn-7990
547
521
642
-- ------- -
•Connooii<Ut - The oounll" of Hanford_ Tolland, and WindOam
South CO<olono- The entire Slate_ _ _ _ _ _ _ _ _ _ - - - - - - -
-~------------
•California • The coumi" of San FrMC1SOO ancl
~an
-
--~-- "-~-~---~-
Mateo
I
IS"'I",
.119
--
--~--~-
.\loryland • area 'tns'1de the Bnl1imore llcll\1 'l' (J'OU10 6951
IM~elllgan
----
-The county of O<.lland.
·-----·
649
:Mkhigon. The coenue> of A leo""- Alpena. Antmn, Arenac, llo}', B'nzto,
.Oarlevoix, Chebo,gan. Clare, Cral'ofocd. Em men, Gcoe,.e, Gladw10, Grnnd
; rrave"'· Gr.,iot. !;obelia. lo:;oo, K.. IWka. Lal<c, Leelanau. ).ian isle<. Mason,
:M1dland, '>l;:;saukeo, Mootmor<n<}', Ogcm'"· Osceol11, Oscodo, Ot>ego,
ISohibler, Richard
!olo AZ Subwa~ De>elopm<nl Corp.
IJ9
!Arizona. 'Jllc enure <tate
18674 E. San Alberto Drive,
!~'"'''~'''· .'\ZSS258
•{4ROJ 615-0;100 - - - - - - - - - ·Sootli, Dovid
!elo LO Sooni Entorp"'" !no.
------------18
l'i<W J<r><y -Tile oount>e< of Mocoer, M•ddiO>tx ""d Union
~
' -~·ew York • The coun"' of lliohmond
-
'
I597 ll•y S<toet
!Staten l•land NY 10)04
_I!_L~ ~l7-20S.Q _____________________________________ ----------------------·---- ----·· __ ·-- __ _
;Singh, N<il
797 :r>.ow Yor~- Nossau Count).
:c/o I< til'< Sub< Povolopmonl Corp.
j211 Po" o\ve ..
IWo,.bury, NY 11590
i(J_~ 6_)_~3_8-622_9__ - -------Siomionyj, P<ter/Siom,.ny), ~hohaol
)) I
;North Co.-olin• - l'he entire "''"·
tlo 1\CSub"•) Group
I
!727 Eosto~ no Dri,·e. Suite JOO!J,
Chapel I loll. NC 275 14-2214
{91 ~) 493-872 i
----~-- - - - - - - - - - -
·Smith, Jomos/Sondhu, Jogmohan/Sondhu,
fl:on,.·otpro<l
PhtlaJclphta Subwa)' Dcwlopn!cnt. LLC
20 l{.ogert' Blvd Unll J
;WcltCho;oorPA 191Rl
------1(610-696-6904
ICoiM<Danieit.'IJ
IKovin ..,<D•ni<l
'163 Rouoe IJO Nonh_ Buold~ng I. 2"' Floor,
t!lordcntown. NJ 03)0)
i(609) 324-1011
!StenYig, Tim
<>fCho>:«, Dot,;;.;~ 1111d MO~;go;;;o~--~-----~-,
________
M4
641
'P•n~-;;i~~~~~ :l'i,z;;-~n""'
m
'""'Jersey· ll><" count•es of Allanh<, Burl1ngton, Car:oden. Cape May,
----~-
Cum!>erllllld, C.louoe<!er. Monnwuth. OcoM Md \alem_
-------'
,<Jo DC Dovolopment LTD. Inc.
jSpnn~ Lnl.e E•oxutive Cam~us
:IUJ7 II' HaWihomo Dnvo
-Itasca, IL 60 143
WOJ m-~?O~
•Stewart, Stophen
,<Jo t"rancln« D<><lopm<nt of Wl'i\", Ine
.2233 Un100 Roed
670
;:>e"'
-- ------- -----------
\ork -ll1e oounlies ofC111araugus, O•umuqufl. E;10 Md K 1ag;1ro
:wcstSeneea. "Y 14224
_(2_1_6_H_-!_I_:!Il__!J
---------~~,=~==
:Sti<l, Hugh
613
Loui>iana ·'!'he oounti« of Jefferson. Orlellll<, Plaqu<min<> lllld Sl Be~wcl ·
;o~o Subw•y Fr•nehist Co. In e.
:~lississippi •The coun!lc< of George, Hancock, Hamson, Jackson, Pearl R".. '
,2420 Athlllloa Parkway, Su1to 200.
_l.m<I_S~~------------·
-·-___ _. ··~---'Metaitlo, LA 70001
630
: Louo<iana - 111" l"'"'h'" <If MaUia. Allen. Ass"mption, Moyelles. Cnldwell,
:(504) S35-77JO
ICatahoula, Concordia. DeSoto. Evangeline, f rn11khn, (irMI, lhoflfl. lbervillo.
Laf•veue, LaS.1llc, N"chitochC>, Po~n«, Coupe< Rap1dcs. RcJ
:Jelfee<on
: R""'· Sabine. So. Land f), St Martin_ St. M:ory, l'cn"'-'· Verrnibo", We" !laion
__ 'Rous~-~~''""'""~~ y.'l_~, ___________ _
_ __ _
656 ; Loui•i•n• • J'hc pari<h<' of,\'"'""""· Ea-<1 8alon Roo go, fOaso Fcliciana,
ILaFourche. L1v1MgS<M, S,;,ot Charles, Sam\ Helena, S..inl Jame.1, Saint Jol>n the
; Bapti>t. Saont I ammllll)', Tllll~ipahoa, rerrohonno and Washmgron
-----" - 7'7----- - . -----.---.----.----- -)71
1Lou"'""" • fhe Pan she> of Beauregard, Cakastec, Camet(ln on<l Vemon.
-I he counrie> of Angdma. Chambers, Hardin, Houston. J.1Sper,
!Jeffcr>on, Leon. Libert)-, Madison, Nev.1on, Otao1ge. Polk, San Jacmw. Trimty,
o,,,,
'
w,,,
!T<•••
i__ -----·- ______________________,,,,,,,,,.,,,,,,,,w,,,,.,,,,_
Suzelecki,
8adoara1Sm.el,c,-,c,c,c,c,:,,;;---c,:,c--,cc,.:,:,:,:,:,-,nc,,:.:'":,:,:,:,:,:":.:,:,:,:,:,:,:,:,:_<,:,:,:,:,,:,:,:;,:.,:,:,:,:,:,:,:,:;n:,-,:,:,:,:,=rne,
~ E'-'t Carroll, Jac.,on. t1ncoln. Mado<on, Morcilou", Ouachita, Rrcilland.
Inc.
1Union. and lhS1 Carrollo Tu" - Tile coun1_, of Bow1c
"
I
-
- -
-- --
1Pu<.-Jo Rko- The enllr< commonwe;rl!h
()evolopomont lnr.
'
,,
·. i
Gor)
Northw«t Sobwa) Devoloprnonl Inc.
.'I 14820 ~<w;><>rr 1-lw;·,
•Mead, WA 99021
j(509) 467-4385
W<stine, Hoothor
clo Subway l>eveloprnonl Corp.
i250JO SW l'ark''"l' Menue Suite 300. WL11onville, OR
i970JO
·(503) 582-1114
I
6-47
524
575
569
''~15)39B·0190
629
--·==-----
j Idaho ·The c;;urltrc' of B'newah, Bonner, BounOa!)', Clearwater. Koo1on",
IL,ah, Lcw>S, Ne>. Perce a110 Shoshone: Woshing10n -The counties of Mums,
Asotin, l'lcn,on. Chclllll, Columbra, Doug]~,. Ferry, Fran kiLn, Garfield, Grnm .
; Konila<, Klicki!Ol, L1ncoln. Okanogan, Pend Om lie. Spokane. Stc\Cns, 1\-alla
•Wolin. Wh,tm"" at1d Yakima.
;Oregon - The counties of Clackamas, Cla.,op, Columbia, Hood River, Monnn.
! Mullnomah, Sherman. lillamonk. W=. Washingwn and Yamhill;
!Wnshington • Tho counties of C:ark, Cowlitoc ';kanlania and Wahkr•bm
I
-Subway J.P.W. Inc
,c/o Wilhelm, Jeffrey/Willlelm, l'llo<h<
!5301 EState St., Ste 204A,
IRockford, IL 61108
oWolf, Chari.,/Wolf, L<O
ic!o Subway Devolopment Corporation of North Te'"'·
line.
:600 ~i< I lags Dr .. ~ui:e 400
iArlington. TX 16011
"
592
---;o;;go~--:-fhc coum;e; of Henton, Coos, Crook, Cun;, D.sch~iOS:liOUg-1;,_
i'"'"'"· Jeffmvn, JoS<phioo. f;:[:;n10th, Lake, Lane. Lir,oolr•. Linn >lld Po::.._
!Illinois • Tile count"'' of lloonc, C..-..oli. Jo Davies, Lee. Ogle, St<phcoson.
;whi"<rdc and Wrnnet>ago: Wi>eon•in - The counties ofColumtiO>- Cm1ford.
iOMc, Do<ige, Grao11. Green, Iowa. Jeffe"on, L•fayene, Richhuid. Rock, Sauk
:and Vernon
:Illinois • The counlle~ of Bureau, llenry, l.aSolle, I' urn am an<i Rock lslan<i·
!low• ·The counties of Clinlor., Muscatone and Scoto.
:r•u• -The counties of Archer, ll•ylor. Cl•y, Cooke. Denton. Easlland. E"th.
;Hood, Jack, Johnson, Montague. l'alo l'on<o, l'arker. Slephcns, Som,rvell,
ITarrar,1. Tilrcdmorron, W10hi"'- WrlbiU'go:_
and Youn_o
w,,.
J!l_?) 275-0387
Item 3
LlTIGATION
Other than these I0 I actions and the 6RO frat~chisor-initiated actions disclosed in Exhibit L, no other litigation
is required to be disclosed in this Item. We eSiimate that the franchisees we or our affiliates fLied actions against
in connection with the franchise relation;hip ~onstitute about 2% of the franchisees operating SUB WA yli>
reSiaurants globally.
Item 4
IIANKRUPTCY
On May 15, 199R, Nicolas C. Bennett and Jan a L. Benne!! filed a petition to reorganize under Chapter II of the
U.S. Bankruptcy Code, and were allowed to continue to operate under bankruptcy wurr supervision while the
case was pending. (U.S. Ban~ruptcy Court for the Western District of Pennsylvania Case No. 98 23272-BM).
On December 9, 1999, a Final Decree confmning the reo'lymization plan wa< entered i11tlns maner. On July
18, 2003, Mr. and Mrs. Bennett filed another petition to reorganize under Chapter II of the U. S. Bankruptcy
Code, and were allowed to continue operation under bankruptcy court supervisions while the case was pending.
(U.S. Bankruptcy Court for the Western District of Pennsylvania Case No. 03-27687-BM). On October 20,
2004, the bankruptcy was closed. Nicolas C. Bennett is a Development Agent of DAI for Pennsylvania,
identified in Item 2.
No other bankruptcy is required to be disclosed in this Item.
Item 5
INITIAL FEES
Franchise Fees.
INITIAL FRANCHISE FEE
REDUCED FRANCHISE FEE FOR:
• ADDITIONAL FRANCHISE PURCHASE (IF QUALIFIED)
• INITIAL FRANCHISE FEE FOR AFFILIATE COMPANY SUBWAy®
FRANCHISE OWNERS AND DEVELOPMENT AGENTS (IF QUALIFIED)
• INITIAL FRANCHISE FEE FOR FRANCHISE OWNERS AT SAME
SITE OF OVER 50 SYSTEM, CO-BRANDED PARTNER OR
ORGANIZATION MEMBER (IF QUALIFIED)
ADD-ON FEE (IN ADDITION TO REDUCED FRANCHISE FEE)
SATELLITE FRANCHISE FEE
SHORT TERM SATELLITE FRANCHISE FEE
SCHOOL LUNCH PROGRAM FRANCHISE FEE
COMMUNITY DEVELOPMENT PROGRAM FRANCHISE FEE
$ 15,000*
$ 7,500*
$ 3,750
$ 5,000*
$ I ,000*
$
0
$
0
*The initial franchise fee, reduced franchise fee or satellite franchise fee (as applicable) will be waived for
qualified honorably discharged veterans of the United States Armed Forces ("US Veterans") purchasing a
franchise to be located in a government facility, including but not limited to: military bases, veterans hospitals,
service academies and federal or government buildings (a "Government Facility"). If purchasing a traditional
franchise that will not be located in a Government Facility, US Veterans purchasing their first franchise will
pay 50% of the initial franchise fee, so long as they obtain government-sponsored financing under a program
designed exclusively for US Veterans. We may modifY or discontinue this program for US Veterans at any
time.
You will pay or reimburse us for payment of any Sales Tax or other tax imposed by law on the Franchise Fee,
Royalty, advertising fees, and any other amounts payable under this Agreement, whether assessed on you or on
us. We will pass on to you taxes we must pay directly to any taxing authority. We may collect taxes from you
that the law requires you to pay. All franchise fees are payable in full when you sign the Franchise Agreement.
We do not consider any amount a deposit.
We may offer incentives of up to $2,000 per referral to people who refer prospects. We may also offer to credit
franchisees for their qualifYing airfare or mileage up to $1,500 if they visit our offices in Milford, Connecticut,
and then purchase a franchise during their visit, subject to compliance with disclosure requirements and other
policies. We may change the amount of these incentives, including eliminating or reducing the credit for the
cost of the airfare or mileage. This incentive is not valid for travel related to attending training.
We do not have to sell you a franchise or additional franchises or consent to your purchase of existing
franchises. We or your DA may decide in our business judgment that you should not own additional
28
restaurants, even if you are in full compliance with your existing Franchise Agreements and the Operations
Manual. If our Development Agent rejects your application to buy a franchise, you may ask us to review that
decision by calling the Development Team Department ofFWH in Connecticut.
The Standard Franchise Fee. The standard franchise fee for a SUBWA v«' restaurant franchise is $15,000 for
all first-time franchisees except: (i) qualified US Veterans as stated above, or (ii) a qualified SUBWAy®
restaurant franchisee of our affiliates, or (iii) those purchasing under our School Lunch or Community
Development Programs, or (iv) those purchasing for a qualified Non-Traditional location. See below in this
Item for an explanation of the franchise fees charged under circumstances (ii) through (iv).
If you are purchasing your first franchise and you qualify under our minority loan program, we offer to finance
$10,000 of the full franchise fee of $15,000. We may offer a similar loan program for franchisees purchasing a
franchise for a restaurant to be located in a low density market. We may stop or modify any loan programs we
offer at any time. See Items 7 and 10.
Reduced Fee for Additional Franchises. We offer the reduced franchise fee of $7,500 for the purchase of
additional restaurants to qualified existing franchise owners operating restaurants in substantial compliance (as
defined in the Operations Manual) and with no material defaults under any of their Franchise Agreements with
us. If you do not qualify for the reduced fee, you must pay the full fee of $15,000.
If you qualify for the reduced franchise fee when you sign the Franchise Agreement, but any of your existing
restaurants are out of substantial compliance (based upon your most recent store-evaluation) when your
restaurant opens, you must pay us the $7,500 balance of the full franchise fee. Certain large institutional-type
franchisees who may buy over 50 franchises negotiated the right to buy additional franchises at the former rate
of $2,500, but there are certain time limits and quantity limits for them to buy at this lower rate. They must also
meet the reduced fee requirements.
We also offer the $7,500 reduced franchise fee to qualified SUBWAy® franchisees of our affiliated franchising
companies. To qualify, we must approve you and you must be in substantial compliance (as defined in the
Operations Manual) with no material defaults under any of your Franchise Agreements with our affiliates that
offer SUBWA v«' franchises. We and our affiliates may change or eliminate this cross-discount.
You may not sell, transfer, or assign a franchise you purchase at a reduced fee unless you sell it in conjunction
with an open and operating restaurant associated with that franchise. See Item 17. We may change the amount
of the initial franchise fee, including eliminating or reducing the discount.
Add-on Fee. If you do qualify for the reduced fee and you want to add an individual who is not already a
SUBWA v«' franchisee, you must also pay an add-on fee of$3,750. We may change or eliminate this add-on
fee in the future. We will waive the add-on fee if you are adding your parent, child, or spouse to your Franchise
Agreement.
Reduced Fee {or Qualified Non-Traditional Locations. You will pay the reduced franchise fee if you are
purchasing a franchise for a non-traditional location and: I) you are an approved convenience store operator, a
food service management company, or other company that provides its own food services (and you have 50 or
more locations or you have a net worth of at least $10 million as shown on an audited balance sheet); 2) you are
a cooperative, foundation, a qualified non-profit charity, hospital, university, college, other school, or an Indian
nation, or governmental agency or entity; or 3) you are purchasing your franchise for a non-traditional location
we approved to be located in a portion of an existing facility you own, lease or otherwise control under a
management agreement and you are a franchisee in good standing of a nationally branded gasoline retailer. If
any of these representations are not true when your restaurant opens (based upon the most recent store
evaluation), you agree to pay an additional $7,500. If we do not approve your location within 90 days after you
sign the Franchise Agreement, we may cancel your Franchise Agreement and refund your initial franchise fee.
See Exhibits A-3, A-4, and A-15.
29
If you own an oil company that has at least 50 locations and you convert an existing sandwich shop business
you created, own and operate at your facility into a SUBWAy® restaurant, we will waive the initial franchise
fee.
To qualify to purchase additional franchises for non-traditional locations at the reduced franchise fee, at least
90% of the SUBWAy® restaurants you operate must be in substantial compliance (as defined in the Operations
Manual), and must follow all operating policies and procedures for the other chain at the location where you
will establish your restaurant. There must also be no material defaults under any of your Franchise Agreements
with us. See Exhibits A-3 a.nd A-4.
Satellite Franchise Fee. The initial franchise fee for a satellite restaurant is $5,000; however, this fee will be
waived if your satellite will'be located in the same facility as your Base Restaurant. We may refund the
satellite franchise fee if we terminate the Franchise Agreement after 90 days because we or our designated
affiliate does not obtain a lease or license for the premises which contains basic economic terms (for example
rent, square footage, and length of term), previously consented to by you, and offer you a Sublease or
Sublicense, or if we do not give final approval to the location. However, this refund will not be issued if: I)
you fail to sign a Sublease or Sublicense that was previously consented to which contains basic economic
terms, 2) if it is your fault we disapprove the location or we cannot obtain the lease or license or 3) you attend
training, pass our standardized test (if required) and receive a copy of the Operations Manual in either
electronic or print form. See Exhibit A-2. The term of the Satellite Franchise Agreement will be from the date
of the Franchise Agreement until the expiration or termination of the Base Restaurant Franchise Agreement,
with the right for additional 20 year renewals in line with the Base Restaurant Franchise Agreement term.
There is no renewal fee.
The satellite franchise fee will be $1,000 if the satellite will be in operation for a term of one year or less
("short term"). The term of the Franchise Agreement for a short term satellite location is one year or less from
the date of the Short Term Satellite Rider or until the termination or expiration of the Base Restaurant Franchise
Agreement, whichever occurs sooner. If your Base Restaurant Franchise Agreement has not expired, you may
renew short term satellite location for additional one year renewals for a renewal fee of$1,000 per year. See
ExhibitA-18.
If, with our approval, you choose to convert your satellite to a full restaurant and terminate your Franchise
. Agreement for the satellite, we may credit the initial franchise fee you paid. We will not allow credit for
expired or terminated Franchise Agreements for the satellite. To qualify for the credit, you must be in
substantial compliance (as defined in the Operations Manual) and you must comply with any necessary
upgrades or additional requirements to establish a full restaurant at the satellite location.
School Lunch Program Franchise Fee. We will waive the initial franchise fee through March 31, 2014, under
our school lunch program, where we will franchise (I) a school system directly, (2) an institutional food service
provider, or (3) an existing individual SUBWAy® franchisee, to operate a SUBWAy® restaurant located in a
school. We may charge an initial franchise fee after March 31, 2014 at our then-current rate or at a reduced
rate, or may continue to waive the fee. You must open your school location within 6 months after you sign your
school lunch Franchise Agreement. If you are not the school board, school district, or municipality controlling
the school location, within 6 months after you sign your Franchise Agreement you must sign a contract, license,
or lease, giving you the right to operate the restaurant, or your Franchise Agreement will automatically
terminate. You will not have to enter into a Sublease or Sublicense with us or our affiliate or assign your
contract or license to 'us. You must identify a location for the school lunch restaurant and your proposed
operation plan before you sign the Franchise Agreement. The term of the Franchise Agreement for a school
lunch location is a period of 5 years, with the right for additional 5 year renewals, with no renewal fee. If you
are an individual franchisee, you must establish the restaurant in the school as a satellite location.
30
Community Development Program Franchise Fee. We will waive the initial franchise fee through March 31,
2014, under our Community Development Program. We may charge an initial franchise fee after March 31,
2014 at our then current rate or at a reduced rate, or may continue to waive the fee. Under the program,
franchisees may establish franchises within facilities operated by organizations or individuals that offer support
services within the community in which they are located. Examples of these facilities include places of worship,
shelters, half way homes, rehabilitation centers, community centers, and disaster relief centers. Your restaurant
must be operated with the intent of providing job training to individuals with barriers to employment. You will
not have to enter into a Sublease or Sublicense with us or our affiliate or assign your contract or license to us.
You must identity a location for your restaurant and your proposed operation plan before you sign the Franchise
Agreement.
·
Location Selection Prowam. We offer a location selection program whereby you can purchase a franchise to
establish a full service restaurant (not a satellite restaurant) for a specific location at the time you sign the
Franchise Agreement, including the Specific Location Rider (Exhibit A-6). We give preliminary approval to the
location when we sign the Franchise Agreement. If you pay the initial franchise fee and sign a Specific Location
Rider, you cannot attend training until a lease is signed for the specific location. If we or our designated affiliate
cannot offer you Sublease or Sublicense for the premises or if we do not give final approval to the location
within 6 months after the date of the Franchise Agreement, the Specific Location Rider will automatically
terminate and your franchise will be deemed a standard franchise. You will have no further rights to the
location. We will refund the initial franchise fee if you send us a written request no later than 60 days after the
Specific Location Rider is terminated and the standard franchise becomes effective. If we or our designee offers
you a Sublease or Sublicense, you must sign it within 30 days from the date it was offered to you or your
Franchise Agreement will automatically expire at the end of the 30 day period. We will not refund the initial
franchise fee if we or our designee enters into a lease or license containing basic economic terms (e.g. rent,
square footage, and length of term) which you previously consented to and you do not then sign the offered
Sublease or Sublicense within the 30 day period.
a
Refund Policy. We do not refund any of the initial franchise fees except as stated above or under the following
circumstances: I) you purchase a franchise for a location where we will allow you to enter into a lease or
license directly with the landlord and we do not grant final approval of the location within 90 days after you
sign the Franchise Agreement (see Exhibit A-12); or 2) you purchase a franchise for a dual location test site and
you do not obtain a Sublease or Sublicense in accordance with our requirements (see Exhibit A-16); or 3) you
purchase an existing restaurant and apply the franchise fee of your current, unused franchise toward the transfer
fee. If you apply the franchise fee of your unused franchise to pay a transfer fee, you will sign a release
terminating the unused franchise.
If you fail our standardized test which may be conducted during the training program, we may dismiss you from
the training program, cancel your franchise agreement and refund one-half of your franchise fee. If more than
one individual signs the Franchise Agreement, any one of the individuals who fails this standardized test may be
dismissed from the training program, removed from the Franchise Agreement and no portion of the franchise fee
will be refunded. See Item II.
Extension Fee. You may request in writing, and we may grant in writing, the option to amend and extend your
Franchise Agreement by paying $1,000 and signing our then-current form of Franchise Agreement. The
extension fee is due when you sign our then-current form of Franchise Agreement and is nonrefundable. The
term of your franchise will then be for the full number of years granted in the replacement Franchise Agreement
and you will have no right to any additional extensions. We may change or eliminate the extension procedures
in the future ..
If you sign the standard Franchise Agreement, you will have 2 years to sign a Sublease or License or your
Franchise Agreement will expire unless you receive an extension. If you are granted an extension, you will
have an additional 2 years to sign a Sublease or Sublicense. See Exhibit A.
31
If you sign a Non-Traditional Location Rider, Food Service Provider Rider or Direct Lease Rider, you will have
2 years to open your restaurant or your Franchise Agreement will expire unless you receive an extension. If
you are granted an extension, you will sign our then-current form of Franchise Agreement and you will have 2
additional years to open your restaurant. This description of the extension fees also applies if you sign a NonTraditional Location Rider in conjunction with a Satellite Rider to open a satellite restaurant in a nontraditional location. See Exhibit A-3, A-4, A-12 or A-15.
The extension fee does not apply to school lunch locations, satellite locations operating in locations other than
non-traditional locations, short term satellite locations, or locations which fall under our location selection
program. These locations must be opened within the timeframes set forth in their respective Riders and will
have no right to any extension. See Exhibits A-2, A-5, A-6 and A-18.
Location Security Deposit and Other Initial Lease Fees. When you sign the Sublease, you will pay our
affiliate $50 as a nonrefundable fee for administrative costs to record the lease. In addition, you will be
responsible for all other costs we incur to record the lease, including but not limited to, recording fees,
recording taxes, conveyance fees and conveyance taxes. We estimate that these costs may range from $50 to
$2,500, depending upon your state and local laws. See Exhibit D. These fees are nonrefundable.
You must pay a deposit of2 months' rent when you sign the Intent to Sublease, representing one month's rent
and one month's security deposit. We estimate that the security deposit will cost approximately $2,000 to
$12,000. If you are required to sign a Sublicense for the location, you may be required to pay an advancement
fee when you sign the Intent to Sublicense. If the landlord does not require the security deposit, we or our
designee will return the money to you. If your restaurant is in a non-traditional, satellite, or school lunch
location, and you are providing the premises for the restaurant, you will not have to sign a Sublease. If your
restaurant is a satellite location, we may allow you to enter into the lease or license directly with the owner of
the premises, but you may have to sign a collateral assignment of your rights under the lease or license which
would take effect if your Franchise Agreement terminates or expires. If your restaurant is a school lunch
location, you may enter into the contract, license, or lease directly with the entity controlling the school.
In some cases, we may allow you to sign a lease directly with the landlord, but we must approve the form of
lease. We may require that the lease you enter into contains either a conditional assignment of the lease or any
other security interest for the lease we designate that will allow us or our designee. to take possession of the
premises and assume the lease if you breach the lease or your Franchise Agreement. The assignable interest
will be enforceable against you, any corporation you establish to lease the premises for the restaurant, and any
person or entity to which the lease or restaurant is transferred.
The conditional assignment should read substantially like:
The person(s) or corporation that has executed this lease shall hereinafter be referred to as the "occupying
tenant". Landlord acknowledges that the occupying tenant of the demised premises has executed the lease with
the intention of operating a SUBWAy® restaurant pursuant to a franchise agreement with Doctor's Associates
Inc. ("DAI"), a Florida corporation. Landlord further acknowledges that this occupying tenant has executed
this lease personally or on behalf of its own duly formed corporation. This lease shall not be binding on DAI
unless it is assumed by DAI. Should the occupying tenant default on its obligations to landlord, DAI, at its sole
option, can assume or elect to designate an authorized subsequent occupying tenant to assume this lease and its
obligations for continuing the operation of a SUBWAy® restaurant. In this event, landlord agrees to assign to
DAI or its designee all of the occupying tenant's rights under this lease. Landlord agrees that this
assumption/assignment shall not transfer liability for a previous default to a subsequent occupying tenant of
DAI. This provision shall not be construed as a remedy for any uncured default.
32
Equipment Ordering Administrative Fee. You must purchase or lease from us substantially all major items of
equipment for your restaurant. You may be required to pay us a fee on the equipment we order for purchase or
lease by you in an amount up to 4% of the cost of the equipment. We estimate that this fee will cost between
$2,200 and $3,200. You will pay this fee by preauthorized check or electronic funds transfer. See Items 7, 8
and 10.
Equipment Lease Costs. If you participate in the Equipment Lease program, you must pay us a security deposit
by certified or cashier's check. The security deposit is I 0% of the equipment cost, with a minimum of $1,000.
We estimate that the equipment lease security deposit will cost between $3,500 and $7,000, depending upon the
location. We will refund the security deposit at the end of the lease if you satisfy our requirements. See Items
6, 7 and 10 and Exhibits F and G.
Equipment Purchase and Freight Charges. If you purchase equipment through us, you must pay us the cost of
the equipment charged by the manufacturer or distributor before the allowance of any trade discounts, plus a
buffer of 10% of the cost to cover freight charges and other amounts. We will refund any amounts we do not
need from the buffer. See Item 7. We estimate that the cost for equipment will range from $55,000 to $91,000
(including the 10% buffer), depending upon the location. You may experience delays and have higher costs if
you seek approval to purchase directly from vendors or from vendors not currently approved.
Cost for Menu Board Translites, Promotional, and Operational Items. Your initial purchase of menu board
translites must be from SF AFT, unless we designate otherwise. The estimated cost for menu board trans!ites is
$125. You must also buy decals and replacement menu board translites from SF AFT. You must buy certain
operational items from our affiliate, FSCC. The estimated cost is less than $600 and is nonrefundable. See
Item 8.
Training Cancellation Fee. If you register for and fail to attend the training program, or if you cancel a
registration for the training program with less than I 0 business days' notice, you must pay a nonrefundable
cancellation fee of $100.
Standardized Test Requirement and Retest Fee. If you do not pass our standardized test to qualify for the
purchase of a franchise, we charge a nonrefundable retest fee of $20 if we allow you to take the test again. We
do not charge a retest fee for our standardized test conducted during the training program. If you do not pass,
we may grant you an exemption under one of the three following circumstances and you meet all the
conditions: (I) you qualify to sign a Non-Traditional Location Entity Rider (Exhibit A-3); (2) your spouse or
relative named on the Franchise Agreement passes, you successfully complete our training program, you are
actively involved in the daily operation of the restaurant for one year (as verified by the area field representative
or Development Agent) and the restaurant is in substantial compliance (as defined in the Operations Manual)
then you may be added to the Franchise Agreement for that restaurant provided that you otherwise comply with
the transfer process in Subparagraph 9.a. of the Franchise Agreement; or (3) you have been the manager of a
SUBWAy® restaurant for at least three years, the restaurant has been in substantial compliance (as defined in
the Operations Manual) and you receive the approval of the area Development Agent.
Software License Fees. The PC-based POS system you are required to use must be purchased from our
approved POS hardware vendors, ParTech, Inc. ("Par") and Micros Systems, Inc. ("Micros"). You must use the
approved POS software unless you are granted a waiver, in which case you must meet our data transmission
standards. Currently, Sub Shop/2000™ and SubwayPOS® are the approved POS softwares for all markets.
When you purchase the PC-based POS system from Par, Micros, or its designated third party, we will receive a
$540 initial license fee for the Sub Shop/2000™, which includes Team Viewer, or other remote access software
fee, the Subway Payment Manager software license fee, and Progress DBMS software license fee) for the basic
program Sub Shop/2000™.
33
You may also choose to purchase through us the optional programs Sub Shop/2000 HOME OFFICE™ System
and Sub Shop/2000 In-Store HOME OFFICE Support. We will receive initial license fees of $217 for Sub
Shop/2000 HOME OFFICE™ System (which includes the Progress DBMS software license fee), and $29 for
Sub Shop/2000 In-Store HOME OFFICE Support.
All software license fees are nonrefundable.
In the future, DAI will cease to offer licenses for Sub Shop/2000™. The new approved software you will be
required to purchase will be the SubwayPOS® software. The software will be licensed to you through us and
there will be no license fee for the software.
You must use antivirus software approved by us. The approved antivirus software is only available from ESET,
LLC ("ESET") and is provided as part of the software package you will receive from our approved hardware
vendors. The license fee is $20 for three years and is nonrefundable. If you are participating in the Integrated
Credit Debit, you may be required to adhere to additional standards and requirements.
You must participate in the SUBWAy® Card Program. The SUBWAy® Card is similar to an electronic gift
card, wherein customers can purchase the SUBWAy® Card and charge purchases to the card. Participation in
the program will require you to purchase the SUBWAy® Payment Manager ("SPM") software. See Item 11.
The license fee for this software is $50. The total start-up costs for the SUBWAy® Card Program are
approximately $200, whic-h includes the licensing fee, POS upgrade support, marketing, training materials,
welcome kit and initial SUBWAy® Card inventory. There may be additional fees for software or hardware
support calls made after the initial installation.
In the future, SUBWAY CAFE® Program participants may be required to purchase, use and maintain an
additional PC-based POS system at their own expense. We estimate these fees to range between $2,500 $3,500 for an additional PC-based POS system and $500- $1,000 for additional software. See Item 7. Future
requirements of an additional PC-based POS system must be met on the compliance date we impose.
Purchase Price of Company- or Affiliate-Owned Restaurant. If you are purchasing a company- or affiliateowned restaurant, you must sign a Franchise Agreement and pay the initial franchise fee that applies to you.
You must pay the purchase price in cash or by certified check. The restaurants vary greatly in price. In 2012,
DAI and its affiliates sold 59 restaurants ranging in price from $1 to $257,500. The purchase price does not
represent your total initial investment for a company- or affiliate-owned restaurant. You must determine
whether equipment and other items listed in Item 7 are included in the assets you are purchasing. The purchase
price may cover only the costs of existing physical assets, such as leasehold improvements, equipment, signs,
any security systems, inventory and supplies. Equipment may be financed or subject to a lease and may not be
included in the price. You may have to spend additional money to bring the restaurant into compliance with the
Operations Manual. Your initial investment for other items will be the same as if you had constructed,
furnished, equipped and stocked your own restaurant. These other items include the initial franchise fee, real
property costs, insurance, training expenses, legal and accounting, opening advertising, miscellaneous expenses
and additional funds necessary for three months. Financing is available for some of the purchase price. We
may offer incentives to franchisees purchasing company- or affiliate-owned restaurants that we believe have
below average sales. These incentives may include but are not limited to: 1) financing by us or an affiliate for
all or a portion of the purchase price at variable terms; or 2) under certain conditions, an obligation in the
purchase agreement for us or our affiliate to repurchase the restaurant from the franchisee if the franchisee
chooses to terminate the transaction. Under these circumstances, we or our affiliate will not repurchase the
restaurant unless it is in substantial compliance as defined in the Operations Manual and the franchisee has
maintained or exceeded the Average Unit Volume (AUV) of sales reported for the twelve months prior to our or
our affiliate's acquisition of the restaurant from the previous owner.
***************************
34
In \ery rare cases, we ma) oiTer you the opporrunLT)' to participate in a program in which our affiliate will buy
the premises where your restaurant WL II he located, construct the restaurant and then leas.e the restaurant to you.
You would pay $25,000 for the construction costs, but you would not have to construct the restauranr. Our
affiliate would refund the $25,000 if our aiTihate does not construct the restaurant. Less than 10 restaurants
have been constructed by our a 1Til'1ates in the Umted States and it< territories under this program smce 1992.
We or our affiliates may derive a profit from this program. See Item I 0.
Item 6
OTHER FEES
more
than one week late
L
"
law where your
is located) per annum on
is more
maximum rate allowed by
law where your restaurant
is located) per annum of
than one week late
""""'"''""owe may be
payments because you
change banks without
or our
"
'
but not later than
00
day
security
deposit on signing of
Intent to Sublease or
I
''
per S!OO
of the
'
paidtol i
'
monthly rent paid to
landlord/licensor. See Note 6.
'
Upon early termination
remainder of monthly
payment>. limited to I g
and
Cost
buffer to co,er
charges, ta\es, and other
lawyerS
i I i
competmg >tore plus 8%
of its gross sales, or
$100,000 (whichever is
'
except you w1ll pay the
whole fee plus costs,
including lawyers' fees,
management preparation
time, and travel expenses
if you withhold money
from us or an affiliate
arbitration fee w111 be due
upon invoicmg ti'om the
third pany
If you breach the
prov1sions of the
Fmnch,se Agreement
regarding mandatory
arbitration, or restrictions
on damages or against
whom you can arbitrate, or
the proper forum for an
action, you will pay our
expenses and the expenses
of anyone you name
improperly. includmg
lawyers' fees; you will be
liable for abuse of process
You will P"Y our
expenses or the expenses
of a person you name
improperly when we
request when you violate
the provisions of the
Franchise Agreement
Type of Fee
Co-Brand Continuing Fee
Fees Charged by CoBrand Franchisor
Amount
Probationary Case
Management Fee- $500;
Probationary Extension
Fee- $250
Due Date
Due upon your signing
the probationary
agreement or extension
Interim Order Case
Management Fee - $250
Due upon your signing
the interim order
Litigation Expense Fee to
permit sale of restaurant 5% of gross consideration
received for sale of
restaurant, not to exceed
$5,000
0%-8% of total gross sales
of a co-brand concept
Fees and rates set by third
party co-brand franchisor
Due upon sale of your
restaurant
Remarks
Payable weekly
See Note 13
Payable weekly when
your royalty to us is due
We may act as collection
agent for third party co-brand
franchisor. See Note 13 and
T'T"T:''- If
1
11 DlVJ 1
.
Optional Store Listing
Service
$100 for each 90 day
period
Fees for Software License,
Maintenance and
Processing
For SubShoQ/2000™
When you list your
restaurant for sale with
our Help Sell Program
$540 initial license fee for
the software when you
purchase the POS system
from Par or Micros
When you place order
Annual $400 software
maintenance fee payable
to us
Payable starting I"
anniversary of license;
$16.43 per year payable to
a third party, subject to
future changes, for
Progress DBMS software
Payable each year starting
when you license the
software
For SubwayPOS®
No initial license fee
Annual $350-$600
software maintenance fee
payable to us, subject to
future changes.
$20 to extend antivirus
software every 3 years.
Payable to a third party.
37
We may waive this fee. Paid
by pre-authorized check or
electronic funds transfer
We may withdraw all fees for
software from your DAI preauthorized account; we may
waive or partially waive the
annual $400 maintenance fee
for SubShop/2000™ if you
transmit sales weekly using
the most current version of
the software for at least the
number of weeks per year
that we require in the
Operations Manual. See Note
14.
r,;
~·
Processing Fees
]!!
'
per transaction.
~;,,~
'
Paid to customer's bank
lntenohange Fee vanes,
estimated at l 65% of
transaction amount and
$.04 per item. See Note
"
Fixed Acquirer Network
Fee. Amount detem1ined
by Visa, Inc. ba;ed upon
your gross sales volume of
all Visa-branded credit
card purchases. Contact
card processor
'
'
'ro,
Retail Technology
varlOUS new
"
Charged by Visa, Inc. and
collected by your credit card
processor.
y.,;.,
' I
fees from your
-t:¥-' $20 pe,' incident
' Fee ll
Re•olution
~
customer complaint and
we send gift ccnificatc to
~aining Fcc
.
5
'
: unle<> you sign a
rider which requires you
to send your Manager or
Director of Food Services
to the Training Program
and you cannot prme that
the person is your
employee, in w~i;~,-case
""'
'
jc;;
'"'Y'"
'
~
'
Program Fees
""per
b t I .
SJ
•,_each
customer recetpt
for a cookie will cost you
appro~imately $.08 per
'
h
Payable only upon your
failure to demonstrate
that a Director or
Manager sent \0 the
Trammg Program is your
employee_
'
i
:~~J~~he~k or pre-
check or
electronic funds transfer
~
"
'
.
particlpate in the Call
Center and Website
Program in which case a
fee equal to approximately
7% of each catering order
=
~~~orized accou~:r~:m belialf
lo
I
'
customer places an order
with the call center or
webS<te to be fulfilled by
your restaurant.
v;;;;.,
i
,"third party. 5ee
Note 18
to the IPC Note 19.
l'ype of Fee
Optional Loss Prevention
Program Fees
Amount
None; however, if you fail
to complete the program,
we will charge an
administrative fee of
$1,000.
Due Date
Only upon your failure to
complete the Loss
Prevention Program
Remarks
Note 20.
*The table above and the following notes are a general summary only. You can only obtain a full
understanding of the SUBWAy® franchise system and the costs involved by reading all franchise
documentation completely, and obtaining independent legal, accounting, and business advice in relation
to your proposed investment. Certain State and Federal legislation may affect the respective rights and
liabilities under the various agreements to which you and we are both party. We may collect taxes from
you that the law requires you or us to pay. These imposed fees are nonrefundable, except we may
refund a portion of the transfer fee. They are payable to us or to others as noted. These fees are the
same for all persons currently acquiring a franchise except as noted below.
Note I. Royalty Fee. "Gross sales" includes all sales of every kind made from your restaurant. Gross sales do
not include any amounts you collect for state or local sales taxes. If your restaurant is in a non-traditiona!.or
school lunch location and you are selling other items from the premises, a Non-Traditional Location Rider or
School Lunch Rider may help define gross sales subject to the royalty. See Exhibits A-3, A-4, A-5, and A-15.
The royalty is the same for all persons currently acquiring a franchise. The royalty is payable to us and is
nonrefundable. We may pay up to one-third of collected royalties to third parties who assist with the
development of our franchise system, including Development Agents. See Item 2. The royalty is payable
weekly and is due on or before the Saturday following the close of the business week which is usually Tuesday.
You must submit signed forms to allow us to deposit drafts against your bank account for the full amount of the
weekly accruals of royalties, advertising fees, and other amounts you will owe us. See Exhibit F. We may
establish a marketing assistance fund that may be used to conduct marketing analyses and related activities
regarding specific restaurants located in the vicinity of certain non-traditional locations. We may place a
portion of the royalty fees received from SUBWAy® restaurant locations developed by large companies
operating I 00 or more locations into this fund which will be administered jointly by us and the company
developing the locations.
Note 2. Advertising Fees. You must pay us 4 Yzo/o of gross sales of your restaurant for advertising. The
advertising fee is nonrefundable and we will deposit that money into SF AFT. See Item II. At any time,
franchisees may temporarily or permanently increase the advertising percentage for either the country or any
market by a 2/3 vote on the basis of one vote for each operating restaurant. Company- or affiliate-owned
restaurants pay advertising fees and have a vote on advertising fund matters.
A satellite restaurant is not considered an operating restaurant for purposes of voting on increases to the
advertising percentage and it will have no vote on advertising fund matters but it does pay advertising fees on
its sales. If your restaurant will be located in an airport terminal, theme park, national park, school lunch
location managed by a qualified Food Service Provider, or if you are a qualified Food Service Provider
operating a restaurant at a non-traditional location, your advertising contribution will be 2% of gross sales and
the restaurant will have no vote on any increases to the advertising percentage or other advertising fund matters.
The reduction in the advertising contribution is due to the limited value of advertising for these locations. We
may negotiate a reduction in the franchise fee and/or advertising fee for certain food service contractors
operating non-traditional locations or in instances where the restaurant is located in an area where access is
restricted and the franchisee is making a capital expenditure of $1 million or more.
DAI and SF AFT may determine that certain restaurant locations quality for a reduced advertising fee and for
these restaurants DAI will only collect an advertising fee of2% of gross sales. For a location to quality, the
following criteria must be met: 1) you must be obligated under your lease to pay for advertising or marketing at
39
the location, 2) those payments must be equal to or exceed 2Y:z% of the restaurant's gross sales, and 3) the
advertising or marketing must provide exposure for the SUBWAy® brand. Restaurants that DAI and SF AFT
determine meet their criteria will be placed into a submarket and will not have a vote in the local advertising
market in which the restaurant is physically located. DAI and SF AFT have the right to re-evaluate whether a
restaurant continues to meet the criteria and may determine that a location no longer qualifies as a submarket.
In such case, you will be required to pay the full advertising fee of 4Y:z% plus any local advertising voted on by
the local market.
We are testing a program whereby we will permit you to conduct your own advertising initiatives outside of our
normal advertising venues. This program is only available if you are a school board, school district,
municipality, or institutional food service providers operating a restaurant at a school lunch location (grades K12) but do not qualifY for an advertising fee reduction as described above or do not meet SF AFT's criteria to be
a submarket as defined in the SF AFT Policies and Procedures. You must spend no less than 2 Y:z% of the
weekly gross sales for your restaurant on your advertising initiative and we will reduce your weekly advertising
fee by this amount. You will be required to submit your proposed advertising initiative to us annually for
review. Your participation in the test will be evaluated on an annual basis and will be subject to our sole
approval. In the event you no longer incur expenses associated with your advertising initiative or your
advertising expenses are less than 2 Y:z%, we may withdraw our approval, you may no longer participate in the
test, and your advertising fee will be as stated in your Franchise Agreement.
The advertising fee. is the same for anyone- c-urre-ntly buying a franchise, except as stated above. A.ny
advertising fee voted by a local market is uniform for all franchisees in that market, except that certain
older Franchise Agreements do not contain the requirement that the franchisee contribute additional .
advertising funds and several large institutional-type franchisees negotiate limitations on over their over a!
expenses for advertising. Advertising fees are due weekly at the same time as the royalty fees (see Note I
above).
If you are an existing franchisee, by signing our current form of the Franchise Agreement, whether for
an additional restaurant, transfer, an extension, or a renewal, you amend all of your existing Franchise
Agreements under Paragraph 14 to include the provisions of Subparagraph S.i. of the Franchise
Agreement regarding advertising, summarized in this Note.
You must hold a grand opening sale within 4 to 8 weeks after the opening your restaurant or a change in the
ownership of your restaurant. This grand opening sale requirement applies to all new, transferred and relocated
restaurants: We recommend that you spend at least $2,000 on the grand opening sale.
Note 3. Audit Fees. If we determine, after conducting an audit, that you under-reported gross sales by
more than two percent (2%) of your reported sales, you will pay us the Royalty, advertising contributions
and other charges due on the gross sales that were not reported, all costs provided in Subparagraph ll.o. of
the Franchise Agreement, plus interest and the late fees (the "Overdue Amount"). This charge covers the
damages we suffer for your under-reporting, which is injurious and prejudicial to the SUBWAy® system,
the trademarks, and the goodwill associated therewith. If you fail to submit all of your information to be
audited, we may estimate your sales and charge you based upon the estimate. However, we will not impose
this charge if you can show that you fully completed all of our control sheets in an accurate manner each
week and that your under-reporting was due solely to employee theft that could not be detected with our
control systems. We may also terminate your Franchise Agreement if you fail to properly report gross sales
for any calendar year. We may in addition to or instead of charging the Overdue Amount, require you to
complete our loss prevention program. See Note 20.
Note 4. Late Payment Fees. We may change or eliminate these fees. Under Paragraph 14 of the Franchise
Agreement, you amend all of your existing Franchise Agreements to include the provisions of
Subparagraph ll.f. of the current form of our Franchise Agreement.
40
Note 5. Transfer Fee. If the buyer attends any portion of our Training Program and then we, you, or the buyer
cancel the transfer, no portion of the transfer fee is refundable. If you choose to reactivate the transfer, you must
pay a reactivation fee of$1,500 ($750 for a satellite location).
If we have not yet issued the Consent-to-Transfer and you and the buyer cancel the transfer, we will refund the
entire transfer fee. If the Consent-to-Transfer has already been issued, and (i) you and the buyer cancel the
transfer, or (ii) we cancel the transfer because you and the buyer failed to complete the transfer within 60 days
after you received the Consent-to-Transfer, then we may refund the transfer fee, less a cancellation fee of
$1,500 ($750 for a satellite location) and less any past due amounts owed to us under the terms of your
Franchise Agreement. If you and the buyer want to reactivate a transfer cancelled under these circumstances,
and we approve, the parties must repay the full transfer fee.
You may use the franchise fee of a current, unused franchise that you own toward the payment of a transfer
fee. You will sign a release terminating the unused franchise and will receive back any portion of the franchise
fee that we do not apply to the transfer fee. If the applied franchise fee is not enough to cover the transfer fee,
you will pay the difference. If the buyer successful completes training and purchases your franchise, we will
credit the transfer fee and/or other money you owe us, and we will refund any balance.
Deleting one or more individuals as franchisee is a transfer, but you pay a reduced fee if you do not also add
new individuals to the Franchise Agreement. See Item ! 7, Note 3. If you own a satellite restaura.'1t, you must
transfer the Franchise Agreement for the satellite restaurant to the same buyer who purchases the Base
Restaurant and the Base Restaurant's Franchise Agreement. See Item 17. In isolated circumstances, we may
allow a transfer of only the satellite restaurant and satellite Franchise Agreement if there is a good business
reason to do so, as determined by us. You must pay a transfer fee of$3,000 for the transfer of the satellite
Franchise Agreement and a separate transfer fee for the transfer of the Base Restaurant. See Exhibit A-2. We
will waive the transfer fee for franchisees selling restaurants in an exclusive area to a franchisee with limited
exclusivity rights for a territory, as described in Item I. We will also waive the transfer fee if the selling
franchisee then purchases a restaurant outside of the exclusive territory within a year. We pay third parties who
assist us with the development of the franchise system, including Development Agents, up to one-third of the
transfer fees. See Item 2.
You must pay all related registration fees, taxes, and preparation costs for the filing, including lawyer's costs, to
the extent we can require you to do so under local law. You must cancel, and then the buyer must obtain, or
you must transfer to the buyer, any permits, licenses, registrations, certifications or other consents required for
leasing, constructing, or operating the restaurant. We are authorized to cancel any permits, licenses,
registrations, certifications or other consents that you do not cancel within a reasonable time. Any costs for
cancellation will be borne by you.
We will not become involved in the sale of any real estate included or contemplated in your sale terms. We
will not be responsible for any loss or gain resulting from any sale, failure to sell or delay of the sale of the real
estate. Any such loss or gain shall be incidental, consequential, contingent and not part of the transfer of your
restaurant and the Franchise Agreement. You may only transfer your restaurant and the Franchise Agreement
individually and not as part of a sale of multiple Franchise Agreements and restaurants that you own, unless we
grant you written permission. We will not be liable for failure to allow a sale cifmore than one restaurant under
the same transfer.
Note 6. Location Rent. You pay rent for your restaurant to the landlord of the premises under a Sublease you
enter into with our designated affiliate. The Sublease contains the rental rate and terms in the primary lease
between the landlord and our affiliate. The landlord may require you to personally guarantee the lease and may
also require a right of first refusal if you want to transfer your restaurant. Our affiliate may assess late payment·
fees and other costs arising from the administration of the lease. Our affiliate has the same rights as the
41
landlord on default to charge you for certain fees, to carry out repairs and to recover costs. Any right of first
refusal to purchase the restaurant property provided in the primary lease shall remain with our affiliate or its
assignee. We may allow you to lease the premises directly from the landlord if we or our affiliate are unable to
come to terms regarding a lease for the premises but you are willing to agree to the landlord's terms. You will
sign the lease directly with the landlord and you will pay all costs associated with the lease. You will also be
required to sign the Direct Lease Rider attached as Exhibit A-12.
In limited instances, we may enter into master agreements granting us a master license with the right to
sublicense to you the right to operate on the premises of a third party licensor. Under this circumstance you
would be required to enter into a Sublicense for the location instead of a Sublease. We may also require you to
sign a license for your restaurant, in limited circumstances, where it would be inadvisable for you to sign a
Sublease or where the premises for your restaurant can only be licensed. For example, we may require you to
sign a license instead of a Sublease if petroleum products, controlled by another, are sold on the premises where
your restaurant will be located. You will pay the licensor either a fixed monthly fee or a fee based on the
percentage of your gross sales depending upon the terms of the license.
There are risks involved if your arrangements with a third party are short term. For example, if an oil company
controls the premises and you have only a three year agreement to operate a service station, your Franchise
Agreement with us could become valueless and you could lose your investment in the restaurant if the oil
company does not renew its agreement with you at the end of the three year period.
In some circumstances, we and/or our affiliate may earn a profit from your Sublease or Sublicense. You may
have to make payments directly to our affiliate for rent that is in excess of the cost of the lease as well as an
initial fee to process the lease. We or our affiliate may also keep all or a portion of any landlord or government
payment for early termination of the lease. This compensation may be partially attributed to lost royalties, loss
of market penetration, extended down time, and other factors associated with the termination of the lease. An
affiliate of ours may derive a profit if it owns your restaurant and leases it to you under a pilot construction
program.
Note 7. Insurance. See Item 7 for a summary of the insurance requirements. Your insurance costs may be
higher depending upon the geographic location and construction of your restaurant. Insurance payments must
be made through Electronic Funds Transfer ("EFT") directly to the insurance carrier. If you are a school
district, school board, or municipality buying a school lunch franchise !ind you are not allowed by law to
provide.the required insurance coverage or indemnification, you must notifY us before you sign the Franchise
Agreement. See Exhibit A-5. Under Paragraph 14 of the Franchise Agreement, you amend all of your
existing Franchise Agreements to include the provisions of Subparagraph S.c. of the current form of our
Franchise Agreement. You must participate in any insurance program we specify. See Items 7 and 8. If
you fail to meet our insurance requirements in violation of your Franchise Agreement, you will reimburse us for
the reasonable costs we incur to enforce this obligation. These costs include, but are not limited to, mediation
and arbitration fees, court costs, attorneys' fees, management preparation time, witness fees, and travel expenses
incurred by us or our agents or representatives.
Note 8. Noncompete Violation. You cannot have any direct or indirect association with a competitive business,
as defined in the franchise agreement, during the term of the Franchise Agreement and for 3 years after
termination, expiration or transfer of the Franchise Agreement within a 3 mile radius of where a SUBWAy®
restaurant operates or operated within the prior year. These fees are nonrefundable. See Exhibit A. We modifY
these covenants for a non-traditional or school lunch location. See Exhibits A-3, A-4, A-5 and A-15 and Items
15 and 17.
Note 9. Confidentiality Violation. You agree not to disclose our trade secrets and confidential information,
including the contents of the Operations Manual. See Item 17 and Exhibit A.
42
Note I 0. Trademark Violation. You agree to stop using the trademark SUBWAy® and other marks and
materials associated with a SUBWAy® restaurant, and to return whichever form of the Operations Manual you
have in your possession when your Franchise Agreement terminates or expires. See Item 17 and Exhibit A.
Note II. Operations Manual. You will be provided with a copy of the Operations Manual in either electronic
or paper form. If we have a record of shipment to you, you will pay the nonrefundable replacement fee if you
do not notifY us of non-receipt within three months after you purchase your franchise. You must also pay the
replacement fee ifyou do not notifY us of non-receipt of an updated version ofthe Operations Manual within
three months after shipping notification in the Subway to Subway publication and we have a record of shipment
to you. If you transfer your restaurant, you must provide your copy ofthe Operations Manual to the new
franchisee on the date of transfer. If you do not have your copy of the Operations Manual to provide to the new
franchisee, you must request a replacement copy at least three weeks prior to the transfer date and pay the
replacement fee.
Note 12. Dispute Resolution. For fee information concerning arbitration, you can call your local office of the
American Arbitration Association, American Dispute Resolution Center, or other arbitration agency (as
applicable). You will also have to pay your own costs related to the proceeding, including the costs of your
own lawyer or other advisors as well as travel expenses to Connecticut. You may also be liable to us for our
collection costs, including lawyers' fees. See Item 17. and Exhibit A. You will pay our leasing company
affiliate its costs for enforcing the Sublease or Sublicense, including lawyers' fees and legal costs, as additional
rent/licensing fees under the Sublease or Sublicense. See Ex_hibits D and D-1.
You will pay us a Probationary Case Management fee of$500 if you breach the provisions of the Franchise
Agreement and we settle with you and allow you to continue operation of your restaurant on the condition that
you comply with the terms of our probationary agreement. You will pay us an extension fee of $250 if we grant
you an extension of the probationary agreement. You will pay us an Interim Order Case Management fee of
$250 if you breach the provisions of the Franchise Agreement and we settle with you after arbitration has been
filed to allow you to continue operation of your restaurant on the condition that you comply with the terms of
our interim order. You may also have to pay additional fees as part of a settlement. If we commence arbitration
against you for failure to comply with the Operations Manual and we then approve the transfer of your
restaurant, you may be required to pay us a Litigation Expense fee in an amount equal to 5% of the gross
consideration you receive from sale of the your restaurant, not to exceed $5,000. These fees cover our costs to
enforce your obligations to meet our system standards.
You should read Paragraph 10 of the Franchise Agreement carefully. It contains other important
provisions concerning dispute resolution including the requirement that arbitration be administered by the
American Arbitration Association or its successor ("AAA") in accordance with its administrative rules
including, as applicable, the Commercial Rules of the AAA and under the Expedited Procedures of such rules
or under the Optional Rules for Emergency Measures of Protection of the AAA. If AAA is no longer in
business, arbitration will be administered by the American Dispute Resolution Center or its successor
("ADRC") in accordance with its administrative rules. If AAA and ADRC are no longer in business, we and
you will mutually agree upon an arbitration agency to adminster the arbitration. Paragraph I 0 of the Franchise
Agreement also provides a limitation that you can only seek relief from us and not any of our affiliates or
individuals associated with us or our affiliates. You must pay certain fees and costs for the arbitration. See
Item 6. The provisions in the Franchise Agreement concerning arbitration and litigation do not apply to your
Sublease, Sublicense or any other agreement with us or our affiliates, except they are incorporated by reference
into our Equipment Lease. Our designated affiliate may terminate your Sublease or Sublicense without us also
terminating your Franchise Agreement. This may render your Franchise Agreement valueless.
You should read Paragraph 17 of the Franchise Agreement carefully. It contains important provisions
limiting your right to recover damages, including a monetary limitation on the greater of: 1) $100,000;
or 2) at your sole option, all amounts paid to us for franchise fees and royalties under the franchise
43
agreement for up to three years preceding any award herein, adjusted for inflation, on permissible
claims by either party against the other( with some exceptions for claims brought by us for infringement
to the Marks, disclosure of confidential information, or breach of covenants not to compete); and an
exclusion for punitive or consequential damages, except where prohibited by governing law.
Note 13. Co-Brand Continuing Fee. We may charge you a co-brand continuing fee on your gross sales from a
third party franchisor. The fee will not be greater than 8% of gross sales from the third party franchisor, and
will be the same for all franchisees entering into direct franchise agreements with the third party. The
percentage may vary for each third party franchise concept. You will pay royalty and advertising fees due to a
third party franchisor to us if the third party franchisor directs you to.
Note 14. Software License and Update/Enhancement Fees. The initial license fee for the Sub Shop/2000™
software is $540. This amount includes the licensing fees for the Team Viewer, the SUBWAy® Payment
Manager, and the Progress DBMS softwares. There is an annual software maintenance fee of$400 for the Sub
Shop/2000™ and all other required and optional approved software, and includes updates and enhancements for
the software. There are additional costs and fees to add the optional software programs, Sub Shop/2000 HOME
OFFICE™ System and Sub Shop/2000 In-Store HOME OFFICE Support. The total added costs for the optional
Sub Shop/2000 HOME OFFICE™ System is approximately $280-$330. This includes the initial license fee of
$217. We may require you to obtain additional support software, in which case you will pay us a license fee of
approximately $29.00 and a yearly maintenance fee of approximately $16.43. We may discontinue at any time
the waiver or partial waiver of the annual maintenance fee if you transmit sales using the most current software
version for at least the number of weeks per year we require in the Operations Manual. You will also have costs
for additional terminals. If you want the updates/enhancements by disk or other medium, instead of
downloading the updates/enhancements from the SUBWAY PartnersTM website, you must order the disk from
us, and pay the cost of producing the disk, as well as a shipping and handling charge.
In the future, we will cease to offer the Sub Shop/2000™ software and you may be required to use the
SubwayPOS® software. There is no license fee for this software. There is an annual software maintenance fee
of$400.
If you use Sub Shop/2000™, you will be bound by the Sub Shop/2000™ Software License Agreement in a
form substantially similar to Exhibit A-8. If you use SubwayPOS™, you will be bound by the SubwayPOS™
End User License Agreement in a form substantially similar to Exhibit A-8-1.
If we initiate a mandatory SUBWAy® Card Program, you may have costs associated with software licensing,
any additional hardware, and installation of software and/or hardware.
Note 15. Credit Card Payment Processing Fees and Retail Technology. You will be required to accept credit
card payments through a magstripe card reader that is integrated to your POS system in all of your new and
existing restaurants. You must have a high-speed broadband connection that meets our standards and
specifications to process credit card payments. In the future, you may also be required to accept debit card
payments. Credit card payment processing fees will be charged to catering orders placed with the call center
and catering website. The interchange fees for credit card payment processing referenced in this chart may be
higher or lower depending upon the credit card brand and type of transaction.
You may be required to report all transactions for your restaurant to us electronically at the same time each
transaction occurs. To better manage business functions and control costs, you may also be required to invest
in and implement new technology initiatives at your own expense, which may include, but will not be limited
to, acceptance of debit cards, LCD or plasma monitors, music, Internet TV, Social Media applications, WIFI,
surveillance system, remote ordering kiosks, PCs, hand held devices, and software applications. In some
instances, an investment may be necessary for hardware or equipment purchases and software licenses. You
may be required to purchase this hardware and equipment from a supplier we designate. Additionally, there
44
may be service fees associated with some of these initiatives. We estimate that the cost for the video
surveillance system will be approximately $2,500 to $5,000. You may also have to pay a transmission fee to
transmit data from your restaurant to our designated database. We have not estimated the costs for all of the
initiatives listed above as they are in the early stages of planning and costs cannot be estimated at this time.
Note 16. Taxes and Other Fees. You will pay or reimburse us for payment of any Sales Tax or other tax
imposed by law on the Franchise Fee, Royalty, advertising fees, and any other amounts payable under your
Franchise Agreement, whether assessed on you or on us. Taxes may be payable to your state, county, or town.
We, or another entity to which you pay fees, will pass on to you the cost of any taxes we or the other recipient
must pay directly to the taxing authority.
Note 17. Training Fee. There is no fee for the Training Program. However, if you sign the Non-Traditional
Location Entity Rider, Food Service Provider Rider, or Rider for Entity Franchisee Operating a Traditional
Location, and we determine that the Manager or Director of Food Services that you send to training is not your
employee and is a prospective franchisee, you will be required to pay a training fee of$7,500.
Note 18. Catering Program Fees. There is no fee for the basic catering program. However, if you participate in
the SUBWAY Fresh Catering™ Call Center and Website Program, a fee of approximately 7% of each catering
order will be charged to cover administrative expenses and includes credit card processing fees. This fee may
change to reflect costs. We may make additional modifications to the program and you will be responsible for
any costs or fees associated with those modifications.
Note 19. Optional Customer Experience Program Fees. Customers will have the opportunity to fill out an
online survey at a web address provided on their receipt. Upon completion of the survey, the customer will be
given a coupon for one free cookie. They may redeem this coupon at any participating SUBWAy® restaurant.
There is a monthly administration fee of $3 for the Customer Experience Program, which the !PC may deduct
from your pre-authorized account. Also, your cost will be approximately $.08 per cookie. Customers may also
elect to sign up for our electronic mailing list. You may elect to use this list to send customers messages
concering store promotions.
Although participation in this program is not required, you will be automatically enrolled into the Customer
Experience Program. If you do not wish to participate in this program, you must provide us with written notice
and we will discontinue your enrollment. You may review customer survey results for your restaurant online.
Note 20. Loss Prevention Program. We offer a Loss Prevention Program to franchisees experiencing high food
costs relative to their sales on a consistent basis. As part of the program, a loss prevention specialist will
evaluate your restaurant quarterly over a 52 week period to assist you in addressing possible operational
deficiencies in your restaurant. There is no fee for the program, however if you fail to complete the program, we
will charge you an administrative fee of $1,000. We may deduct this amount from your pre-authorized account.
Note 21. SUBWAYCAF~ Program POS System Hardware Fees. In the future, SUBWAY CAFE® Program
participants may be required to purchase, use and maintain all additional PC-based POS system at their own
expense. We estimate these fees will range between $2,500- $3,500 for an additional PC-based POS system
and $500 - $1,000 for additional software. See Item 7. Future requirements of an additional PC-based POS
system must be met on the compliance date we impose.
45
TI-llS SPACE INTENTIONALLY LEFT BLANK
Item 7
ESTIMATED INITIAL INVESTMENT
Type of Expenditure
Lower
Mid
Higher
Amount
Amount
Amount
METHOD
o•
WHEN DUE
TO WHOM
PAYMF.NT
PAYMF.NT
IS TO BE
Lump
or Licensor
m
in
OJ
Foro Non-Tmduional
construction
*77,000
7.500
Lump sum
'
System
place order
(nO( including
Prepaid when
Fur a Non- Tradiiionol
Carrier or
you order or on
deliver)'
ti II
'2,800
•3.500
•3,800
Vendor
TOTAL (II)
For a Non- Tradiliuno/
All figures in /Iris flem
We are in the process of testing certain locations that conform to special dietary preferences We are also
testing certain locations that ofTer delivery. Certain non-lr4ditional locations and locations operatin(.! within
Walman swres may participate in a co-brand arrangement with AUNTIE ANNE'S~>tores. If you are
participating m one of the;e test locations, there may be additional costs and your initial investment costs may
be lnghcr.
If you are offering our additional menu items under the SUB 'II.' A Y"'Pius Program, SUBWAY CAFE"' Program
or !he Store, Marke!wide, or Region Option Programs described in Jteon I, you will have additional costs. \Ve
provide these costs below.
NOTES:
Note I. Initial Franolmc Fee. The initial franchi>e fee os St 5,000. The initial franchise fee may be lower for
additional franchises or if you qualify for a reduced fee_ We currently waive or offer a discount of the franchise
fee for qualified US Veterans purchasing a franchise for cenam locations. Se~ hem 5. ~'e offer to finance
$1 0,000 of the full $ t 5,000 franchise fee if you are purchasmg your first franchise and you qualifY under our
minority loan program. See Items 5 and I 0. We are currently waiving the initial franchise fee for school lunch
locations, satellite locations located in the same facility as the Base Restaurant, and for oil company retailers
who have at least 50 units and convert an existing sandwich business that they created, own and operate at their
facility into a SUBWAy® restaurant. The initial franchise fee for a satellite location is $5,000 or $1,000 if the
satellite location will be in operation for a shorter term of one year or less. See Item 5 where we discuss
circumstances when the franchise fee may be refunded.
Note 2. Real Property. We estimate this amount to be the deposit of2 months' rent payable when you sign the
Intent to Sublease. This represents a security deposit of one month's rent and payment of one month's rent.
You may pay a significantly higher security deposit if our affiliate leasing corporation cannot obtain a lease
with a reduced security deposit. You make direct payments to the master landlord for anything due under the
Sublease and primary lease terms. This could vary if you use a portion of the premises for other than a
SUBWAy® restaurant. The master landlord may require you to personally guarantee the lease. You may not
have to sign a Sublease for a satellite, school lunch, or non-traditional location. If we allow you to lease the
premises directly from the landlord, you may have to pay a higher security deposit due to the landlord when you
sign the lease. You will pay the landlord directly for anything due under the lease. Under certain circumstances,
your landlord or the licensor may require us or one of our affiliates to make rental payments for your restaurant
to them on your behalf. All rental payments and related charges we pay on your behalf will be deducted from
your pre-authorized account with us, which you agree to adequately fund for such payments when due. See Item
5. Review the terms of your Sublease for circumstances where your rental payment may be refunded. In
limited instances, we may require you to sign a Sublicense for your restaurant where it would be inadvisable for
you to sign a Sublease or when the premises can only be licensed. See Item 5. Depending upon the terms of
the license, you may be required to pay the licensor an advance fee when you sign the license.
Real estate costs vary widely, but we estimate the typical monthly rent expense runs from $1,000 per month to a
high of $6,000 ($1, 000 to $6,000 for a non-traditional location) per month. The typical restaurant measures
approximately I ,200 square feet, but some restaurants are as small as 300 square feet and others as large as
2,000 square feet. Restaurants are in a wide range of locations, including strip centers, enclosed malls, food
courts, free standing buildings, downtown locations, and seasonal and non-traditional sites. Factors such as
these will affeCt your costs, which may be higher than our estimates. You will also pay $50 to our affiliate when
you sign the Sublease as a nonrefundable fee for administrative costs to record the lease. In addition, you will
be responsible for any additional costs associated with recording the lease. The $50 nonrefundable fee and
additional costs are estimated in the entry for Miscellaneous Expenses in this chart. See Item 5 and Exhibit D.
In very rare circumstances, we may offer an optional pilot program in which our affiliate buys the real estate,
constructs the restaurant, and then leases it to you. We or our affiliate may derive profit from this program.
Your cost may be higher if you participate in this program.
Note 3. Leasehold Improvements. Your local law may require use of a grease trap in your restaurant. This may
increase your leasehold improvement costs between $8,000 and $12,000 depending upon the location of the
grease trap. In limited circumstances, the landlord for the restaurant premises may require that you upgrade the
decor of your restaurant in order to lease the premises. This upgrade may increase your leasehold improvement
costs by approximately $10,000.
The SUBWAy® METRO Decor is required for all SUBWAY CAFE® restaurants. The METRO Decor is also
available as an optional decor upgrade for all new and existing restaurants, including relocations. The cost of
construction and all decor elements and the cost of its installation in the restaurant shall be at your sole expense.
We estimate the total cost of the decor to be an additional $10,500. Because the METRO Decor is a new look
for the SUBWAy® brand, there is a risk that it may be unsuccessful, which may lead to monetary loss. DAI
exclusively reserves the right to modify any element of the METRO Decor during its use.
Note 4. Equipment Lease Security Deposit. We list the amount of the security deposit for our equipment leasing
program. Ifyou qualify, the equipment leasing program is available to-you if all restaurants presently operated
by you are in compliance with your Franchise Agreements and the Operations Manual. Lease payments are due
48
monthly over 60 months. You must also pay any applicable sales, use, gross receipts, personal property or other
taxes. Please see Item I 0 for a brief description of the program and the limitations on the number of Equipment
Leases available, and see Exhibit G for a copy of the Equipment Lease agreement. We derive a profit from the
equipment leasing program. You have the option to purchase all the equipment outright, including the right to
finance the purchase with a lender of your choice. OVER TIME YOUR TOTAL OVERALL COSTS FOR
USING THE EQUIPMENT MAY BE SUBSTANTIALLY LESS IF YOU PURCHASE IT OUTRIGHT, EVEN
IF YOU FINANCE THE PURCHASE, THAN UNDER THE EQUIPMENT LEASING PROGRAM.
HOWEVER, YOUR TOTAL INITIAL INVESTMENT WOULD BE SUBSTAINTIALLY HIGHER. Ifyou
choose to purchase your equipment or the DAI's equipment leasing program is not available to you, you should
substitute $55,000 to $91,000, including the I 0% buffer, as the cost of the equipment package instead of the
security deposit- depending upon the size of your restaurant and the amount of equipment you need. The
amount of additional funds for your three months' operating expenses would also be adjusted to reflect that you
will not have to make three monthly equipment lease payments. WE ESTIMATE LOWER COST
RESTAURANTS WILL COST $166,700 TO $196,200 (NON-TRADITIONAL $135,730 T0$165,700), MID
COST RESTAURANTS WILL COST $236,725 TO $266,725 (NON-TRADITIONAL $179,125 TO $209,125),
AND HIGHER COST RESTAURANTS WILL COST $307,850 TO $340,350 (NON-TRADITIONAL $249,650
TO $279,650). You must also pay any applicable sales tax, use, gross receipts, or other taxes.
We do not include motor vehicles in this amount. You will need to add the cost of a motor vehicle for a
satellite location to properly service the satellite restaurant from your existing Base Restaurant.
You must use a PC-based POS System in all of your new and existing restaurants, including satellite
restaurants. We may waive this requirement for satellite restaurant on a case by case basis.
Our cost estimates assume that you lease the POS system for your restaurant under our equipment leasing
program. When making a decision to lease or buy you should consider that the average life-cycle for computer
based POS systems is 3 to 4 years. If you choose to purchase the POS system outright, we have negotiated
prices with Micros and Par. These systems range from $2,500 to $3,500. SUBWAy® Payment Manager
software, Sub Shop/2000™ software, SubwayPOS® software, Progress and Team Viewer software are available
for an additional $500 to $1,000. See Item II for specifications on these systems.
Please note: Under Paragraph 14 of the Franchise Agreement, you amend all of your existing franchise
agreements to include the provisions in Subparagraph S.f. of the current form of our Franchise
Agreement regarding reporting information electronically.
If you do not lease the major items of equipment from DAI, you will purchase most of these equipment items
through DAI. You must give DAI a certified check or cashier's check for the cost of the equipment package,
plus a buffer of I 0%. DAI holds the buffer to pay for sales tax, gross receipts tax, delivery charges, additional
equipment costs, or other charges you must pay. If you have the freight prepaid, an additional 8% will be added
to the freight items. DAI will return any amount left over. You will have to pay DAI the balance if the buffer
of I 0% is not sufficient. If you are offering our additional menu items under the SUBWAy® Plus Program,
SUBWAY CAFE® Program or under the Marketwide Option Program described in Item I, you will have to
obtain additional equipment for each program you offer in your restaurant. We provide these costs below.
Note 5. Insurance. You must purchase the insurance we specify, which presently includes statutory Workers'
Compensation in the minimum amount required by law, and comprehensive liability insurance, including
products liability and completed operations coverage in the minimum amount of $2,000,000 per
occurrence/$4,000,000 general aggregate. You must also purchase business vehicle coverage, including owned
vehicle liability and hired and non-owned vehicle liability insurance, in the minimum amount of $1,000,000.
General liability and auto liability coverage must be written on a per location basis. You must also purchase the
insurance required by the Master Lease and state law. If you lease equipment from us, you must purchase
property insurance and liability insurance covering the equipment and name us as Loss Payee. Your insurance
49
coverage must be primary and non-contributory, and you must name us, our affiliates, the Development Agent,
our agents, representatives, shareholders, directors, officers, employees, and those of our affiliates and the
Development Agent, the tenant corporation named in your Sublease or Sublicense and your landlord as
additional insureds unless otherwise directed. You must provide us with a copy of your Certificate oflnsurance
when you return your signed Sublease or Sublicense or finalize your Lease or License. Your insurance carrier
must agree to give us pdor written notice of termination, expiration, material modification, or cancellation of
your policy, or cancellation of us or any of the other entities or individuals in the preceding sentence as an
additional insured. We may change or increase your insurance requirements due to changes in experience, and
you must comply with the new requirements. The estimated cost is for one year for property, casualty and
general liability coverage, but does not include any Workers' Compensation, Employment Practices Liability
Insurance, health insurance, or other benefits, or coverage for motor vehicles. Your insurance costs may be
higher depending upon the geographic location and construction of your restaurant. You must defend and
indemnity us, our affiliates, the Development Agent, our agents, representatives, shareholders, directors,
officers, employees, and those of our affiliates and the Development Agent against any claims that arise in or in
connection with the operation of your restaurant, regardless of cause or any fault or negligence. You must
indemnity us and/or our affiliates against any claim for which we and/or our affiliates have to indemnity the
Master Landlord under the primary lease for your restaurant. You must also indemnifY us and our affiliates
under your Equipment Lease.
If you are a school board, school district, or municipality buying a franchise for a school lunch location, you
must notifY us before you sign the Franchise Agreement if the law prevents you from providing the required
insurance coverage or indemnification. We may elect to amend your Franchise Agreement to delete the
unlawful insurance coverage or indemnification requirements.
We have designated one or more approved insurance brokers and their associated carrier(s) from which you
must buy your insurance under our Gold Standard Insurance Program. We have negotiated to provide an
insurance package, including property and casualty, statutory workers compensation, general liability, business
income, and additional forms of insurance coverage for SUBWAy® franchisees. At the brokers' direction, the
carriers will name all the additional insureds your Franchise Agreement and Sublease or Sublicense, if any,
requires and will also provide insurance certificates to us and our real estate affiliate. You must make payments
directly to your insurance carrier via EFT. If you sign the Non-Traditional Location Entity Rider or the NonTraditional Location Individual Rider and your insurable interest in the facility in which the restaurant is
located is greater than the restaurant, subject to our written approval, you may maintain a program of selfinsurance or buy your insurance through your usual insurance broker or carrier. If there is another business
operating on the premises where your restaurant is located, we may allow you to buy your insurance from the
broker or carrier that handles the insurance for the other business. We may allow you to obtain your insurance
from a source other than that approved under our Gold Standard Insurance Program, provided the broker meets
our requirements relating to Errors & Omissions coverage, indemnification and reporting specifications and
places your insurance with a carrier maintaining a rating of at least A-/IX in Best's Insurance Guide. Neither
we, nor our affiliates receive any income from placing insurance coverage or benefit plans with any insurance
broker or carrier.
Under Paragraph 14 of the Franchise Agreement, you amend all of your existing Franchise Agreements
to include the provisions in Subparagraph S.c. of the current form of our Franchise Agreement
regarding reporting insurance and indemnification. You must buy your insurance from the brokers and
companies we designate and provide indemnification under our current language for all of your
restaurants.
Note 6. Training Expenses. You do not pay us a training fee but you will be responsible for all personal
expenses for the training, including transportation to Connecticut, lodging, meals, wages, and benefits for any
of your employees. We may substitute a local, shorter training program for school lunch franchisees but you
may have local travel costs depending on where you receive your training. We do not charge a separate training
50
fee for school lunch franchises, but we may do so for franchises purchased in the future, if we are waiving the
·
initial franchise fee at that time.
Note 7. Miscellaneous Expenses. You must pay the cost of all permits, licenses, registrations, certifications, or
other consents required for leasing, constructing, or operating your restaurant. The $50 nonrefundable fee and
any additional costs associated with recording the lease that you pay to our affiliate are included in the total. In
addition to these expenses your municipality may assess impact fees on your SUBWAy® restaurant location.
Impact fees are charges assessed by your municipality against new development projects, such as your
restaurant, in an attempt to recover the cost incurred by the municipality in providing the public facilities
required to serve the new development. Impact fees may vary among municipalities; however, we estimate
these fees to be between $5,000 and $25,000. These fees are nonrefundable.
Note 8. Additional Funds. This is an estimate only of the range of initial start-up expenses for three months.
These expenses assume you lease your equipment from us, and include payroll costs but do not include royalty,
advertising fees, or food costs or any allowance for an owner's draw. The actual amount of additional funds
you will need to operate for three months depends on a variety of factors, including the size and location of
your restaurant, your own management skill, economic cqnditions, competition in the area of your restaurant,
the sales level reached during this period, and other factors. We cannot estimate the operating results of your
restaurant. We disclaim that by providing these estimates of your costs we are making any representation that
you will have any level of sales. The estimates are of your costs only and do not reflect any offsetting sales
revenue you may earn from operations to help pay these costs. We do not make earnings claims. See Item ! 9.
The estimate of Additional Funds for three months shown in the above chart is not an estimate of working
·capital you will need, but relates only to certain expenses for the time period stated. The time period of three
months is not a representation 6f when you should expect to break even, if ever.
Note 9. Opening Advertising. All new, transferred and relocated restaurants must hold a grand opening sale.
See Item 6. These costs do not apply to school lunch locations.
Note 10. Outside Signs. These costs do not apply to school lunch locations.
Note II. Total. These figures are estimates of the complete investment for setting up a SUBWAy®
restaurant and operating it for three months. It is possible to significantly exceed in any of the areas
listed. Your costs could also be substaintially lower if you are purchasing a non-traditional, satellite or
school lunch location. Some costs will vary in relation to the physical size of the restaurant. A lower cost
restaurant is one that will require fewer leasehold improvements, less seating, and fewer equipment purchases.
Moderate and higher cost restaurants may require extensive interior renovations, extensive seating, and
additional equipment. It may not be possible for you to construct your restaurant at the location you selected at
the lower or moderate total investment cost listed above. To avoid excessive construction costs, we strongly
recommend you choose contractors carefully by obtaining several competitive bids before construction begins.
The above figures do not include extensive exterior renovations or "key money" to the master landlord. We
have relied on our own experience of over 45 years in the restaurant business to compile these figures.
• • • • • • • • • • • • • • • • • • • • • • • • • • ****• *• *******
Apart from: (I) providing financing of $10,000 of the full $15,000 franchise fee for certain first time franchisees
under our minority loan program; (2) the equipment leasing program; (3) entering into the primary lease and
subleasing the restaurant premises to you; ( 4) loans in connection with a SUBWAy® restaurant; and (5) rare
circumstances in which an affiliate buys the real estate, constructs the restaurant and leases it to a franchisee; we
and our affiliates do not offer assistance or financing to you directly or indirectly. The above costs are not
refundable except the Equipment Lease security deposit, the location security deposit (depending upon the terms
of the primary lease), and utility deposits (depending on the terms set by each local utility), as long as you are in
compliance. Also, we may refund the initial franchise fee under certain circumstances as specified in Item 5.
51
Additional Menu Item> under the SUBWAY"' PilL,. Program, SUBWAY CAFE" Prog;am and Harl<eiWide or
Region Option Program. If you offer addttional menu items under the SIJBW A Y~ Plus Program, SUBWAY
CAFE"' Program or under the Marketwtde or Region Optton Programs described in Item I, you will have
additional investment costs. We estimate your additional investment costs below for adding our own menu
options If you enter into a franchise agreement or a hcensc with a third parry, the third party should provide
you with the mvesllnent cost informatton for adding its products and concepts.
This chart is our estimate of your add!lional investment costs to offer our in-house additional menu programs.
If your advertiSing fund market has approved a metm program we designate as a Marketwide Option Program,
or approves the menu program in the future, you will have to make the investment associated with that menu
program
CMts to Add Additional Menu Items Under tile SUBWA t' Plus Program SUBWAY CAFE'" Pmgram or
Marl<etwide Option Program
I Improvements
'
TOTAL 1
1
$2,550
$5,200
$<1,000
$28,506
Equipment for the soup program" optional.
2 All com arc noruefundable c>cept for the equipment le.,e deposits. 5ee Item 10_
'Costs may be higher for "'i>ting restauraJJts to add-on the METRO D<!cor.
Actual CIJ.•·t.~ will "ary for each franchisee and each location. This additi,nal informfltion concerning
additionalprodflctlines i• •ul>jecl to the qualiflcatimrs and nute' mentioned fli>ove.
Item 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
You must purchase or lease food products. packaging materials, constmction materials, equtpmcnt, items
bearing the SUBWAY" (rademark, and other products and materials required for the operation of your
restaurant in accordance with our specifications. Spceiticmions a"' available upon request and include
minimum standards for quality, construeuon, economies of scale, name recognition, appearance, and function.
We have wrinen lists of approved items of food products, packaging materials, cleaning products, construction
materials. equipment, and SUBW AY"'-logoed items. Your choice of products and supplies, however, may be
limited by the market in which you are located under the Marketwide Option Program See Item I and Item 16
You v.ill purchase all required food, equipment, beverages, and other products or services rypically used in
SUBWAY"' reS\amants exclusJvely from an approved distribution center or another approved source, including
us or an affiliate. as we may designate. You may bu} certain items from any source as long as they meet our
specifications. In some cases, we recommend manufacturers that you may choose to purchase from. We have
also approved one or more suppliers (including manufacturers, distributors, distribution centers, and other
sources) as the required supplier for certain items and you must buy these items only from them unless you
request and subsequently receive approval from us to add another approved supplier for the item in accordance
with our quality control procedures. The amount of time it takes to receive approval from us ranges from two
months to one year, depending on the item. We may withhold approval for a substitute supplier for a legitimate
business purpose, including identification of the system with one recognized brand, obtaining volume price
benefits, or achieving uniform procedures or systems.
We may change our specifications and supplier designations as a result of experience or changes in the
marketplace or law. We issue these changes to all franchisees. If you purchase a franchise for a school lunch
location, you may have to modifY the menu items with different specifications in order to satisfY nutritional
requirements. Except as described below, we and our affiliates do not derive revenue or profit from your
purchases or leases . .Other than the ownership interests stated in this Item 8, no officers of DAI have any
ownership interest in any approved supplier that provides goods or services to SUBWAy® franchisees
with exception of any publicly traded shares of a supplier that may be purchased from time to time by a
financial advisor on behalf of a DAl officer without the officer's knowledge. Any such ownership interest will
constitute a minimal interest in the supplier's company.
Under Paragraph 14 of the Franchise Agreement, you amend all of your existing Franchise Agreements
to include the provisions in Subparagraph 5.b. of the current form of our Franchise Agreement
regarding compliance with applicable laws and the Operations Manual and royalty increase for noncompliance.
You must purchase through us or lease from us substantially all major items of equipment. You may be
required to pay an administrative ordering fee of up to 4% of the cost of the equipment we order which is
purchased or leased by you. You may experience delays and higher costs if you seek approval to purchase
directly from vendors or from vendors not currently approved by us. If you purchase through us, you must pay
us, by a certified or cashier's check, the cost ofthe equipment charged by the manufacturer or distributor before
the allowance of any trade discounts, plus a buffer of I 0% of the cost to cover additional equipment or options
you may order, as well as any sales tax, gross receipts tax, or similar tax, delivery, or other additional charges.
See Item 7, Note 4. We act as an ordering and distribution agent and do not record the transaction as a sale by
us to you and we do not report revenue on the sale. You must pay or will reimburse for payment for any
applicable sales tax, gross receipts tax, or similar tax. We may collect these taxes from you. In a few instances,
depending upon the timeliness of bill payment, we may earn purchase discounts on the equipment we order for
SUBWAy® franchisees. We received purchase discounts in 2012 of $761,926 on equipment we ordered for
purchase or lease by SUBWAy® franchisees worldwide. We may derive a profit from the equipment leasing
program. Our revenues from our Equipment Leases with our franchisees in 2012 were $3,466,551. We offer
used equipment for sale. We had no revenue from our sales of used equipment to franchisees in 2012. If you
lease the equipment package, the security deposit represents 2% to 6% of your total purchases for the
establishment of your restaurant, and your monthly payments represent 4% to 12% of your overall purchases in
. operating your restaurant. See Item 7. The cost to purchase the equipment package outright represents 25% to
45% of your total purchases for the establishment of your restaurant. Our purchase discounts, Equipment Lease
revenues and revenue from the sale of used equipment totaled $4,228,477, or .004% ofDAI's total revenues of
$1,177,048,000. We have estimated your overall purchases in operating your restaurant to calculate the
percentages in this paragraph and below in this Item 8 differently from our estimates of the additional funds you
will need for the first 3 months (shown in the chart in Item 7). For example, to calculate the percentages in this
Item 8, we have included the food costs in your overall purchases, but did not include food costs in additional
funds in Item 7.
At present, our affiliate Franchisee Shipping Center Co., Inc. ("FSCC") is the only approved supplier for your
decals, certain operational items and replacement menu board trans lites. FSCC is also an approved source of
53
certain advertising, promotional, novelty and miscellaneous materials offered to franchisees. FSCC may derive
a profit on sales to franchisees. You may purchase items from the FSCC Online Store or by contacting your
coordinator. FSCC's revenue for sales was $17,704,229 in 2011, or 74% ofFSCC's total revenues of
$24,044,735. The cost of the menu board translites, decals, Sub Club® Card stamp dispenser and stamp
materials, operational materials, and the other items available from FSCC represents less than 2% of your total
purchases for the establishment of your restaurant, and less than 2% of your overall purchases in operating your
restaurant.
We designate a real estate leasing company affiliate to enter into the leases and licenses for the approved
locations and you sublet or sublicense from our affiliate. The Sublease and Sublicense provides for the passthrough of the costs and obligations of the main lease or license to you, and we and our affiliates do not derive
profit of anykind under our Sublease or Sublicense to you. However, if you use a portion of the leased or
licensed premises for any purpose other than a SUBWAy® restaurant, our affiliate may charge a premium for
the non-SUBWAy® restaurant space in addition to the rent you pay to the landlord, and may earn a profit from
this space. We and our affiliates did not receive any premium charges for leased or licensed premises in the last
fiscal year. Our affiliate may assess late payment fees and other costs arising from the administration of the
lease. Our affiliate has the same rights as the landlord or licensor on default to charge you for certain fees, to
carry out repairs, and to recover costs. You will also pay our affiliate $50 when you sign the Sublease as a
nonrefundable fee for administrative costs to record the lease. In addition, you will be responsible for any
additional costs associated with recording the lease. See Item 5. DAI and its affiliated leasing corporations
have an interest in compensation which often may include, hut is not limited to, lost royalties, loss of market
penetration, extended down time and other factors associated with the termination of a lease. We or our
affiliate may also keep all or a portion of any landlord or governrnent payment for early termination of the
lease. We estimate the required real estate Sublease or Sublicense represents 4% to 11% of your total purchases
for the establishment of your restaurant and 7% to 15% of your overall purchases in operating your restaurant.
You may not have to sign a Sublease or Sublicense for a non-traditional, satellite, or school lunch location. Our
affiliates that may act as your sublessor or sub licensor are listed in Item I. Any of these companies may be
involved in one or more lawsuits in various jurisdictions with landlords claiming breach of! ease or license and
suing for back rent and other remedies. These companies may also be involved in lawsuits with franchisees.
Any one of these companies may not have sufficient assets to pay a damage award in any one of these lawsuits.
We and our affiliaties may also own real estate and lease the premises to you for the purpose of operating a
SUBWAy® restaurant. Our affiliate or its assignee may also exercise a first right of refusal contained in a
primary lease to purchase property where a restaurant is located. In both instances we, our affiliate, or its
assignee will become your landlord and may derive rental revenue. In 2012, DAI had rental revenues of
$16,800. In 2012, our affiliate and its assignee had no rental revenue.
An officer of DAI has an ownership interest in DAI, Franchisee Shipping Center Co., Inc., Subway Real Estate,
LLC., Subway Real Estate Corp., and Subway Restaurants, Inc. See Item I for a description of these affiliates.
A company owned by a Development Agent ofDAI listed in Item 2 offers accounting services to franchisees
located outside of his development territory and may earn revenue for providing these services.
There are two approved suppliers for your POS system hardware. They are the only suppliers that can meet our
POS standards for hardware, software, and data transmission. The cost to purchase the system (including all
license fees for software on your POS system) will represent 3% to 7% of your total purchases.
We are the approved vendor for the Sub Shop/2000™, Sub Shop/2000 HOME OFFICE™ System and Sub
Shop/2000 In-Store HOME OFFICE Support™ software for your POS system. Computer Register Associates,
Inc. ("CRA") acquired license rights for the Sub Shop/2000™, Sub Shop/2000 HOME OFFICE™ System and
Sub Shop/2000 In-Store HOME OFFICE Support™ software from Franchise Technologies, Inc. ("FTI"), an
unrelated software developer. CRA dissolved and assigned all of its rights to us on June 13, 2001. We license
FTI's software to you through the vendor integrating and offering the hardware and software components of the
54
PC-based POS system to you. We guarantee an amount of license fee revenue to FTI as an incentive for FTI to
reduce its per unit licensing fee. We may earn a profit if the number of sales of the PC-based POS systems with
FTI's licensed software exceeds the number it needs to pay FTI the guaranteed license fee. We may waive or
partially waive the $400 update/enhancement fee for this software if you transmit your weekly sales
information using the most current software version for at least the number of weeks per year that we require in
the Operations Manual. The cost of the license fee for this software we license will represent less than I% of
your total purchases for the establishment of your restaurant. In 2012, DAI's revenue for licenses for Sub
Shop/2000™, Sub Shop/2000 HOME OFFICE™ System, and Sub Shop/2000 In-Store HOME OFFICE
Support™ software and any maintenance fees paid by franchisees worldwide was $1,999,087, or .002% of
DAI's total revenues of $1,177,048,000. In 2012, DAI's revenue from Technology Center support was
$1,44 7, 706.
We and our affiliate FWH are the developers and owners of the SubwayPOS® software, which you may be
required to use when available in your market. There is no license fee for this software, however we will charge
an annual software maintenance fee between $350-$600. The cost of the maintenance fee will represent less
than I% of your total purchases for the establishment of your restaurant. Our approved hardware suppliers will
provide support for the SubwayPOS® software. We or FWH may receive a portion of all revenue received by
our hardware suppliers for providing software support. In 2012, we and FWH did not collect any revenue for
SubwayPOS® software support offered by our hardware suppliers.
The approved SUBWAY® Payment Manager ("SPM") software you must purchase to participate in the
SUBWAy® Card Program is only available from Value Pay Services, LLC ("VPS"), a subsidiary of the !PC.
The principal address ofVPS is 9200 S. Dadeland Boulevard, Suite 705, Miami, FL 33156. We own the rights
to the SPM software and licensed VPS to license and distribute the software to SUBWAy® franchisees. We
may earn a profit if the cost to maintain and upgrade the software does not exceed our revenue. See Items 5, 6
and II. In 2012, the revenues from the SPM software were $644,300.
In the future, you may be required to invest in and implement various new technology initiatives. To better
manage business functions and control costs, you may be required to purchase materials for these initiatives
from a third party supplier we designate. Examples of such initiatives include, but are not limited to, the
following: LCD or plasma monitors, music, internet TV, acceptance of debit cards, Social Media applications,
WIFI, high speed broadband connection, surveillance system, remote ordering through kiosks, PCs, hand held
devices, e-learning, and software applications. See Item 6, Note 5.
In accordance with Nevada state law, you will be required to use an architect licensed in the state of Nevada for
the preparation of site specific drawings to be used in the new construction, alteration, and remodel of
SUBWAy® restaurants located in or contemplated in Nevada. You may be required to use the Nevada licensed
architect that we designate.
We recommend franchisees of our affiliate PFG Ventures (ProForma® franchise) as suppliers of business forms,
but you do not have to buy from them. Our investors or parties related to them who are also investors in PFG
Ventures will benefit indirectly because of the royalty paid to PFG Ventures by its franchisees on any sales to
SUBWAy® franchisees. We are not able to determine the size of this indirect benefit.
Sub-Technologies, Inc. was an affiliate of a person who is a Development Agent of DAI. The company had a
principal business address at P.O. Box 18285, Raytown, Missouri 18285 and was an approved supplier to
SUBWAy® franchisees of small-ware restaurant equipment and induction burners. You can purchase items
similar to those offered by Sub-Technologies, Inc. from any source you like, except the equipment package
offered by Sub-Technologies, Inc. was the only equipment we had approved for our omelet program under the
Marketwide Option Program.
55
Estep & Company, Inc. was established by a franchisee of DAI and is the only approved supplier of catering
call center services. The principal business address for Estep & Company, Inc. is I 0 I 0 25th Street, Columbus,
Indiana 4 720 I.
In-Store Broadcasting Network ("IBN") is the only approved vendor for SUBWAy® Vision, an in-store media
system which includes promotional materials for the SUBWAy® brand, third party advertisements and other
entertaining information for customers. The principal business address for IBN is 175 S. Main Street, Suite
1600, Salt Lake City, UT 84111. We may receive contributions from IBN that we plan to direct to the
Franchisee Education Fund which supports training.and other franchisee educational programs.
We currently designate only one approved supplier for purchasing or leasing the following products, materials,
or services. We have the right to change approved suppliers. This could result in additions to or deletions from
the listings below of products, materials, and services only available from a single source.
At present, we have only one approved supplier for each of the following items that you will buy frequently:
Seafood Sensation; Soup; Croutons; KIDS' PAK® premiums; KIDS' PAK® bags; Cookies; Paper Hot
Cups/Lids; Lid and Soup Container; Salad Plate and Lid; Catering Trays & Lids; Straws; Cutlery Kit; Sub
Carrier; Napkins; Box Lunch; 4 Cup Carrier; Specialty Bag; Pouch Wrap; Plastic 30 oz Cup; Subwrap;
Sanitizer-Safe Wiper; Degreaser; Dish Detergent; Floor Cleaner; Glass & Multisurface Cleaner; Restroom
Cleaner SuperSan Sanitizer; Oven Cleaner; Antibacterial Hand Soap; Ice Clean Ice Machine Cleaner; Sani 750
Ice Machine Sanitizer; Cube Ice Machine Cleaner; Squeeze Bottles; Bread Toppings; Mustard; Ranch Dressing;
Flatbreads and Olive Oil Blend. We estimate the purchase of these items will represent less than 5% of your
total purchases to open your restaurant and less than 8% of your overall purchases to operate your restaurant.
At present, we have only one approved supplier for each of the following items you will buy once or
infrequently: Sandwich Unit; Coffee Airpot; Dry-Storage; Marlite Wall Laminate; Dough Retarder Cabinet;
Menu Board; Easy Slicer; Water Filtration System; Souffle Cups and Lids; T-Shirt Bags; 1/3 & 1/6 Pan Liner;
3 foot Sub Board; Menu Board Translites (initial purchase and updated versions); Acrylic Cleaner; Blizzard
Low Temperature Cleaner; Board Bright Cutting Board Cleaner; Clear Liquid Drain Cleaner; De-Limer Lime
and Scale Remover; Stainless Steel Polish; Wipe Off Graffiti Remover; Integrated Credit/Debit Transaction
Processor; Anti-Virus Software; Kiosks System; Credit Card Payment Processing Encrypted Mag Stripe
Reader; Squeeze Bottles; Modular Soffit and Modular Soffit Lights; office/training station, Coffee and iced tea
brewer, iced tea urns, lighting, coolers, freezers, and bottled beverage cooler. We estimate the purchase of
these items from these sources will represent 14% to 30% of your total purchases for the establishment of your
restaurant, not including the shipping costs, sales tax, gross receipts tax or similar tax. Some of these items may
only be available through us.
The only approved supplier for beverage products and the equipment for the beverage products is Coca-Cola
North America, a division of the Coca-Cola Company ("Coke") with a principal address at One Coca-Cola
Plaza, Atlanta, Georgia 30313. We estimate the purchase of Coke beverage products will represent I 0% of
your total purchases to open your restaurant and 9% of your overall purchases to operate your restaurant.
If you have a school lunch location, you may have only one approved supplier for some food items unless you
request approval from us for additional suppliers.
We designate one or more approved insurance brokers and their associated carrier(s) under a Gold Standard
Insurance Program. You must purchase your general liability insurance from one of these brokers and their
associated carrier(s) unless permitted otherwise. See Item 7, Note 5, and Exhibits A-3, A-4 and A-15. We
estimate the cost of your insurance from a broker or carrier we designate will represent less than 4% of your
total purchases to open your restaurant, and less than 4% of your overall purchases to operate your restaurant.
Neither we, nor our affiliates receive any income from placing insurance coverage or benefit plans with any
insurance broker or carrier.
56
We designate suppliers for additional menu items and equipment offered under the SUBWAy® Plus,
SUBWAY CAFE® and Marketwide Option programs. Some of the equipment items for these programs may
only be available for purchase through us. At present there is one approved supplier for each of the following
menu items and equipment for these programs:
Personal Pizza- Boxes; Pepperoni; Sausage; Mozzarella cheese; Menu Board, back-lit. The purchase of these
items may represent almost 5% of your total purchases in connection with establishing this menu offering and
I 00 % in continuing it.
Soup- The purchase of soup from this supplier may represent 15% of your total purchases in connection with
establishing this menu offering and 100% in continuing it.
Omelet: Required Equipment package (including induction burners, pans, custom cutting board, small-wares)
for this menu item. The purchase of this package may represent almost 30% of your total purchases in
connection with establishing this menu offering and I 00 % in continuing it.
SUBWAY CAFJ!& Program: Biscuits; Coffee, whole bean; Coffee sauces and syrups; Cold Drink Cups and
Lids; Croissants; Frozen Drinks; Pastry Bites; Specialty Boxes; Tea; Bakery Display Case; Menuboard;
Menu board Lighting; Back Counter With Ice Bin; Refrigerated Back Counter; Blender; Espresso Machine;
SUBWAY CAFE® Interior Sign; SUBWAY CAFE® LED Outdoor Sign; End Wall; Cash Section. The
purchase of these items may represent 30% of your total purchases in connection with establishing this program
and almost 45% of your total purchases for continuing it.
We consider the manner in which we establish our standards and specifications, as well as our criteria for
suppli~r approval, to be confidential, and have no established policy to provide this information to franchisees.
We have developed a Gold Standard Program for certification of all food suppliers. A Gold Standard is a
detailed listing of every specification associated with the product. For example, the specifications for food
products include product size, product description, spice profile, slice weight, water content, nutritional profile,
and other components of a product analysis. The goal of the Gold Standard Program is to promote consistency
across the SUBWAy® system, with all products within any category being virtually identical regardless of the
supplier. All food product suppliers must successfully complete an application process, including payment of a
nonrefundable $500 administrative fee and submission of samples for examination and testing. Prospective
equipment and supplies vendors must meet or exceed our specifications for the equipment or supplies. We may
develop a Gold Standard for certain supplies. Equipment and supplies vendors may have to pay an application
fee and submit samples. Standards and specifications for non-food products include minimum requirements for
weight, delivery, performance, warranties, cjesign, and quality control.
If you want to purchase or lease equipment, packaging materials, supplies, or food products we have not
approved, you must notify us first. Suppliers must successfully complete our application process. We will
advise you within a reasonable time whether the equipment, packaging materials, supplies, or food product is
approved. The amount of time it takes to receive approval from us ranges from two months to one year,
depending on the item. We may re-inspect and re-evaluate the facilities and products of any previously
approved supplier, and may revoke its approval if we find the supplier fails to meet any of our standards and
specifications at any time. Gold Standard Certified food product suppliers will be subject to monitoring on a
periodic or ongoing basis.
You may purchase approved food products from an approved food distribution center in your area. In some
areas there may only be one approved distributor, and you must purchase from this distributor. Even if we have
approved more than one manufacturer for a certain food item, distributors may choose to carry only one product
line, due to various factors, including price and storage considerations. If you are in an area served by a single
approved distributor, you may have limited selection for certain approved food items. Franchisees in the United
57
States and Canada approved formation of the Independent Purchasing Co-op (the "IPC"), a purchasing cooperative proposed by the Subway Franchise Owners' Advisory Council. The IPC may recommend and
negotiates approval of vendors with DAI. The IPC will not have any exclusive rights for the purchase of
approved products. For franchisees in the United States and Canada, although there may be more than one
approved brand, availability of a particular brand in an area may be limited by the IPC and the store will be
required to carry the brand available in that area.
We and the IPC occasionally negotiate prices, discounts, and other purchase arrangements systemwide or
nationally in the United States, for the benefit of SUBWAy® franchisees, with approved suppliers of food
products, packaging materials, construction materials, equipment, items bearing the SUBWAy® trademark, and
other products, services and materials required for the operation of your restaurant. We and the IPC have
entered into an agreement with the Coalition oflmmokalee Workers to improve tomato harvester wages and
working conditions in Florida. As part of this agreement your cost to purchase Florida-grown tomatoes has
been increased by 1.5 cents per pound in order to provide a supplement to the harvesters' wages. We and the
IPC have in the past and may in the futUre negotiate contributions and programs for advertising and other uses
benefiting franchisees with approved systemwide or national suppliers, including manufacturers and
distributors, based upon franchisee purchases from these suppliers. We may negotiate agreements with
suppliers that include marketing funds that are pooled and directed to a local or national advertising fund.
These agreements allow the supplier to achieve a promotional goal of advertising their product in conjunction
with the SUBWAy® brand consistently throughout a market. Franchisees will not receive a rebate directly
from the supplier, as a franchisee could not solely meet the supplier's market\vide promotional goa!. Vendors
and suppliers may also contribute money to our Franchisee Education Fund. This fund is to be used for
SUBWAy® franchisee educational and other purposes approved by us. The IPC will manage the solicitation of
funds from vendors and suppliers. All contributions are voluntary. DAI will contribute any income, after
expenses, from the annual SUBWAy® convention into the Education Fund. In 2012, DAI collected
$13, I 52,800 from suppliers for market research, testing and equipment. Suppliers pay booth fees and/or
sponsor events to participate in franchisee trade shows. In 2012, fees, sponsorships and contributions made by
vendors and suppliers totaled $2,130,250. The suppliers' payments may subsidize our costs to hold the
franchisee convention or company field meeting. Vendors paid $52,320,500 in 2012 to be used for the benefit
of franchisees serving their products.
We and our affiliates use the funds contributed by these suppliers for the benefit of franchisees. We do not
intend to receive a profit. We may direct that these funds be used for national advertising, local advertising, the
purchase of equipment, research and development or other uses to benefit franchisees. However, you may,
apply to the supplier annually to receive the contributions on your purchases for that year directly. The amount
of the contributions is determined as a specific amount of money per quantity of product purchased, or
sometimes as a percentage of the supplier's dollar sales of the product. Some vendors contribute on a national
level only, some on a local level only, and others on both a national and local level. Occasionally, a supplier
may make a contribution or an additional contribution on the same basis or some other basis temporarily for a
special promotion. It is also possible manufacturers and distributors could negotiate supplier advertising
contributions on a local level with the funds being used to promote advertising in the local market. We are not
able to provide specific information on all these local programs, but we believe that suppliers make
contributions at rates determined in a manner similar to those discussed. As of the date of this Disclosure
Document, we and the IPC have made all or the bulk of these arrangements that benefit franchisees in the
United States, Australia and Canada. There were minimal or no national or local vendor contributions paid
outside of the United States, Australia and Canada in the last calendar year. At present, the suppliers
contributing funds which benefit franchisees in the United States are making contributions at approximately the
following rates based on franchisee purchases: $0.03 - $0.10 per pound; $0.18 - $1.00 per case; $0.052 per bag;
$0.97 - $1.53 per gallon; or 2% - 3 7% of sales dollars.
The Members Advertising Funds Trust ("MAFT") collects the advertising contributions that we and the IPC
negotiate. MAFT is administered by the MAFT Board which is comprised of representatives from DAI, IPC
58
and SF AFT. The MAFT Board tracks the franchisee purchases from our approved suppliers, collects the
appropriate amount of advertising contributions and then distributes the advertising contributions for each
market to an advertising fund. We determine the allocation of the advertising contributions for each market
based upon the information supplied to us by MAFT. We may designate another entity to perform these duties.
The advertising contributions may be allocated to advertising markets anywhere in the world where franchisees
have purchased products from suppliers in the United States. The allocation of some portion of the advertising
contributions is .by country, based upon franchisee purchases from the supplier. We may designate that MAFT
place the advertising contributions into a national advertising fund or local advertising funds. We have no
obligation to designate that MAFT contribute all of the rebates to any particular advertising fund established for
the benefit of franchisees, and instead may allocate the funds to more than one advertising fund in proportions
that we determine.
Item 9
FRANCIDSEE'S OBLIGATIONS
This table lists your principal obligations under the Franchise and other Agreements. It will help you find more
detailed information about your obligations in these agreements and in other Items of this Disclosure
Document.
Obligation
Section in Agreement
.
a. Site selection and
acquisition/lease
b. Pre-opening
purchases/leases
c. Site development and
other pre- opening
requirements
d. Initial and ongoing
training
e. Opening
Franchise Agreement (FA) Paras. l.b, 5.a, 1l.i; Satellite Rider
(SR) and Short Term Satellite Rider (STSR) Paras. R.2, II; NonTraditional Location Rider (NTLR) Exhibit A-3 Paras. III, V,
Exhibit A-4 Paras. II, III; .School Lunch Program Rider (SLPR)
Paras. II, IV, V; Specific Location Rider (LR) Para. II; CoBrand Location Rider (CBLR) Para. I; Food Service Provider
Rider (FSPR) Paras. IV, VI; Dual Location Test Rider (DLTR)
Para. II; SUBWAY CAFE® Program Rider (SCPR) Paras. I
FA Paras. 5.a, 5.b, 5.c; SR Paras. II, IV; STSR Paras. I, III;
NTLR Exhibit A-3 Paras. V, VI, Exhibit A-4 Para. III; SLPR
Paras. II, IV, VI; LR Para. II; FSPR Paras. VI, VII; SCPR Paras.
II, III
FA Paras. 5.a, 5.b,5.c; SR and STSR Paras. II, III, IV, NTLR
Exhibit A-3 Paras. V, VI, Exhibit A-4 Para. III; SLPR Paras. IV,
VI; LR Para. II; Sublease Para. 10; Sublicense Para 7; FSPR
Paras. VI, VII; SCPR Paras. I, II, III, IV
FA Paras. 4.a, 5 .a.; SR and STSR Para. II; NTLR Exhibit A-3
Paras. IV, V, Exhibit A-4 Para. III; SLPR Paras. III, IV; FSPR
Paras. VI, VII
FA Para. 5.a; SR Para. II; STSR Para. II; NTLR Exhibit A-3
Para. V, Exhibit A-4 Para. lll; SLPR Para. IV; FSPR Para. VI
59
Item in
Franchise
Disclosure
Document
Items I, 6, 7, 8,
II and 12
Items 7, 8
and 10
Items 6, 7, 8, I I
and I 7
Items I I and 15
Items 7 and 1 I
f. Fees
g. Compliance with
standards and policies
/Operations Manual
h. Trademarks and
proprietary
information
i. Restrictions on products
/services offered
j. Warranty and customer
service requirements
k. Territorial development
and sales quotas
I. Ongoing product
/service purchases
m. Maintenance, appearance and remodeling
requirements
n. Insurance
o. Advertising
p. Indemnification
q. Owner's participation!
manag_ement/staffing
r. Records and reports
s. Inspections/audits
t.
Transfer
u. Renewal
v. Post-termination
obligations
FA Paras. I, 2, 5, 8.e, 8.g, 8.h, 9.a, IO.a, IO.h, IO.o, ll.f,
ll.k, II .I, 14; SR Paras. IV, VII, IX; STSR Paras. Ill, VI, VIII;
NTLR Exhibit A-3 Paras.II, V, VI, VII, VIII, X, XI, Exhibit A-4
Paras. I, III, IV, VI, VII; SLPR Paras. I, III, IV, VI; LR Paras. I,
II; CBLR Para. I; FSPR Paras. III, VI, VII, VIII, IX, XI, XIII;
Sublease Paras. 5, 6; Sublicense Para 2; Equipment Lease Paras.
3, 4, 6, 7, 10, II, 12, 13, 14, 16, 21, 22.e, 22.f, 22:i, 23
(Addendum); Software License Agreement Exhibit A-8 Para. 7;
End User License Agreement A-8-1 Para. 9.
FA Paras. 5.b, 5.c; SR Para. III; STSR Para. ll; SLPR Paras. V,
VI; CBLR Para. I; SCPR Paras. I, ll, III, IV, V
Items 5, 6, 7,
I 0 and 17
FA Paras. 3, 5.1, 5.m, 8.e, 8.h, ll.g; SCPR Para. V
Items6, 13,14
and 17
FA Paras. 5.b, 5.c; SR Para. III; STSR Para. II; SLPR Para; V
Items 8 and 16
FA Paras. 5.b, 5.c
Items 8 and 16
FA Para. ll.m
Item 12
FA Para. 5.b; SCPR Paras. ll, III
Item 8
FA Paras. 5.b, 6; SR Paras. III, VI; STSR Paras. 11, V; CBLR
Para. I; Sublease Para. 4; Sublicense Para. 3; Equipment Lease
Para. 7; SCPR Paras. II, V
FA Paras. 5.c, 14; SR Para. IV; STSR Para. III; NTLR Exhibit
A-3 Para. VI; SLPR Para. VI; FSPR Para.VII; Sublease Para. 4;
Sublicense Para. 3; Equipment Lease Para. 6
FA Paras. 5.i, 14; SR Para. V; STSR Para. IV; Advertising Fee
Rider for Theme Park, National Park, and Airport Terminal
Locations Para. II; School Lunch Ad Fee Rider Para. II
FA Paras. 5.c, 14; Sublease Para. 4; Sublicense Para. 3; SLPR
Para. VI; Equipment Lease Para. 12
FA Recital Para. I, Paras. 5.a, 9.a., 9.c.; SLPR Para. XI;
NTLR Exhibit A-3 Paras. V, XV, Exhibit A-4 Para. Ill
FA Paras. 5.f, 5.g, 14; NTLR Exhibit A-3 Paras. VIII, XI,
Exhibit A-4 Para. V; CBLR Para. I; FSPR Para. X; Equipment
Lease Paras. 22.b, 22.d
FA Paras. 5.g, 5.h; NTLR Exhibit A-3 Para. IX, Exhibit A-4
Para. V; CBLR Para. I; FSPR Para. X; Equipment Lease Para.
22.c
FA Para. 9; SR Para. IX; STSR Para. VITI; NTLR Exhibit A-3
Para. XIII; CBLR Para. I; Sublease Para. 7; Sublicense Para. 5;
FSPR Para. XVI; Equipment Lease Paras. 15, 16
FA Para. 7; SR Para. VII; STSR Para. VI; SLPR Para. X;
Sublease Para. 3; Sublicense Para 2
FA Paras. 8.e, 8.g, 8.h, 8.i, ll.b, ll.h, 13, 14; SLPR
Para. XI, XII; Sublease Para. 6; Sublicense Para 4; Equipment
Lease Para. I 7
Items II and I 7
60
Items 8, 16 and 17
Items 6, 7 and 8
Items 6, 7 and 11
Items 6 and 7
Items II, 15
and 19
Item 6
Items 6 and II
Items 6 and 17
Item 17
Items 6 and I 7
•
Non-wmpctition
FA Paras. 5.d, ~-e, S.g, S.h; SLPR Paras V, VII, XI, XJJ, XJ/1;
NTLR Exhibit A-J Paras. 111, VJI, Xl, Xlt, Exhibit A-4
Paras. II, rY, VII, VIII; FSPR Para. Xlii
FA Parns. 10, 14, 17. Also see FA Paras_ 5.d, 8 d. 8.e. 8.h,
ll.i; NTLR Exhibit A-J Paras. Vll, XI, XrY. Exhibit A-4
Paras. IV, VII; LR Para. I/1; FSPR Para. XVII; Sublease Para. 6,
Sublicense Para~: E
ment Lease Para. 14
C<J\enants
Dispute resolution
'
L
Jtems6, !Sand 17
Item l 7
"'
,
Item 10
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Note I. All oft he individuals who signed !he Franchise Agreement must also personally si~ the financing
documents. All shareholders must guarantee the obllgation if you assign your righ1s to operate the restaurant to
a corporation. See Item t 7_
Note 2. We offer an equipment leasing program. The program is available to all franchisees in the United
States its territories (not including Puerto Rico but including Guam), except that a franchisee who owns an
existing restaurant that is not in compliance with the Operations Manual may not obtain an Equipment Lease.
You may acquire an Equipment Lease for 2 restaurants without prior credit approval. However, if you want to
lease equipment for 3 or more restaurants, you must complete our financial application and send it for review
before you enter into the third or any subsequent Equipment Lease. We estimate the cost of the equipment
package to be between $55,000 and $91,000. The cost varies depending upon the size of the restaurant and the
amount of equipment you order. We also offer to lease the equipment portion of the POS system. See Item 11.
Your equipment package cost will be higher if you offer additional menu items under our SUBWAy® Plus
Program, SUBWAY CAFE® Program or Marketwide Option Program. See Items 1 and 7. We require a
security deposit. It is due when you sign the Equipment Lease and before we will order the equipment. The
security deposit is 10% of the equipment cost, with a minimum of $1,000, payable by certified or cashier's
check. All of the individuals who sign the Franchise Agreement must sign the Equipment Lease. You must
also obtain insurance coverage for the equipment, naming us and/or the following as additional insureds before
we will order your equipment: our Development Agent, agents and affiliates, our shareholders, officers,
directors, employees, agents and those of our Development Agent and agents and affiliates. You may be
required to pay us a fee of up to 4% of the cost of the equipment you lease as an administrative ordering fee
upon the signing ofthe equipment lease and before the equipment will be ordered. See Item 6. We do derive a
profit from the equipment leasing program and we may earn purchase discounts. See Item 8. The equipment
leasing program does not presently include equipment necessary for items offered under the SUBWAy® Plus
Program or the Marketwide Option Program, or to establish a co-branded concept.
We deem the Equipment Lease to be a true lease and not a financing lease. Equipment leases are written for a
term of 5 years. See Equipment Lease, Section 2: Schedule of Rental Payments. You pay monthly and you
must pay through your pre-authorized account. See Exhibit F and Equipment Lease, Section 3: Schedule of
Rental Payments. You must also execute pre-authorized draft forms for your royalties and advertising charges
in order to obtain an Equipment Lease. You must also be current in all of your accounts. The present
Equipment Lease charge is at the rate of $2.70 per month for each $100 of gross equipment financed, plus any
applicable sales, use, gross receipts, personal property or other taxes. We estimate the monthly payment on an
Equipment Lease of $55,000 to be $1,485 per month for 60 months, plus any applicable taxes. After 60
months, you will have paid $89, I 00 (not including any applicable taxes) and you will also have paid a security
deposit of$5,500, for a total of $94,600. We will return the security deposit at the end ofthe lease term if you
are not in default. You can terminate the lease early after 30 days' notice. You must pay all amounts due
through the termination date. You must also pay the remainder of the monthly payments due through the end of
the lease, limited to 18 months' payments. See Equipment Lease Addendum, Section 23. You will not own the
equipment unless you purchase it. You may buy out the lease at any time during the term or at the end of the
term according to a formula. The purchase price at the end of the 5 year lease period is I 0% of the original
value. See Equipment Lease, Sections 4 and 2l.f. In our example of a $55,000 leasable equipment package,
you could buy the equipment at the end of the 5 year lease term for $5,500, making your total payments $94,600
(not including any applicable sales or other taxes you must pay or your security deposit). You may assign or
transfer an Equipment Lease upon the sale of your restaurant business if you pay a transfer fee of 5% of the
outstanding balance due on the lease at the time of the transfer. See Equipment Lease, Section 16.
The Equipment Lease does not contain any .waiver of defenses or similar provisions, except that if we assign the
Equipment Lease to a third party, you are required under the Equipment Lease to pay all sums due to the
assignee and the assignee is not obligated to perform or see to the performance of any condition or covenant in
the Equipment Lease to be observed by us. See Equipment Lease, Section 15. Accordingly, the Equipment
Lease is not subject to defenses or setoff if it is assigned. You must arbitrate any disputes and claims under the
Equipment Lease. See Equipment Lease, Section 14. If you do not make a payment on time, we can demand
all overdue payments and terminate the Equipment Lease. See Equipment Lease, Section 13. The Franchise
Agreement (Subparagraph 8.a.) provides that any failure to pay monies due to us will be a default under the
Franchise Agreement, so that a default under the Equipment Lease may lead to termination of your Franchise
62
Agreement. You are liable to pay our costs to collect under the Equipment Lease, including attorneys' fees.
See Equipment Lease, Section 21.
Note 3. We offer to finance $10,000 of the initial franchise fee under our minority loan program for qualified
franchisees purchasing their first franchise at the full $15,000 franchise fee in the United States only. You are
eligible for this program if you are a member of a minority. We will determine your eligibility adopting the
definition of "minority" used by the United States Small Business Administration for its business development
programs, found at 15 U.S.C. Section 631 (f)(! )(C). The definition includes but is not limited to African
Americans, Hispanic Americans, Asian Americans, and Native Americans. If you participate in the minority
loan program, you will pay $5,000 of the initial franchise fee at the time you sign the Franchise Agreement, and
you will sign a promissory note similar to Exhibit K, described in Note 7 below, for the balance of $10,000.
The maximum term of the loan will be 42 months, with payments starting after 6 months/the 27 111 week after you
sign the Franchise Agreement. The note will be interest-free for the first 6 months/26 weeks, and then you will
pay principal and interest weekly, amortized over 36 months/156 weeks, through your pre-authorized account.
Note 4. We designate an affiliate to enter into the primary lease or license for your restaurant premises with the
landlord. The landlord is usually an unrelated third party. You pay rent or license fee for your restaurant to the
landlord of the premises, but under a Sublease or Sublicense you enter into with our designated affiliate. See
Sublease, Paragraph 4 or Sublicense, Paragraph 6 (as applicable) and Franchise Agreement, Paragraph 5.a. You
may pay rent directly to our affiliate. Under certain circumstances, your landlord or the licensor may require us
or one of our affiliates to make rental payments for your Restaurant to them on your behalf. All rental payments
and related charges we pay on your behalf will be deducted from your pre-authorized account with us, which
you agree to adequately fund for such payments when due. If you are purchasing a franchise for a nontraditional location, you may not have to sign a Sublease or Sublicense.
Your entrance into the Sublease or Sublicense does not relieve our designated affiliate from its obligations
under the primary lease or license. The Sublease or Sublicense (as applicable) incorporates the landlord's form
of lease or license, which will vary. The landlord may require you to pay "key money" and may require you to
personally guarantee the lease or license and may require a right of first refusal if you want to transfer your
restaurant. You should read the primary lease or license (as applicable) and the Sublease or Sublicense (as
applicable) carefully. You may also want to review these documents with a lawyer. You and our affiliate
waive trial by jury. See Sublease, Paragraph 6 and Sublicense, Paragraph 4. The landlord may require a
security deposit, typically equal to one month's rent. You may have the right to prepay the lease without
penalty; however, many lease agreements do not allow payments to be made more than I or 2 months in
advance. The individuals who sign the Franchise Agreement must also sign the Sublease and are personally
liable for payments under the Sublease. If you default under the provisions of the primary lease or license, our
affiliate may terminate the Sublease on 10 days' written notice, and you must surrender and leave the premises.
See Sublease, Paragraph 6 and Sublicense Paragraph 4. A default under the Sublease or Sublicense is a default
under your Franchise Agreement (Franchise Agreement Subparagraph 8.a.) and we may terminate your
Franchise Agreement. Conversely, a default under your Franchise Agreement will be a default under your
Sublease or Sublicense (as applicable). See Sublease, Paragraph 6 and Sublicense Paragraph 4. In such case,
our affiliate may evict you if you do not leave. Any action to enforce our affiliate's rights against you under the
Sublease is not considered an arbitrable dispute under the Franchise Agreement, and is not subject to arbitration
required under the Franchise Agreement. See Franchise Agreement, Paragraph I O.c. You will remain liable for
payment of the balance of the rent or license fee due under the primary lease or license, and you will be liable
for our affiliate's costs and legal fees if litigation occurs and you lose. See Sublease, Paragraph 6 and
Sublicense, Paragraph 4. Our affiliate may charge you interest on all past due amounts at the rate provided in
the primary lease. See Sublease, Paragraph 4 and Sublicense Paragraph 4.
The primary lease may contain a right of first refusal to purchase the property in which your restaurant ·
operates. Our affiliate will not include with your Sublease the ability to exercise this right to purchase the
property. In the event your landlord elects to sell the property, any right of first refusal to purchase the property
63
shall remain with our affiliate. Our affiliate may assign its right of first refusal to an assignee of its choosing,
which may be an affiliate or your Development Agent. In the event our affiliate or its assignee exercises its
right of first refusal and purchases the property where your restaurant is located, our affiliate or its assignee will
become your landlord.
Our affiliate may earn a profit if you use a portion of the leased or licensed premises for any business other than
a SUBWAY" restaurant. DAI and its affiliated leasing corporations have an interest in compensation which
often may include, but is not limited to, lost royalties, loss of market penetration, extended down time and other
factors associated with the termination of a lease. We or our affiliate may also keep all or a portion of any
landlord or government payment for early termination of the lease. See Items 5 and 8 and Exhibits D and D-1.
Note 5. In rare circumstances, one of our affiliates will acquire real estate and construct a free-standing
restaurant under the Pilot Construction Program. We expect a newly-formed affiliate would construct each
restaurant under this program. After construction, including the leasehold improvements according to our
requirements, a SUBWAY" franchisee will lease the premises. The franchisee must equip the restaurant. See
Item 7. To participate in this program, you must pay our affiliate $25,000 upon signing a lease for the location,
which will occur before the construction begins. We consider the $25,000 a deposit and will apply it to the
exterior and/or interior construction or remodeling costs. If our affiliate does not do the construction work, we
will refund the $25,000. We intend to use this payment for acquisition, construction, and financing costs.
Leases will be written for a term of 20 years. Fixed minimum rent will be payable monthly at the rate of $1.20
per $100 of acquisition and construction costs, Jess your $25,000 payment, !!nd is subject to an annual consumer
price index adjustment. For example, if the project cost to acquire the .real estate and construct the restaurant is
$225,000, the minimum rent payment the first year would be $2,400 per month. Rent costs under this program
may be equivalent to costs of constructing your own restaurant. Rent costs may also be higher. We or our
affiliate may derive a profit from this program.
Note 6. The promissory note permits us to declare the entire balance of the note due if you default. See Exhibit
K. You will pay a late fee equal to 10% of any payment that is more than one week late. We may collect our
reasonable costs of collection and lawyers' fees, calculated as 15% of the unpaid loan balance. A default under
a note will also be a default under your Franchise Agreement and we may terminate your Franchise Agreement.
See Promissory Note, Paragraph 5 and Franchise Agreement, Subparagraph 8.a. You may prepay the note
without penalty. You must pay the note in full if you wish to transfer your restaurant. See Franchise
Agreement Paragraph 9.a. The note includes a general release of claims. You must execute pre-authorized
draft forms for your note payments.
Note 7. We may lend money to franchisees in connection with a SUBWAy® restaurant. The terms and
purposes of these loans are negotiable and you will sign a promissory note in the form of Exhibit K and
described in Note 6 above. In addition, we may guarantee a loan for a franchisee in connection with a
SUBWAY" restaurant. There will be a one time fee deducted from your pre-authorized account of 1% percent
of the loan amount for any loan guarantee we make on your behalf.
***************************************
We may change or eliminate these loan programs and equipment leasing program without any prior notice to
franchisees. We and our affiliates did not discount or assign to anyone (other than an affiliate) any franchisee
notes, commercial paper, or Equipment Leases prior to January 1, 1998. When we and our affiliates do
discount and assign the notes, commercial paper, and Equipment Leases to the third party, the third party may
be immune under the law to claims or defenses you may have against us or our affiliate, or the equipment
manufacturer.
Whether, and on what terms, you can obtain financing from third parties will depend on a variety of factors,
including your own creditworthiness, the type of security you can offer, the policies of lending institutions, and
64
the availability and cost of commercial credit generally. You may not be able to obtain a loan. Except for
payments made to us under the equipment leasing program, financing of the franchise fee, loans to resolve
disputes, and payments made to our affiliates under Subleases, Sublicenses, licenses, or leases for constructed
restaurants, we and our affiliates do not receive payments for the placement of financing or providing financing.
We may receive payments under the Sublease or Sublicense if you use a portion of the premises for any use
other than a SUBWAy® restaurant, or under the lease or license if the lease or license is terminated early by the
landlord or the government. Except for the lease or license for your restaurant premises, we and our affiliates
do not guarantee your obligations to third parties. Also, you may lose your defenses against us and others in a
collection action on an Equipment Lease or a loan that is assigned, as disclosed above. We do require you to
sign a general release of claims as a condition of making a loan to you. You must arbitrate any disputes or
claims under the Equipment Lease. The primary lease or license for your restaurant may contain a waiver of
notice, confession of judgment, or a waiver of defenses. Except as disclosed in note 8, we do not arrange
financing from other sources.
Franchisees of the SUBWAy® system are eligible for expedited and streamlined SBA loan processing
through the SBA's Franchise Registry Program, www.franchiseregistry.com.
Itemll
FRANCIDSOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING
Except as listed below, DAT is not required to provide you with any assistance.
Pre-Opening Obligations. Pre-opening obligations include assistance to:
I. Initial training, at times and locations we designate (Franchise Agreement, Subparagraph 4.a;
Satellite Rider, Paragraph II; School Lunch Rider, Paragraph Ill).
2. Approval of the location of your restaurant. Under the Franchise Agreement, you must operate your
restaurant only at a single site of which you and we both approve, with consideration given to accessibility
requirements of the Americans with Disabilities Act. You have sole responsibility for finding a location. We
will not unreasonably withhold approval of a location you find. You must submit a location approval request
describing the proposed location. You may not be able to locate in a territory we grant to a franchisee with
limited exclusivity rights. See Item I and Item 12. We will accept or reject the location within a reasonable
time, providing reasons if we reject the location. We have a site review procedure conducted at our sole option
to address concerns regarding the positioning of restaurants. Depending upon the results of the procedure, we
may approve or disapprove a location or suspend development. Our approval is not a guarantee of your success
at the location. We consider the potential customer base in the area when deciding whether to approve the
location. Other factors we consider in site evaluation include traffic patterns, proximity to strong population
back-ups, visibility, and parking. In evaluating a site for a satellite location, we also consider proximity of a
proposed satellite restaurant to the Base Restaurant to allow proper servicing of the satellite restaurant. See
Franchise Agreement, Subparagraph 5.a; Satellite Rider, Paragraph II; Non-Traditional Location Riders;
Exhibit A-3, Paragraph V; Exhibit A-4, Paragraph lll; School Lunch Rider, Paragraph IV; Direct Lease Rider,
Paragraph II; Food Service Provider Rider, Paragraph VI; and Short Term Satellite Rider, Paragraph II.
3. Negotiation of the lease, sublease, license, or sublicense by our affiliate leasing company after you
confirm the restaurant's location by signing an Intent to Sublease (Exhibit E) or Intent to Sublicense (Exhibit E1). After you sign the Intent to Sublease or Intent to Sublicense, our leasing company affiliate assists us and you
with negotiation of the lease or sublicense (as applicable) for your restaurant and will sign the lease or license
with the landlord or licensor (as applicable). You will then sign a Sublease or Sublicense (as applicable) with
· our affiliate. You must sign a Sublease or Sublicense (as applicable) for your restaurant within 2 years after
you sign the Franchise Agreement or your Franchise Agreement will automatically terminate, unless you
request an extension in writing, you pay an extension fee, and sign a replacement Franchise Agreement. The
65
leasing and extension procedures vary or may not apply under our programs for purchase of a specific location
under the Non-Traditional Location Riders, Satellite Rider, School Lunch Rider, Food Service Provider Rider
or Location Rider. See Item 5. Our leasing affiliate may terminate your Sublease if you breach the Sublease or
materially breach the Franchise Agreement. See Franchise Agreement, Subparagraph 5.a; Satellite Rider,
Paragraph II; Non-Traditional Location Riders: Exhibit A-3, Paragraph V and Exhibit A-4, Paragraph ill;
School Lunch Rider, Paragraph IV; Direct Lease Rider Exhibit A-12, Paragraph II; Food Service Provider
Rider, Paragraph VI; and Short Term Satellite Rider, Paragraph II. We are continuing to offer a pilot program
where our affiliate may be your landlord. See Items 7 and 10. If our affiliate leasing entity enters into a license
for the restaurant premises, you will be required to execute a Sublicense instead of a Sublease. See Item 5 and
Exhibits D-1 and E-1.
4. Standards and specifications for the layout, design, appearance, and equipment for your restaurant.
See Franchise Agreement, Subparagraph 3.a. The Operations Manual contains the standards and specifications.
See Item 8 and Exhibit J.
5. A representative or Development Agent whom you may consult for advice and guidance concerning
the operation of your business, during their normal business hours. See Franchise Agreement, Subparagraph
4.b.
6. Use ofthe Operations Manual and other materials for the operation of your restaurant. See
Franchise Agreement, Subparagraph 3.a. The Operations Manual and other materials are strictly confidential
and their use is subject to Paragraph 8 of the Franchise Agreement.
The typical length of time between the time you sign the Franchise Agreement, we approve your location, and
you open your business is 2 to 12 months. The factors that affect this time usually include difficulty of
obtaining a satisfactory site; ability to obtain a lease, financing, or building permits; zoning and local
ordinances; weather conditions; shortages; delivery and installation of equipment, fixtures, and signs; and your
timetable.
Obligations After Opening. During the operation of the franchised business we will provide:
I. A representative or Development Agent whom you may consult for advice and guidance during their
normal business hours. See Franchise Agreement, Subparagraph 4.b.
2. A program of assistance, including: (a) periodic consultations with our representative or
Development Agent in a location we designate and (b) written materials with new developments and
techniques. See Franchise Agreement, Subparagraph 4.c.
3. The option for you to relocate your restaurant only with our prior written consent under Paragraph 6
of the Franchise Agreement. In such case, you will have one year to relocate and reopen your restaurant. All of
your accounts with us and our affiliates for each SUBWAy® restaurant you operate must be current and the
lease for the former location of your restaurant must be terminated and settled prior to reopening. You will pay
all expenses and liabilities to terminate the lease for the former location and any relocation expenses. hi. finding
a relocation site, you must give consideration to the accessibility requirements of the Americans with
Disabilities Act. If a proposed site is not accessible, you must provide plans to make the site accessible, or we
may request that you identifY an alternative accessible location. You may not be able to relocate in a territory
we grant to an exclusive area franchisee. See Items 1 and 12. You have only six months, not one year, to
relocate and reopen a satellite restaurant under Paragraph VI of the Satellite Rider. If the satellite will be in
operation for one year or less, you are not permitted to relocate the satellite restaurant under Paragraph V of the
Short Term Satellite Rider. If you purchase a school lunch franchise, you can relocate your restaurant only
within the same school or the same school district under Paragraph X of the School Lunch Rider. Under
Subparagraph ll.i. of the Franchise Agreement, if the landlord terminates the lease or license (as applicable)
66
for the premises and an arbitrator or court determines you did not breach the Sublease or Sublicense (as
applicable), but it was our fault or our affiliate's fault the landlord terminated the lease, then our obligation to
you will be limited to the cost of your leasehold improvements less depreciation using a five year life under the
straight-line method. We will pay you this amount after you relocate and reopen your restaurant. If the
landlord terminates the lease and an arbitrator or court determines you breached the Sublease or Sublicense or it
was not our fault or our affiliate's fault, then we will not have any obligation to you relating to termination of
the lease. The selection and construction of any new location will be subject to our requirements in the
Operations Manual in effect at that time.
We may deem a restaurant to be located close in proximity to another SUBWAy® restaurant owned and
operated by the same franchisee a "Dual Location Test Site" so that the franchisee can determine whether both
restaurant locations should be operated simultaneously. If we grant you a franchise for a Dual Location Test
Site, you may cease operation of the new or existing restaurant, by means other than transfer or assignment,
within one year after the new restaurant opens. We will then cancel the Franchise Agreement for the restaurant
you cease to operate and refund the franchise fee for the new restaurant. You will pay all expenses and
liabilities to terminate the lease for the restaurant that you cease to operate. Non-traditional locations are not
eligible to be "Dual Location Test Sites" at this time. See Exhibit A-16.
Advertising Programs. Established in the United States, SF AFT provides advertising services and operates as
an advertising fund. SF AFT currently administers all of the advertising contributions paid by franchisees in the
United States and interacts with local advertising fund entities around the world that are associated with the
SUBWAy® brand.
In accordance with the Franchise Agreement, you will pay us the 4.5% advertising fee (or higher percentage
voted by franchisees contributing to the fund) and we will deposit that money into SFAFT. See Item 6 where
we discuss the advertising fee. Your advertising contributions will be administered by SF AFT, and you will be
subject to the policies and procedures it has established. If your restaurant will be located in an airport
terminal, theme park, national park, school lunch location managed by a qualified Food Service Provider, or if
you are a Food Service Provider operating a restaurant at a non-traditional location, your advertising
contribution will be 2% of gross sales. The reduction in the advertising contribution is due to the limited value
of advertising for these locations or restrictions imposed by state law. See Exhibits A-1 0, A-14 and A-15.
DAI and SF AFT may determine that certain restaurant locations qualifY for a reduced advertising fee and for
these restaurants DAI will only collect an advertising fee of 2% of gross sales. The location must meet specific
criteria established by DAI and SF AFT. You must be obligated under your lease to pay for advertising or
marketing at the location and those payments must be equal to or exceed 2Y:z% of the restaurant's gross sales.
Additionally, the advertising or marketing must provide exposure for the SUBWAy® brand. Restaurants that
DAI and SF AFT determine meet their criteria will be placed into a submarket and franchisees of restaurants
meeting these qualifications will not have a vote in the local advertising market in which the restaurant is
physically located. DAI and SF AFT have the right to re-evaluate whether or not a restaurant continues to meet
the criteria and may determine that a location no longer qualifies as a submarket. If DAI and SFAFT determine
that the restaurant no longer qualifies for submarket status then you will be required to pay the full advertising
fee of 4Y:,% plus any local advertising voted on by the local market.
Currently, we are testing a program whereby we will permit you to conduct your own advertising initiatives
outside of our normal advertising venues. This program is only available if you are a school board, school
district, municipality, or institutional food service providers operating a restaurant at a school lunch location
(grades K-12) but do not qualifY for an advertising fee reduction as described above or do not meet SF AFT's
criteria to be a submarket as defined in the SF AFT Policies and Procedures. You must spend no less than 2 Y2%
of the weekly gross sales for your restaurant on your advertising initiative and we will reduce your weekly
advertising fee by this amount. Your participation in the test will be evaluated on an annual basis and will be
subject to our sole approval. In the event you no longer incur expenses associated with your advertising
67
initiative or your advertising expenses are less than 2 Y>%, we may withdraw our approval, you may no longer
participate in the test, and your advertising fee will be as stated in your Franchise Agreement.
We and our designee may negotiate programs and advertising contributions with suppliers, and specifY that
these advertising contributions be placed into a fund to be spent on advertising and related expenses for the
benefit of franchisees. See Item 8.
SF AFT uses the advertising contributions to purchase advertising on radio and television, in newspapers, direct
mail, free standing inserts, and other advertising and promotional vehicles, on the national and local level. A
small portion of the contributions are occasionally used for regional promotions. Franchisees decide which
medium to use.
SFAFT places a portion of each franchisee's SF AFT contributions into a national advertising budget, subject to
guidelines for the use of these funds established by the SF AFT Board of Trustees. SF AFT distributes the
portion of national vendor contributions and local vendor contributions we or our affiliates receive and forward
to SF AFT to the local markets, except for vendor contributions intended for specific national and/or local
promotions. In the past, SF AFT spent the vast majority of the national advertising budget in the United States
on network television.
SF AFT pools a portion of a franchisee's advertising contributions within individual SF AFT advertising market
areas with those of the other SUBWAy® restaurants in the market area. These funds are spent to plan and place
advertising within that advertising market area.
SF AFT assigns each SUBW A Y00 restaurant to one SF AFT local advertising market based on television market
·designations which are based in tum on the latest TV viewing and other media usage patterns for a particular
area. SF AFT uses Designated Market Areas ("DMA") established by Neilsen, a leading media research
company. The SF AFT Board of Trustees determines the percentage of the advertising assessed by the
Franchise Agreement that is returned to the local market. Franchisees within a local market area may also vote
a temporary or permanent additional advertising percentage by a two-thirds vote of the operating restaurants.
See Item 6. Local markets may also negotiate advertising contributions from vendors and distributors within
certain guidelines. SF AFT pools the portion of advertising fees paid by the restaurants within a local market
with any local additional funds, supplemental funds and any local market vendor contributions. This money is
used for media placements, promotions and ad agency fees within that market.
SF AFT employs one or more advertising agencies that are responsible for the production of all point-of-sale
materials, television, and radio commercials. All restaurants receive advertising material to coincide with the
marketing and promotional plan. While SFAFT provides some materials without charge, you must pay for
·other items. A national media buying agency negotiates and places media with the major networks. SF AFT
may change advertising agencies in the future or reassign all or some of the responsibilities of the advertising
agency to others.
Each local market has the option of hiring a local advertising agency to place the media for that market. In
addition, markets with fewer than I 0 restaurants have the option of handling media placements themselves.
· SF AFT must approve all local advertising agencies, which must sign SF AFT's standard local advertising
agency agreement and adhere to SF AFT's standards and criteria.
We encourage, but do not require, you to set aside an additional minimum of2.5% of gross sales use for
advertising geared specifically toward your restaurant (e.g. fliers, team sponsorships, cross promotions with
other retailers, cash register tape advertising, etc).
You may develop advertising materials for your own use at your own cost. Certain advertising materials you
develop, including but not limited to internet coupons, point of purchase advertising materials and billboards,
68
must be approved by us prior to distribution as provided .in the Operations Manual. You may not use SF AFT
market funds to produce any advertising materials unless the SFAFT Advertising Review Board approves them
in advance, with only a few exceptions. DAI designates individuals to sit on the SF AFT Advertising Review
Board to review consistency with corporate marketing objectives and operating policies and the use ofDAI's
trademarks that we and other affiliates license. We have the power to approve or disapprove of any use of the
trademarks in advertising commissioned by SF AFT or developed by you. SF AFT provides advertising
campaigns to all restaurants within each market for their use. Franchisees within each market make the
decision to support a campaign. If you elect not to display the campaign materials or not to participate in a
promotion, you may only display generic materials or materials from a market area promotion being supported
by restaurants within your DMA.
In the future, we or one of our affiliates may commission the production of advertising materials, including
television commercials, which we or they will offer to franchisees on the national and local level. We and our
affiliates do not need permission from SF AFT to produce advertising materials. We and our affiliates may
charge a usage fee to franchisees to offset the costs of production. Alternatively, we or our affiliates may
allocate money from the vendor advertising contributions to a national advertising fund to pay for all or a
portion of the costs for these materials. See Item 8. In the last fiscal year, we allocated all of the vendor
contributions to SF AFT and did not actively conduct any advertising campaign except through our support of
SF AFT.
Currently, a 3 member Board of Trustees governs SF AFT. The SF AFT Board ofTn1stees consists of
employees and/or officers ofDAI and FWH. See Item 2. Trustees are appointed by DAI and may be removed
as Trustee by DAI. Each Trustee gets one vote. The SF AFT Board of Trustees sets policy governing how the
advertising fees assessed by the Franchise Agreement, any vendor contributions and supplemental funds are
allocated and spent and approves all promotions. In addition, the SF AFT Board of Trustees is responsible for
hiring and appointing staff to administer the trust and the advertising agencies that create all advertising
campaigns. The SF AFT Board of Trustees has decision making power over how SF AFT collects, budgets, and
distributes the advertising fees and approves policies that govern the Trust's administration. If we authorize the
termination of the trust, at least 75% of the Board of Trustees of SF AFT must also vote to approve the
termination of the trust.
The sole purpose of SF AFT is to fund group advertising and promotion of the SUBWAy® restaurant business
for the benefit of all franchisees. SF AFT is a source of funds to create advertising programs designed to build
restaurant sales, promote the system's identity, produce advertising materials for use by SUBWAy® restaurant
owners, and to pool resources to purchase media exposure. You must contribute the amounts described in Item
6, under the headings "Advertising", "Additional Funds" and "Local Advertising". Any company- or affiliateowned restaurants contribute to SF AFT on the same basis as franchisees. SF AFT was not formed to make a
profit. If SFAFT has any income, SF AFT will use it solely for the collective advertising and promotional
benefit of the SUBWAy® franchises, and no part will benefit solely us or any individual franchisee.
The Subway North American Ad Fund Advisory Board (the ''NA Advisory Board") was recently created in
accordance with a settlement agreement entered into between SF AFT and DAI. This board functions in an
advisory capacity and consults with and advises DAI about advertising, marketing and promoting the
SUBWAy® brand. The NA Advisory Board is made up of elected franchisees, some of whom were on the
previous SF AFT Board of Trustees. DAI may modify or abolish the NA Advisory Board and make all
decisions concerning the structure and role of the advisory board.
To be eligible for election to the NA Advisory Board, you must: I) have an open restaurant; 2) be up to date
with your advertising fund contributions and company-related payments including royalties and other charges;
or must have a payment plan approved by us and must have been current in making payments to that plan for 60
days; 3) not accrue any new debt obligations with respect to royalty and advertising fees; and 4) have served on
your local market board or as a local market ad representative for at least 6 months within the last 7 years. We
69
may appoint one or more representatives of DAI or its franchisor affiliate in Canada as a board member.
Voting is conducted on a regional basis with each region electing one board member. Voting for board
members is on the basis of one vote for each operating restaurant. You must meet the eligibility requirements
listed above to vote in anNA Advisory Board election. Satellite restaurants, restaurants operating in an airport
terminal, theme park, national park, school lunch location managed by a qualified Food Service Provider and
non-traditional restaurant operated by a qualified Food Service Provider have no vote. See Item 6.
Local market areas with up to nine restaurants must appoint an Advertising Representative ("Ad Rep") from
among the franchisees in the local market. Ad Reps serve a one year term. You must have an open restaurant
and be current with your SF AFT accounts for each restaurant you own to qualify to be an Ad Rep or vote in the
election for the Ad Rep. Each open restaurant has one vote and at least 75% of the restaurants in the local
market must vote. The local market's Ad Rep will place advertising for the market area and be responsible for
communication with the SF AFT office. If a market hires a local advertising agency to place their media, the Ad
Rep will be responsible for communications and coordination with the advertising agency. The Ad Rep should
communicate regularly with the market's franchisees and develop advertising programs that cover all of the
restaurants within the market.
After it has I 0 open restaurants, a local market must elect a local advisory board ("Local Board") instead of an
Ad Rep. A Local Board _consists of five individuals: three serve for one year, and two serve for two years, on
an alternating year basis. To qualify for election to the Local Board, you must have a restaurant open for a
minimum of six months and you must be current with your payments to SFAFT and DA!. The Local Board
members are responsible for developing an advertising program to meet the needs of the restaurants in the
market, administering SF AFT funds in a responsible way, and following SF AFT policies.
Local Board members and Ad Reps do not develop local policy. The activities of local markets are governed by
the SF AFT Governance Manual as established and updated by the systemwide SF AFT Board of Trustees. The
SF AFT Board of Trustees has the ability to change the SF AFT Governance Manual or to require the formation,
change, merger or dissolution of advertising cooperatives.
Each month, the SF AFT Accounting Department prepares a financial summary of the collections and
disbursements of each individual market along with a summary of disbursements of SF AFT's administrative
budget, advertising production and national media expenditures. All franchisees can access the "Monthly
Market Report" for their market along with a copy of the summary of disbursements of SF AFT's operating
budget and national media expenditures on the SUBWAY® Electronic Library. The SF AFT Board of Trustees
employs a public accounting firm to audit SF AFT's books. The accounting firm performs a 6 month review
and also provides annual audited financial statements. The SF AFT Board of Trustees receives copies ofthese
statements and they are available to all franchisees upon request without charge.
SFAFT reimburses us for services we provide to SF AFT such as sales data and info systems support,
collections and audits.
The SF AFT Board of Trustees approves an annual budget and makes all financial decisions for spending
SFAFT's collections. Local market area Advisory Boards or Ad Reps establish annual budgets and make
financial decisions for spending their local market area's funds. SF AFT typically commits the funds by the end
of the fiscal year for advertising for the upcoming year. For the SF AFT budget, SF AFT typically uses excess
funds for media or promotions for the upcoming year. SF AFT does not use any portion of the advertising
contributions to advertise the sale of franchises.
During the last fiscal year of SF AFT ending on December 31, 2012, SF AFT spent approximately I 0.44% of its
total revenue in the United States on the production of advertisements, other promotional materials, and
systemwide advertising agency fees, approximately 55.95% for U.S. network media placement, approximately
2. 79% for general and administrative expenses, and approximately 38.18% to the local market areas. Expenses
70
for 2012 were approximately I 07.36% of total revenues. SF AFT's budget for 2013 assumes that SF AFT will
spend 6.94% of its total revenue in the United States on the production of advertisements, other promotional
materials, and systemwide advertising agency fees, 60.66% for U.S. national media placement, 4.17% for
general and administrative expenses and 32.35% will be returned to the local market areas to pay for their local
market advertising expenses. The current chain wide SFAFT Policies and Procedures Manual encourages the
local markets to spend their funds, including any additional franchisee contributions and any vendor
contributions and supplemental funds, and after deductions for overhead and national media expenses, within
certain guidelines. The guidelines provide the following maximum spending limitations: 5% for the production
and printing of advertising materials and other promotional materials; 2.5% for non-calendar initiatives; 15%
for agency commissions, fees and wages; 3% for general and administrative expenses; and I 00% for media
placement and promotion. The SF AFT policy limits non-media expenditures to a maximum of 25.5% of local
market funds.
As part of the marketing strategy targeting children, there is a "Kids Pak" program wherein you purchase toys
or premiums to give to customers. SF AFT selects kids programs that coincide with SF AFT's overall marketing
plan. Sometimes these programs involve the promotion of a movie, television program or other licensed
property that appeal to children. Typically, four premiums or toys are featured within each Kids Pak
promotion. You purchase these premiums directly from their distributors. SF AFT uses a portion of the cost of
purchasing premiums to produce advertising materials that support the promotion of each Kids Pak promotion.
FWH maintains a local store marketing and promotions department whic-h provides services to us and our
affiliates. We, FWH and our franchisor affiliates in Canada and Australia did not conduct an advertising
campaign funded by vendor advertising contributions separately from supporting SF AFT during the last fiscal
year of SF AFT, either directly or through SF AFT.
Neither we nor SFAFT is obligated to advertise in the area where you locate your franchise. We cannot
quantifY or guarantee any benefits to you as a result of your contributions to SF AFT or any vendor
contributions paid on your purchases from a vendor.
Computer and Cash Register Systems. You must use a Personal Computer (PC) based Point of Sale (POS)
system in all of your new and existing restaurants, with software meeting our requirements, and transmit sales
and other financial data to us electronically no less than once a week. We may waive this requirement for
satellite restaurants under certain circumstances. The PC-based POS system you use must meet our POS
standards for~hardware, software and data transmission. You must use and maintain an email address to send
and receive electronic mail and attachments on the Internet. See Paragraph 5.f. and Paragraph 14 of the
Franchise Agreement and Item 6 and Item 7.
In the future, SUBWAY CAFE® Program participants may be required to purchase, use and maintain an
additional PC-based POS system at their own expense. We estimate these fees to range between $2,500$3,500 for an additional PC-based POS system and $500 - $1,000 for additional software. See Item 7. Future
requirements of an additional PC-based POS system must be met on the compliance date we impose.
Future software standards must be met within six months of publication. Future hardware standards must be
met on the compliance date we impose. Additionally, we will not test, offer technical support, nor accept
responsibility in relation to this other software or hardware.
You have a contractual obligation to upgrade or update your PC-based POS system to maintain full operational
efficiency and to keep pace with changing technology and updates to our requirements. See Franchise
Agreement, Paragraph 5.f. The average life-cycle for PC-based POS systems is three to five years. Your POS
software must be upgraded each time we modifY the control sheets and other required paperwork provided in
the Operations Manaul. Typically, we modifY this paperwork once or twice a year.
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You must report sales and specified business information to us electronically at weekly or other intervals we
direct for all new and existing franchises that you own. You must also use our control systems to manage your
business. If you are using an approved POS System, we may have independent access to your sales
~
infomiation.
In the future, you may be required to (i) connect your restaurant to the Internet through a high-speed broadband
connection that meets our standards and specifications and (ii) report all transactions of your restaurant to us
electronically in real time. We may also require you to accept debit cards and/or reward/loyalty cards for
customer payments in the future.
Approved PC-based POS System Hardware and Software. There are two approved systems you can purchase
to satisfy our requirements for the PC-based POS system. The systems are available for purchase from Par and
Micros. See Item 6 and Item 7. We may act as collection agent for Par and Micros, and collect fees you owe
through your pre-authorized account.
The first approved PC-based POS system is available from Par, and presently comes with Windows 7
Professional(which is downgraded to XP Professional for Sub Shop/2000™ users), 15" LCD Touch Screen,
4GB DDRJ Memory, 320GB Mirrored RAID Hard Drives, Network Card, SD Card and Reader, RJ45 adapter,
Customer Display, Integrated Customer Display and Encrypted Magnetic Card Reader, Epson TM-T88 Receipt
Printer with powered USB cable, Modem, UPS battery backup, and a 5 year warranty. We estimate that this
system wil! cost approximately $2,575 plus taxes and shipping. The repost printer is a separate charge of
$135. Optional items are available at an additional cost, and include, USB modem DVD/CD-ROM, Sub
Shop/2000™ database configuration, onsite support and onsite installation.
All PC-based POS systems by Par include a five year advanced exchange warranty on parts and labor. Once a
part is confirmed to be defective, a replacement unit will be sent out and delivered the next business day. This
includes shipping on a Saturday for delivery on Monday. Franchisees also have the option to upgrade their
warranty to include on-site service and extend the warranty from 5 to 7 years at an additional charge. The onsite service option is available 7 days a week with a 4 hour response time once a problem is identified.
Warranties. may vary by country and the on-site service option may not be available in all areas.
There are two options for purchasing the second approved PC-based POS system, available from Micros. You
may purchase a Micros PC-based POS system with Windows XP Professional for SubShop/2000™ ( upgraded
to Windows 7" OS for SubwayPOS™), 2.4 Ghz or better 2015 Intel Core i5 processor, 15" Color Monitor, 4GB
Memory, dual 160GB hard drives or better in a mirrored raid configuration, Compack Flash
(Recovery/Backups), Pre loaded 20 I OA SubShop/2000™ software, Integrated Customer Display, Internal
Modem, Media Cash Drawer, USB Keyboard, LAN Card, Thermal Receipt Printer, Integrated Mag Card
Reader, and a five year warranty. The second option for a Micros PC-based POS system comes with 2015 Intel
P4505, Windows 7" OS for SubwayPOS™ (Downgraded to Windows XP Professional for SubShop/2000™),
1.86Ghz Intel Dual Core Celeron or better processor, 15" Color monitor, 4GB Memory, dual 160GB hard
drives or better in a mirrored raid configuration, Compact Flash (Recovery/Back ups), Pre loaded 20 I OA
SubShop/2000™ software, Integrated Customer Display, Internal Modem, Media Cash Drawer, USB
Keyboard, LAN card, Thermal Receipt Printer, Integrated Mag Card Reader, a five year warranty and APC
Battery Back-up with 2 year mail in warranty through APC. We estimate the cost for these systems to be
approximately $2,595 to $2,895 plus taxes and shipping. Fees may vary by region. Optional items are available
at an additional cost, and include a power line conditioner, coin dispenser, kitchen bump bar set up, and seven
year warranty.
SUBWA Y®Payment Management, Sub Shop/2000™, Progress DBMS and Team Viewer software are not
available through Par or Micros and must be purchased separately through us at an additional cost of
approximately $540. SubwayPOS® software is not available through Par or Micros and must be ordered
separately through us. There is no license fee for this software.
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The specifications of the Par and Micros PC-based POS systems will change as manufacturers and software
providers upgrade their products.
Currently, Sub Shop/2000™ is the approved software developed by Franchise Technologies, Inc. ("FTI"), FTI
has an address at I 10 Lee Street, Depew, New York 14043-1042 (716-681-0192). FTI granted a license to our
former affiliate, CRA, to distribute the FTI software to SUBWAy® franchisees. CRA dissolved and assigned
all of its rights to us, including the license granted by FTI. See Item 8. We granted a sublicense to Par and
Micros to license the software to you. You will be bound by the Sub Shop/2000™ Software License
Agreement in a form substantially similar to Exhibit A-8 if you accept the FTI software. The Sub Shop/2000™
Software License Agreement grants you the right to use and install one copy of the software on a single
computer and may not be shared or used concurrently on different computers. If you wish to transfer the rights
granted by the Sub Shop/2000™ Software License Agreement, you must send us a written request accompanied
by a copy of your Sub Shop/2000™ Software License Agreement. We will derive revenue from licensing FTI's
software programs. See Item 8. We claim certain ownership rights to the portion ofFTI's software programs
that vendors customize for the SUBWAy® system. We will offer annual software maintenance to you for the
Sub Shop/2000™ software. The current fee is $400 per year. We may increase or decrease this fee in the
future. We may waive or partially waive this cost for you if you electronically transmit your weekly sales
information using the most current Sub Shop/2000™software version. We may collect this fee from your preauthorized account with us for the restaurant. You will also pay an annual fee of$16.43 for the Progress
DBMS software (subject to change).
In the future, DAI will cease to offer Sub Shop/2000™, and you may be required to purchase the new approved
software, SubwayPOS®. There will be no license fee for this software. This software is comprised of several
modules: front counter, Restaurant Management System (RMS), Subway Exchange System (SubEx), Home
Office, and Centralized Reporting. Data transmission requirements will include, but may not be limited to, the
following: all data generated at the point of sale, including detailed sales transactions; name and title of
employees; labor schedules; inventory; and purchase orders for food distributors. All new and existing
restaurants may be required to use SubwayPOS®. Existing restaurants will be given an extended period of time
to purchase the SubwayPOS® software and comply with the software standards and specifications, except for
those existing restaurants that transfer to a new owner after the SubwayPOS® software becomes required. In
the future, we will supply menu updates and software support only for the SubwayPOS® software. The
SubwayPOS® software will be licensed to you by DAL You will be bound by the SubwayPOS® Software
License Agreement in a form substantially similar to Exhibit A-8-1 if you accept the software. The
SubwayPOS® Software License Agreement grants you the right to use and install one copy of the software on a
single computer and may not be shared or used concurrently on different computers. We estimate that the cost
for the SubwayPOS® software will be approximately $350-$600 annually for software maintenance fees. These
costs may vary. We or FWH may collect this fee from your pre-authorized account with us for the restaurant.
We may deposit any amounts collected into a fund for technology initiatives that will benefit franchisees. See
Item 8.
You must participate in the SUBWAy® Card Program. See Items 5 and 6. This program requires you to
purchase the SUBWAy® Payment Manager ("SPM") software which is only available from Value Pay
Services, LLC ("VPS"), having an address at 9200 S. Dad eland Boulevard, Suite 705, Miami, FL 33 I 56. The
SPM software operates in conjunction with Sub Shop/2000™ through your PC-based POS system. We license
the SPM software to VPS and they license it to you. We will collect all fees you owe to VPS on their behalf.
We may withdraw these amounts from your DAI pre-authorized account. You will be bound by the VPS
Software Participation Agreement in a form substantially similar to Exhibit A-13. See Items 5, 6 and 8.
You must purchase the approved antivirus software, which is only available from ESET, LLC ("ESET"),
having an address at I I 72 Orange Avenue, Coronado, CA 921 I 8. The software, which is licensed by ESET,
operates in conjunction with Sub Shop/2000™ and SubwayPOS™ through your PC-based POS system. We
73
will collect all fees you owe to the ESET or !PC on their behalf. We may withdraw these amounts from your
DAI pre-authorized account. See Items 5, 6 and 8.
You are required to accept credit card payments through a magstripe card reader that is integrated to your POS
system in all of your new and existing restaurants. You must have a high-speed broadband connection that
meets our.standards and specifications to process credit card payments. In the future, you may also be required
to accept debit cards. If you use our only approved credit card processor for credit card payments, you will pay
the processor a fee of approximately $.0155 per transaction. You will also pay the customer's bank an
interchange fee, which varies but is estimated to cost 1.65% of the transaction amount and an additional $.04
per item. The interchange fees may be higher or lower depending upon the credit card brand and type of
transaction. Credit card payment processing fees will be charged to catering orders placed with the call center
and catering website. Visa Inc. will charge you a Fixed Acquirer Network Fee. This fee will be based upon
your gross sales volume of all Visa-branded credit card purchases and will be collected by your credit card
processor on behalf of Visa, Inc.
We may approve additional hardware and software vendors in the future.
Approved PC-based POS System Hardware and Software Support: The FWH Technology Support Center
("Support Center") will provide software support and service, and limited hardware support, to franchisees
using the Par and Micros PC-based POS systems in conjunction with Sub Shop/2000™ and/or SubwayPOS®.
Hardware support is available from the Support Center to franchisees using the Par PC-based POS system only,
and is limited to an initial diagnosis of the hardware issue at which time you will be referred to Par Technical
Support. Please do not contact Par directly for hardware support issues. The initial diagnosis of the hardware
issue is provided free of charge. The Support Center will also provide software support and service to
franchisees using the generic install version of Sub Shop/2000™ and/or SubwayPOS®. Any calls where Sub
Shop/2000™ support is included will incur charges at the following standard rates: $1.30 per minute ($13
minimum/$60 maximum per call) on weekdays between the hours of 7:00AM to 9:00PM Eastern Time and
$1.50 per minute ($15 minimum/$75 maximum per call) on weeknights, between the hours of 9:00PM to
II :OOPM Eastern Time, and on weekends from 8:00AM to 8:00PM Eastern Time. Any calls where advanced
SubwayPOS® support is included will be free of charge while the SubwayPOS® software is in the test phase in
the relevant market. The standard per-minute rates indicated above will apply to calls where advanced
SubwayPOS® support is need once the software is out of the test phase in the relevant market for sixty days or
more. We reserve the right to change this fee structure at any time. The initial diagnosis is provided free of
charge.
Par will provide hardware support after referral from the Support Center and direct SubwayPOS® software
support to franchisees using any Par PC-based POS system. Par Technical Support offers hardware support
after referral from the Support Center and basic software support for SubwayPOS® software, including Go Live
support calls, during normal business hours from 9:00AM local time to 5:00PM local time. Extended hours
may apply. The number for Par Technical Support for SubwayPOS® software will be listed on SUBWAY
Partners™. Par provides basic software support for SubwayPOS® software at a rate of $1.30 per minute.
Optional "Go Live" support calls for franchisees using the SubwayPOS® software will be available from
Micros for $55.
Micros will provide hardware and software support to franchisees using any Micros PC-based POS system and
SubwayPOS®. Micros Technical Support offers hardware support, and basic software support for Sub
Shop/2000™ software, SubwayPOS® software, including Go Live support calls, during normal business hours
from 9:00AM local time to 5:00PM local time. Extended hours may apply. You may contact Micros Technical
Support at the number listed on SUBWAY Partners™. Micros provides support at a rate of $1.30. Call packs
are available from Micros for the price of $150 for 6 calls, $295 for 12 calls, and $440 for 18 calls. Optional
"Go Live" support calls for franchisees using the SubwayPOS® software are available from Micros for $55.
74
We may act as a collection agent for Par and Micros and collect fees you owe to Par or Micros through your
pre-authorized account.
Confidential Operations Manual. We will issue you a copy of the confidential Operations Manual in either
electronic or paper form within three months after you sign your Franchise Agreement or, if you signed a
Specific Location Rider, within three months after you sign a lease, sublease, license, or sublicense for your
restaurant. From time to time, we will issue you an updated copy of the confidential Operations Manual in
electronic or paper form. We do not normally issue the Operations Manual to prospective franchisees but will
permit you to inspect the Operations Manual at FWH's headquarters or at your Development Agent's office or
elsewhere, upon your request, before you purchase the franchise. You must sign a confidentiality agreement if
we request, attached as Exhibit J. You must wait 14 calendar days or 10 business days (whichever is later) after
you receive this Disclosure Document to sign the Confidentiality Agreement and view the Operations Manual.
We may modifY the Operations Manual, unilaterally under any condition and to any extent which we consider
necessary, to meet competition, protect trademarks, service marks, copyrights or trade names, or improve the
quality of the product or service provided by the SUBWAy® restaurant, if modifications are applicable to all
franchisees. We may have policies and procedures which apply only to certain programs, such as satellite, nontraditional, SUBWAy® Plus Program, SUBWAY CAFE® Program, school lunch, catering or the breakfast
program, and these policies and procedures do not apply to franchisees not participating in the program. Any
amendment to the Operations Manual will not unilaterally alter the fundamental rights and obligations created
by. the Fra..rJ.chise .A.. greement and this Disclosure Document.
Training Programs. Before you open for business, all individuals who sign your Franchise Agreement as
Franchisee inust attend and successfully complete the two week long Worldwide Training Program (the
"Training Program") to our satisfaction. For most effectiveness, we recommend that you schedule your training
as close to the store opening as possible. If you are purchasing an existing restaurant through a transfer, we
must approve your transfer before the Worldwide Training Department ofFWH will register you for training.
You may attend training after the close of the transfer. See Item 17. If you sign a Specific Location Rider, you
must have a lease signed for the specific location before you can attend the Training Program.
You may request permission from us for your store manager to accompany you to the Training Program.
Managers that attend training will receive a certificate from us indicating that they have attended the Training
Program as a non-owner. If we determine the manager that accompanies you to training is not your employee,
you will be required to pay to us a fee of$7,500. See Item 6.
We provide the Training Program for no additional charge. However, you are responsible for all of your
personal expenses, including lodging, meals and costs and transportation to and from the class room and "onthe-job" training sites where you will train. We charge a cancellation fee if you fail to attend your scheduled
training or if you cancel your registration with less than I 0 business days' notice. See Item 5.
You will be exempt from attending the Training Program if: 1) you are a current franchisee purchasing an
additional SUBWAy® restaurant and previously passed training, 2) you are a former SUBWAy® franchisee but
you have passed training within the past 2 years, or 3) if you are purchasing your first SUBWAy® restaurant but
you successfully completed the Training Program less than 2 years ago and after serving as a Director,
Manager, or Designee as described below.
You may apply for an exemption from the training program if you are currently a franchisee purchasing an
additional SUBWAy® restaurant but have not previously attended training or if you were a former franchisee or
served as a Director, Manager, or Designee as described below but passed training more than 2 years ago. You
may apply for an exemption from the Training Program through your Development Agent. If we grant you an
exemption, you will be required to complete the Sandwich Artist® Pro Program and additional web-based
training courses. These training courses are located in the University of SUBWAy® section of our SUBWAY
75
Partners™ intranet website and will account for approximately 20 hours. After completeing these courses, you
will be required to pass a Training Equivalency Exam within 30 days. The exam must be taken at the office of
your Development Agent. If you fail the Training Equivalency Exam, you will be required to pass the Training
Program.
If you sign the Non-Traditional Location Entity Rider, Entity Franchisee Operating a Traditional Location
Rider, or Food Service Provider Rider, your Director of Food Services, or equivalent ("Director") and Manager
of your restaurant, or equivalent ("Manager"), must attend and successfully complete the Training Program
before the opening of your restaurant. If your Director or Manager fails to successfully complete the Training
Program you must appoint an individual to assume the position of Director or Manager to attend and
successfully complete the Training Program. Any Director or Manager may be required to pass our
standardized test during of the training program. See Item 5. The Training Program is provided at no charge,
but you are responsible for all of the personal expenses of your Director and Manager, including costs and
expenses of transportation to and from the training center in Connecticut, or elsewhere, lodging, meals and
salary. Prior to sending your Director and Manager to training, you and your DA must demonstrate to our
satisfaction the person attending training is your employee and not a prospective franchisee. If you cannot
demonstrate this, you will be required to pay us a fee of$7,500.
If you sign the Non-Traditional Location Individual Rider you or your designee must attend and successfully
complete the Training Program before the opening of the Restaurant. You or your designee may be required to
pass our standardized test given during the training program, with one retest permitted. If you or your designee
fail the standardized test, we may dismiss you or your designee from the training program, cancel your
Franchise Agreement and refund 1/2 of your Franchise Fee. If more than one individual signs this Franchise
Agreement, any one of the individuals who fails the standardized test may be dismissed from the training
program and removed from this Agreement with no refund of the Franchise Fee.
If you sign the School Lunch Location Rider, we or the Development Agent, may conduct the training program
locally. Training will be at a location or locations selected by the person providing the training, which may
include the school in which your restaurant will be located, or other SUBWAy® restaurants, and may include
web based courses. You understand and agree you will most likely not receive the training we provide at our
Affiliate's initial franchisee training course conducted in Milford, Connecticut. You agree the local, reduced
training program will satisfY our training obligation to you. You will pay any transportation, lodging, and other
expenses to attend the training program.
Prior to attending our training program, we strongly recommend that you work at an existing restaurant for a
minimum of 40 hours after you have purchased your franchise. You must obtain the approval of your
Development Agent and the existing franchisee operating the restaurant at which you wish to be trained. We
and our affiliates have offered in the past, and may offer in the future, additional training courses dealing with
management, paperwork, advertising systems, and multi-unit ownership. These courses are optional and given
at the Milford, Connecticut location and in other locations. You may also take additional courses on the
University of Subway and through the Subway Conferencing System.
Perfect attendance and a minimum grade of 80% on all pre-requisite web-based training courses, in-classroom
quizzes and the final exam, as well as a passing grade on the in-store component of the course are required to
complete the training program to our satisfaction. You may be required to retake and pass our standardized test
during the Training Program unless you are otherwise exempt. See Item 5. If you fail the standardized test, you
will have the option to take one final retest. If you fail the retest or opt not to take it, we may dismiss you from
the Training Program, cancel your Franchise Agreement and refund one-half of your franchise fee. If more than
one individual signs the Franchise Agreement, any one of the individuals who fails this standardized test may
be dismissed from the training program, removed from the Franchise Agreement and no portion of the franchise
fee will be refunded. We will not reimburse you for your travel expenses. If you or any Director, Manager, or
designee fail the final exam, you or they may be permitted to retake the final exam at our discretion, at a
76
location and time we determine. If you or they fail to successfully complete one or more sections of the training
program, you must contact us within 30 days after you attended the Training Program to discuss the options
available to you and them to successfully complete the Training Program. If you or they do not contact us
within 30 days, you or they will be required to repeat the Training Program in its entirety.
You will be provided with a copy of the Code of Business Conduct (the "CBC") in the Training Handbook
emailed to you upon registration for Training, which you must sign. The CBC requires that all staff, students
and guests act in a professional manner at all times during the Training Program. You must adhere to the CBC
while on our property, in training stores, at area hotels and while attending any of our functions, dinners and
social gatherings which might be considered a SUBWAy® sponsored event. We may dismiss you from the
Training Program and terminate your Franchise Agreement if you fail to act in accordance with the CBC. Your
franchise fee will not be refunded under these circumstances. We may dismiss any designee, Director, or
Manager, of the restaurant, from the Training Program for failure to act in accordance with the CBC. In such an
event, you will be required to appoint an individual to assume the position of the Director of Food Services,
Manager of the restaurant or their equivalent and satisfY our training requirements within 30 days after we give
you notice. You or any designee, Director, or Manager that attends training must sign a confidentiality
agreement.
We offer the classroom portion of the Training Program at FWH's headquarters in Milford, Connecticut. The
"on-the-job" training site is SUBWAy® restaurant located within close proximity of the training center in
Connecticut. You will be re.sponsible for your ov~'n transportation to and from the classroom and "on-the-job"
training sites. A new franchisee training program usually begins every two weeks in Connecticut, with
approximately 22 programs a year. Classroom work accounts for approximately 60 hours, and you will have
approximately 33 hours of on-the-job training at nearby restaurants. You will also have from two to three hours
of homework per evening. As part of the training program, franchisees must also complete and pass the
Sandwich Artist® Pro web-based training courses prior to attending the Training Program in Milford,
-Connecticut. The Sandwich Artist® Pro prerequisite training courses are located in the University of
SUBWAy® section of our SUBWAY Partners™ intranet website and will consist of25 on-line courses for
approximately II hours of training. You may be required to retake and pass the standardized test during the
Training Program unless you are otherwise exempt. See Item 5. We may modifY the training courses from time
to time. Any changes made to the training courses will be referenced in the Operations Manual. The Training
Program uses the Operations Manual, a course workbook, and other written materials.
a
The Training Program is under the guidance of Deb McCarthy. She has been Manager of Training since June
20 II. Three full time trainers and the Manager of Training conduct the classroom sessions. The minimum
educational and experience requirements for these individuals are a bachelor's degree with teaching credentials
or corporate training experience, and 3 to 4 years of either classroom teaching experience or restaurant
management experience. Trainers rotate among the groups of franchisees and each teaches all of the subjects.
Other members of FWH may assist in the Training Program. Franchisee owners of the training restaurants and
their managers conduct the on-the-job training. All restaurant trainers must successfully complete the Training
Program themselves and receive instruction in training methods. Restaurant trainers also have at least 2
meetings and refresher training sessions annually.
The Training Program includes instruction in the following subjects:
TRAINING PROGRAM
Hours of
Prerequisite WebBased
Training Courses
Back of Restaurant Equipment Overview
.25
Subject
77
Hours of
Classroom
Training
Hours of Onthe-Job
Training
-
-
Eakin Great Bread
Baking Other Products
Basic Controls Overvi~w
Cleaning the Back of the Restaurant
Cleaning the Beverage Station
Cleanin the Customer Ar~a and Restrooms
Creatin a l'rofe><innal Atmos here
Customer Illness
Exce rional Customer Service
Exterior Building A earancc
Food Pans
Food Pre aration
From Line Food SafelY
Handlin Deliveries
How the Front Line Operates
How to Build
Local Store Marketinu
0 eratin the !'OS
Produce -- Kee
It Fresh
R~>olving Customer Com lainr<;
Service and Customer Area Equipment
Overview
Store Sccuri and Safe ·Procedures
s,. cstivc Sellin
Thru-Put
SeAual Harassment
Oncntation Administration, Retestin
Food Safetv & Cross-Contamination
Subway Training Systems for Employee
Develo ment
Leas in
POS Clerk and Mana er Tasks
WISR Mechanics and Analvsis
Control Sheet Mechanics and Anahsis
Cater in & Lar e Order
Schedulin • Restaurant Ent lo ccs
Rev'•ews, eneral discussion
Cuotomer Ex crience & Customer Care
Rreak- Even & Profitabili
Local Store Marketin & Advertisin
Food Orderin
Store Sccuritv
Thru-Put
SubwavlQ & LivciQ
Restaurant Evaluation and Com liance
Introduction to In-store Tratning & Travel
Time
Combo Rc M
Ombudsman & Subwa Partners
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Retail Technology
In-Store Training
Quizzes and Final Exams
Total Hours
*
12.5
I
0
8
59
33
33
* Time spent on quizzes for web-based prerequisite training courses is accounted for in the appropriate subject
listed above.
Note I. The following trainers rotate among the classrooms and you may have any one of them for a given
subject: In Milford: Deb McCarthy (Manager), AI Dembski, Sandy Williams, and Kaloni Arcidiacono.
Note 2. On-the-job training in local SUBWAy® restaurants consists of 33 hours of instruction. Trainers divide
trainees into small groups of 3 or 4 per restaurant. On-the-job training allows you to gain first-hand experience
in sandwich preparation, store maintenance and restaurant operations. There is no specific time allocation by
subject because this varies with the needs of each training group.
After you purchase your restaurant and successfully complete training, you and your staff may also be required
to complete additional courses on the University of Subway. We or your DA will notify you when additional
courses become required. Additional educational materials are available to you and your employees on the
University of Subway and other sources, which include: the Subway Conferencing System, In-Store Trainers
Guides, and class room courses.
You will be required to have at least one employee who has completed the web-based Sandwich Artist® PRO
Curriculum working at all times throughout the business day. This will require you to have multiple persons
complete the curriculum. You may satisfy this requirement, if you are working at your restaurant throughout the
business day. There is no charge for this curriculum, but you will be responsible for any expenses associated
with completing the courses incurred by you or your employees.
Manager Training Program. If you are an institutional-type or other franchisee signing a Non-Traditional
Location Rider (Exhibits A-3 and A-4), Entity Franchisee Operating a Traditional Location Rider (Exhibit A-9)
or Food Service Provider Rider (Exhibit A-15), we may require that your new Director, Manager, or Designee
attend and successfully complete a two week manager training program. If you sign Exhibit A-3, we may grant
you permission to provide your own manager training program if you meet our requirements.
This program consists of 80 hours of classroom instruction in Paperwork, Key Indicators, Scheduling, Food
Safety, Management and Marketing Skills, Teaching Skills, and Personnel, and does not include any on-the-job
component. This course is conducted once a month. Before the Manager attends our Manager Training
Program, he or she must successfully complete a pre-training course and complete the Sandwich Artist® PRO
course. This course must be conducted by you at a restaurant you operate and must consist entirely of hands-on
tasks. Managers sent to the Manager Training Program may be required to pass our standardized test prior to
attending training with the option to take one final retest. Any Manager failing to pass both the test and final
retest may be dismissed from the training program. In such an event, you must appoint another individual to
assume the role of the Director or Manager and to satisfy the training and standardized testing requirements
provided in Subparagraph S.a.(iii) of the Franchise Agreement within 30 days after we give you notice.
If we determine in our reasonable judgment you are not operating your restaurant up to our standards set out in
the Operations Manual, you must send your current manager for the your restaurant to Manager Training within
thirty (30) days after we give you notice. You will pay all personal expenses transportation, lodging, a!Jd other
expenses any of your employees incur to attend our Training Program.
79
If you are an institutional-type franchisee or other franchisee signing the Non-Traditional Location Entity Rider,
Entity Franchisee Operating a Traditional Location Rider or Food Service Provider Rider, your restaurant
Managers may attend the Manager Training Program only after your Director successfully complete the full
training program.
Your Development Agent may offer an optional training program for store managers. This program is not part
of the Manager Training Program described above. You will pay all personal expenses, transportation, lodging,
and other expenses your manager will incur to attend the training program. Please contact your DA for more
details concerning the costs and classes offered for this optional program.
Item 12
TERRITORY
You will not receive an exclusive territory under the Franchise Agreement or any related agreements. We may
grant you limited exclusivity rights to a territory under our Exclusive Area Development Program described in
Item I. If we grant limited exclusivity rights for territories in the Development Agent territory where your
restaurant will be located, you may have limited choices for locations and less opportunity to own additional
restaurants. Please contact your Development Agent to determine whether any limited exclusive rights to
territories have been granted in your Development Agent's territory. See Item 2.
Franchisees that have been granted limited exclusivity rights to a territory will be limited to owning restaurants
in their territory.
Under the Exclusive Area Agreement, we agree not to operate ourselves or license any person or entity other
than the the franchisee with limited exclusivity rights to open any additional restaurants in their territory, except
in certain circumstances. The franchisee with limited exclusivity rights could consent to another franchisee
developing a new restaurant in the territory. We will offer an existing franchisee with a restaurant closest to a
proposed restaurant location the first right to develop the location, regardless of who brings the location to our
attention. If the closest franchisee does not want the location, the franchisee with the limited exclusivity rights
will have the option to develop a restaurant at the location. If the franchisee with the limited exclusivity rights
does not want to develop a restaurant at the location, the location will not be developed, unless the franchisee
with the limited exclusivity rights consents. Development of the restaurant will be subject to our site review
procedures. We also reserve the right to develop certain special locations and opportunities directly or through
others, if we are not able to offer the exclusive area franchisee a franchise for the location or opportunity.
These special locations and opportunities include schools, hospitals, entertainment or sporting complexes, toll
road or limited access highway food facilities, gas stations, convenience stores, and other methods of
distribution, such as selling SUBWAy® products and merchandise at wholesale or retail. We will grant the
franchisee with the limited exclusivity rights a I 0 business day right of first refusal to develop the restaurant if
we are able to do so without diminishing the value of the opportunity. If we grant a franchisee limited
exclusivity rights to a territory, the ownership of existing franchises within the territory will not be affected.
We do have policies to assist a franchisee with limited exclusivity rights to acquire the other restaurants in their
territory. We will assign a franchisee with limited exclusivity rights the first opportunity to exercise our right
of first refusal if another franchise owner in their territory wants to transfer their restaurant. We will also waive
the transfer fee if an existing franchisee in the territory wants to transfer his restaurant to the franchisee the
limited exclusivity rights. We will then waive the transfer fee if the franchisee selling to the franchisee with
limited exclusivity rights buys a replacement restaurant outside of the territory within a year.
You must obtain permission from us to relocate. We consider the same factors in evaluating your any
relocation site as we do evaluating your initial site. You may not be able to relocate in a territory we grant to a
franchisee with limited exclusivity rights. See Item II.
We issue franchises for specific Development Agent territories and not for states, towns, cities, or counties, or
specific locations, with the exception that satellite, certain non-traditional, school lunch program, community
80
development program and location selection program franchises are issued for specific identified locations. See
Item 2 for a list of the Development Agents and a description of their territories. If you are a franchisee of a cobranding partner or an approved chain having over 50 stores and are purchasing a franchise at a reduced fee,
you can designate the location of your other franchise as the site for your restaurant. See Items I and 5; Exhibit
A-2 (Satellite Rider); Exhibit A-3 (Non-Traditional Location Entity Rider); Exhibit A-5 (School Lunch Rider);
and Exhibit A-6 (Location Rider). Vour franchise entitles you to operate only at and from one location you
select and we approve. In limited circumstances, due to difficulties in negotiating a lease with the landlord, the
location you select may not be available to us or you and, therefore, we will not provide approval for the
location. In such an event, we may approve the landlord to operate at that location.
You may wish to open your restaurant at a location which is in such close proximity to a specific area where we·
plan to develop a SUBWA Y00 restaurant that the sales of your restaurant could be materially impacted once
®
.
both SUBWAY restaurants are open and operating. Nonetheless, we may allow you to open your restaurant at
this location if you sign the Planned Development Rider (Exhibit A-ll) to acknowledge that you waive all of
your rights to dispute our later development of a SUBWA Y00 restaurant in that area.
We may establish other franchised or company- or affiliate-owned outlets or other methods of distribution that
may compete with your location. While additional restaurants or methods of distribution tend to increase name
recognition and market share, in some instances sales at an existing restaurant may be adversely affected by a
new restaurant opening or distribution channel. Franchisees are required to comply with the provisions of the
Operations Manual to ensure that all restaurants within the system provide a safe and healthy environment.
There is a risk, however, that a customer may allege to have contracted an illness, including but not limited to a
food borne illness, at a SUBWA Y00 restaurant. This may cause your restaurant to suffer substantial losses, even
if the customer alleges that the illness was contracted at another SUBWA Y00 restaurant.
We do not presently intend to establish other franchises or company- or affiliate-owned outlets selling similar
products or services under a different trade name or trademark, but we reserve the right to do so. In the future,
00
we may offer our own branded product lines from the SUBWAy® Plus Program or SUBWAY CAFE Program
described in Item I under a separate license. We may charge an additional license fee. We may establish units
as separate franchises not located within a SUBWAy® restaurant. We retain the exclusive, unrestricted right to
produce, distribute, and sell food products, beverages, and other products under the SUBWA Y00 name or other
mark, directly and indirectly, through our employees, representatives, licensees, assigns, agents, and others, at
wholesale, retail, and otherwise, at any location or by any method of distribution, without restriction by any
right you may have, and without regard to the location of other SUBWA Y00 restaurants. You will not receive
any compensation from us in connection with any such production, distribution or sales. We may use methods
of distribution other than through a SUBWAy® restaurant location, including, but not limited to, a centralized
call center, the Internet, catalog sales, telemarketing and other direct marketing. We and our affiliates have
unlimited rights to compete with you and to license others to compete with you. You do not have any right to
exclude, control, or impose conditions on the location or development of any SUBWA Y00 restaurant, other
restaurant, store or other method of distribution, under the SUBWAy® mark or any other mark. Under
Paragraph 14 of the Franchise Agreement, you amend all of your existing Franchise Agreements to
include the provisions of Subparagraph ll.m. of the current form of our Franchise Agreement regarding
no territorial rights and our unlimited right to compete.
You may solicit and accept orders for approved products offered in your restaurant which may compete with
other SUBWA Y00 restaurants. You may use Internet couponing, billboards and point of purchase advertising
materials as a method of direct marketing, but only with our prior written approval prior to distribution. See
Item II.
We have established franchises in other location opportunities, including satellite locations. We intend to
continue establishing franchises in other location opportunities. We are also establishing franchises in schools
as a test and offering additional menu items under the SUBWAy® Plus Program and SUBWAY CAFE00
81
Program. See Item I. Certain affiliates of ours establish franchises and may operate company- or affiliateowned stores that sell goods or services similar to those you offer under a different trademark. MD Pizza, LLC
franchises restaurants featuring pizza and related food items. MD Pizza, LLC has its own principal address.
See Item I. We and our affiliates may in the future establish franchises or company- or affiliate-owned stores
that sell goods or services similar to those you offer in your SUBWAy® restaurant. These stores, whether
company- or affiliate-owned or franchises, may locate near your SUBWAy® restaurant.
We intend to develop a substantial number of restaurants throughout the United States, and through our
licensees, the world. We have divided the country into market areas to plan the development of our restaurant
system. We may define these market areas as one or more entire states and/or portions of one or more states.
Because we do not know the ultimate development of each market, we approach each market using as a starting
point a guideline of one restaurant for every certain number of population within the market, and then we
modify our development goals for the specific market based upon the characteristics of the market. In many
markets, we will increase our development goal and plan to establish more than one restaurant per unit of
population. The sales for your restaurant may be negatively impacted if we increase our development goals and
establish a high store density in your market. Characteristics which may lead us to increase the development
goal include the number of locations in the area established by competitors, a concentration of people who tend
to visit fast food stores more frequently than average (e.g. college and military base areas), a growing
population and the overall volume of people in the market, including people who don't live in the market area
but who work in, travel through, or visit the area. Our decision to increase development goals and to establish a
high store density is for the benefit of the whole SUBWAy® franchise system as we believe it will increase
name recognition, enhance our position against competitors and provide better services within a given market.
We have already increased our development goal in many markets. However, there is no assurance that we will
increase our development goal in all markets. In addition, we cannot guarantee that any restaurants developed
in accordance with our development goal will be successful. The opening and success of additional restaurants
depends upon many factors, including but not limited to, recognition and availability of suitable locations,
hiring of qualified employees, economic conditions, and ability to negotiate appropriate lease terms.
You should realize there may be some market areas where it may take more time for you to find a suitable
location and where you personally may need to spend more time managing your restaurant. You may also need
to spend more money on advertising. in some market areas to increase the name recognition of your franchise.
Additionally, due to changes in demographic patterns and economic conditions, we cannot guarantee that the
location you choose will always be a suitable location. If conditions diminish in the neighborhood where your
restaurant is located, you may suffer a decrease in sales.
We may enter into agreements with certain large companies that have offered the company more than I 00
potential sites for development as non-traditional locations to develop all or a portion of the locations offered to
the company. We may establish a marketing assistance fund using a portion of the royalties received from the
development of these locations to conduct marketing analyses and related activities on a case by case basis.
Item 13
TRADEMARKS
Under the Franchise Agreement, we grant you the right and license to use the name and mark SUBWAy®
which we own, and other marks we designate. The term "marks" means trade names, trademarks, service
marks, and logos used to identify your restaurant or the goods or services you offer. You may only use marks
we designate for use with your restaurant, and you may use them only in the manner we authorize and permit.
The following is a list of the primary marks we may authorize you to use. This list does not include all of the
marks we own. We may add or subtract from this list. We have registered these marks and other marks with
the United States Patent and Trademark Office on the Principal Register, and have filed all required affidavits
and renewals.
82
TRADEMARKS AND/OR SERVICE MARKS
NUMBER
SUBWAy®
SUBWAy®
SUBWAy® {Contour Letter Logo with Color)
SUBWAY 00 {Contour Letter Logo)
KIDS'PAK00
SANDWICH ARTIST 00 {Stylized}
SANDWICH ARTIST® {Stylized}
SANDWICH ARTIST
SUBWAY EAT FRESH & Design
SUBWAY EAT FRES~
SUBWAY COME Y FRESCO
SUBWAY CAFE®
1174608
1307341
3774480
3869196
1799757
!853341
1875737
3678989
2732170
2567334
3355021
1909034
INTERNATIONAL
CLASS
042
030, 032
043
043
043
042
029,030
043
043
042
043
042
DATE
I 0/20/1981
11/27/1984
4/13/2010
11/2/20 I 0
I 0/19/1993
09/06/1994
01/24/1995
09/08/2009
07/01/2003
07/16/2001
12/20/2006
08/01/1995
If you offer approved additional menu items you will have the right and license under the Franchise Agreement
to use any trademarks and service marks we may designate for the menu items and product Jines. The right and
license to use any additional trademarks and service marks will terminate if we discontinue your right to offer
additional items or we discontinue or modifY the marks. We may require a separate license for the marks in the
future, which will terminate if we discontinue or modify the marks.
There are no effective material determinations of the United States Patent and Trademark Office, the
Trademark Trial and Appeals Board, the Trademark Administrator of any state or any court in the United States
or its territories concerning the marks. There is no pending infringement, opposition, or cancellation action in
the United States or its territories. There is no pending material litigation involving the marks in the United
States or its territories. There are no agreements currently in effect which significantly limit our right to use or
license the use of any mark in a manner material to the franchise.
We do not entitle you, at any time, either by implication or otherwise, to the SUBWAy® marks or any other
marks associated with the system. You will not establish title by use, registration, or other means to similar or
related names and marks, including those you and all other franchisees generate while conducting business
under the SUBWA Y 00 name. You will not assist any third party or organization to register any SUBWAy®
marks or any marks associated with the system. You have limited and temporary rights and you agree you will
not, after expiration or termination of your Franchise Agreement, use the marks we licensed to you, directly or
indirectly, for any purpose. If you violate this provision, you may be liable to us for $250 per day. See Item 6.
You will not contest the validity or ownership of any marks associated with the system, and you may not
register them. You must display the following notice in a prominent place in your restaurant: "The
SUBWAy® trademarks are owned by Doctor's Associates Inc. and the independent franchised operator of
this restaurant is a licensed user of these trademarks. "
You may not use the word "SUBWAY" as part of your business entity's name, including in any name for your
operating entity. You will not establish an Internet domain name or Social Media site using the word
"SUBWAY" or representing the SUBWAy® brand without our prior written authorization. In such case, the
domain name must be registered under DAI, and your use of Social Media must comply with our Social Media
Guidelines. See Exhibit N. We may require you to cancel or assign to us registration of your domain name or
Social Media site if you fail to adhere to these Guidelines or we later determine that your domain name or
Social Media site creates consumer confusion regarding.the Marks or SUBWAy® name. See Subparagraph
S.m. of the Franchise Agreement. "Social Media" as used in this Disclosure Document means Internet-based
applications which allow for the creation and exchange of user-generated content including, but not limited to:
blogs, microblogs, social networks, and photo and video sharing sites. At our request, you must have any
information we deem inappropriate and not to be in the best interest of the System removed from any website or
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Social Media site. You may not dilute the marks in any way by engaging in advertising or improper behavior
that may lessen the SUBWAy® system's reputation. You will not use the marks in a manner that degrades,
diminishes, or detracts from the goodwill associated with the marks nor will you use the marks in a manner
which is scandalous, immoral, or satirical. You agree to promptly change the manner of such use upon our
request. We will have the right to physically remove any signage from your restaurant if we believe its
removal is necessary to protect the goodwill associated with the marks.
You must notifY us immediately when you learn about an infringement of or challenge to your use of any mark.
We will take the action we think is appropriate. While we do not have to defend you against a claim arising
because of your use of the marks, we will reimburse you for your liability if you used the marks in compliance
with the Franchise Agreement. To receive reimbursement, you must notifY us of the proceeding promptly after
you learn about it, cooperate with us to defend the proceeding, and allow us to control the defense of the
proceeding.
You must modifY or discontinue the use of a mark if we modifY or discontinue it. If we modifY or discontinue
the use of a mark in response to a third party's claim of infringement, our only obligation will be to reimburse
you for your tangible costs to comply, including your costs to replace'signs and papergoods.
We do not know of any infringing uses that could materially affect your use of the marks in any state.
Item 14
PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION
One of our officers in Item 2 and a sole supplier in Item 8 own a U.S. utility patent with a title of Product Server
with Breath Guard, which may be a required piece of equipment for franchisees. The patent number is US
7,958, 673 with an issuance date of June 14, 2011 and will remain in full force until June 13, 2026. We do
claim rights under copyright laws for various works, including printed matter, art work, menu boards,
advertising and promotional materials, instructional operating manuals, and the like, but we generally have not
filed applications for copyright registration of any of these works. However, we have obtained copyright
registration in the United States in the artwork for a mural entitled "New York_ Print Mural," which is the design
for your restaurant's wallpaper. We have also obtained copyright registrations for the "Subway Puzzles and
Games" and "Subman" in the United States. Copyright registration has been obtained for the sandwich images
of the core SUBWAy® menu items. These include Black Forest Ham, Chicken & Bacon Ranch, SUBWAY
MELT®, Steak & Cheese, B.L.T., Italian B.M.T., Turkey Breast, Buffalo Chicken, Meatball Marinara, Spicy
Italian, Tuna, Big Philly Cheese Steak, Oven Roasted Chicken, VEGGIE DELITE®, Cold Cut Combo, Spicy
Italian, Meatball Marinara, Sweet Onion Chicken Teriyaki, Turkey Breast & Black Forest Ham, Roast Beef,
and SUBWAY CLUB®. At this time there are no pending patent applications.
We own proprietary rights to information related to the SUBWAy® franchise system and the operation of a
restaurant. We will provide you, on loan, one copy of the confidential Operations Manual in either electronic
or paper form. We have not filed an application for registration of copyright in the Operations Manual, but we
claim a copyright in our own works and we and our affiliates treat the information in the Operations Manual as
proprietary and confidential trade secrets. The Operations Manual contains the components, requirements,
duties, standards, procedures, policies, and specifications pertaining to the SUBWAy® franchise system and the
operation of a restaurant. You must operate your restaurant in accordance with the Operations Manual as it is
revised. You must treat the Operations Manual and the information in it, as well as other information we make
available to you, as highly confidential, in accordance with Subparagraph S.n. and 8.h. of the Franchise
Agreement. We make this information available to you only because of the franchisor-franchisee relationship.
84
You must maintain all of our confidential or proprietary information as confidential, both during and after the
term of the Franchise Agreement. You may not at any time disclose the information you receive from us to any
person except individuals involved in the operation of your restaurant who have a need to know the
information. If you do disclose confidential or proprietary information in violation of the Franchise Agreement,
you will be liable to us for damages. We do not represent or guarantee that all aspects of the SUBWAy®
franchise system are exclusive to us or unique.
All ideas, slogans, marketing plans, advertising, concepts, techniques or materials relating to a SUBWAy®
restaurant created by you or on your behalf (the "Created Materials"), are deemed works made-for-hire, for the
purposes of United States and other applicable Intellectual Property laws. You will promptly tell us about all
Created Materials. You will irrevocably assign to us, without separate compensation, all right, title and interest
in and to the Created Materials, together with all associated intellectual property rights. If you have any rights
to the Created Materials that cannot be assigned to us, you will waive the enforcement of such rights, as well as
all claims and causes of action against us with respect to such rights. You agree to sign any documents we
request to record our ownership or to assist us in securing intellectual property rights in the Created Materials,
at our expense.
. Item IS
OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCIDSE
BUSINESS
You do not personally have to supervise your restaurant, but you must attend and satisfactorily complete our
training program. You may also send your manager to our training program. Institutional-type franchisees and
others signing a Non-Traditional Location Rider or Food Service Provider Rider may be required to send their
managers to manager training. See Items I and II. We recommend your restaurant be under the direct, on-site
supervision of a person who has successfully completed our training program. Even if you choose to employ a
manager to supervise your restaurant, we strongly recommend you personally devote a substantial amount of
time to the franchised business. Franchisees who do not devote their full time to the establishment, operation,
and supervision of their restaurants may have lower sales, higher costs, and less name recognition than
franchisees who do devote their full time to their business. Your day-to-day tasks could include supervising
employees, checking inventories, reviewing sales and food costs, bookkeeping, and making reasonable efforts
to ensure smooth and efficient operations. You must keep your restaurant open within the hours specified in
the Operations Manual, subject to local regulations, unless we approve different hours in writing. If you
operate a satellite restaurant, you may have more limited hours of operation. We and you will agree to the
hours and restaurant operation plan for a satellite location. See Item I.
You must sign the Franchise Agreement personally, meaning you are personally liable for the obligations of the
franchisee under the Franchise Agreement. If more than one individual signs the Franchise Agreement, "you"
refers to each individual. You are each personally jointly and severally liable for all of the obligations to us.
To qualify to sign the Franchise Agreement, an individual must pass our standardized test (if not already a
SUBWAy® franchisee). See Item 5. All of the individuals who sign the Franchise Agreement must also sign
the Sublease, Sublicense and any Equipment Lease with us or our affiliate. The master landlord may require
you to personally guarantee the lease. If you satisfy certain requirements, you may assign your right to operate
the restaurant (but not the Franchise Agreement), to a corporation you control, but all of the shareholders of the
corporation must guarantee the corporation's performance in writing. We will not release you from liability
under the Franchise Agreement. See Subparagraph 9.b. of the Franchise Agreement. You agree not to disclose
our confidential or proprietary information during or after the term of the Franchise Agreement. You also agree
that you will not have any direct or indirect association with a competitive business, as defined in the Franchise
Agreement, during the term of the Franchise Agreement and for 3 years after termination, expiration or transfer
of the Franchise Agreement within a 3 mile radius of where a SUBWAy® restaurant operates or operated
within the prior year. The reference to a geographic area does not give you any territorial or other exclusive
rights. See Items I4 and I7, and Exhibit A.
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We may allow a corporation or other entity to enter into the Franchise Agreement for a location we deem to be
non-traditional. Ifyou are an institutional-type franchisee, or if you have a net worth of at least $10 million,
purchasing a franchise for a non-traditional location you will sign the Non-Traditional Location Entity Rider, or
a School Lunch Rider. We may modify the non-competition covenants in your Franchise Agreement if you sell
other items in your non-traditional or school lunch restaurant location. See Exhibits A-4 and A-5. A
corporation or other entity signing the Franchise Agreement, including the Non-Traditional Location Entity
Rider, may bepermitted to sign the Community Development Rider (Exhibit A-17) to operate a restaurant
within a facility offering support services to the local community. See Items I and 5. A corporation or other
entity that qualifies as a Food Service Provider will sign the Food Service Provider Rider (Exhibit A-15). We
may also allow a corporation or other entity to enter into the Franchise Agreement for a location we deem to be
traditional. The corporation or entity will sign the Rider for Entity Franchisee Operating a Traditional Location
(Exhibit A-9). To qualify, the corporation must meet our qualifications and have at least $100 million in annual
sales. You must provide us with an audited annual report for verification. In addition, your director of food
services and the manager of the restaurant, or their equivalents, must attend and successfully complete our
franchisee training program. The non-competition covenants contained in your Franchise Agreement for any
traditional locations you may be operating will not be negotiated. However any non-competition covenants with
respect to any non-traditional locations may be negotiated in a manner consistent with any Non-Traditional
Location Entity Rider (Exhibit A-3) you may have executed.
There are various chainwide and local advisory councils. The Systems Advisory Council ("SAC") is comprised
of members representing franchisees, Development Agents, the IPC, the International System Advisory
Council, SF AFT, FWH and DAI. SAC holds about three meetings per year to identify and work on key
strategies to improve the SUBWAy® brand. In addition, there are food councils made up of franchisees that
work with Development Agents, Regional Managers, manufacturers and distributors concerning optional
products without approved manufacturers, products not yet allocated by the !PC, and products used in local
sandwiches. The goals of the food councils are to choose the best quality products at the best price and to
create efficiency for multiple Development Agent territories and advertising fund markets. From time to time,
our representatives or Development Agent representatives may meet with franchisees on a local level to discuss
issues such as improvements to the franchise system, market conditions and future planning.
Item 16
RESTRICTIONS ON WHAT THE FRANCIDSEE MAY SELL
You must operate the restaurant in strict compliance with all required methods, procedures, policies, standards
and specifications of the SUBWAy® system in the Operations Manual and in other writings we issue. You
must use the restaurant premises only for the operation of a SUBWAy® restaurant and you may not operate any
other business at or from the location without our prior written consent. You must offer and sell only those
goods and services we have approved. If your restaurant is in a non-traditional location like a convenience
store or a school lunch location, a Rider will clarify your Franchise Agreement to reflect that you sell other
items. See Exhibits A-3, A-4, and A-5.
You must offer all goods and services we designate as required for all franchisees. The Operations Manual
states you must at a minimum offer the basic SUBWAy® menu. We must approve additional menu items. If
you operate a school lunch location, your menu will probably be more limited, as we and you will agree, and
you may have to modify the food items you offer and buy food products specially approved for the school lunch
program to satisfy nutritional requirements. See Item I. We may authorize tests of new products or methods at
company- or affiliate-owned or franchised restaurants. Based upon the results of these tests, we may make
changes in our menu. We reserve the right to designate additional required or optional goods and services in
the future and to withdraw any of our previous approvals. There are no limits on our right to do so. You must
comply with our new requirements. If you participate in the SUBWAy® Plus Program and you establish a third
party franchisor's concept, you will sign the Co-Brand Location Rider (Exhibit A-7). We may modify or stop
86
any co-branding opportunities at any time. If both of us approve your co-brand location, you will operate the
other concept as a direct franchisee of the other franchisor. You will receive a Disclosure Document from the
other franchisor and enter into a direct franchise agreement with the other franchisor. You will sign a license or
sublicense with the third party allowing you to offer a third party's branded products. You may have to sign a
test agreement to offer our additional menu items that are under test. We do not have to permit all franchisees
to offer the additional menu items that are under test. See Item I. We also designate some goods and services
as optional programs for qualified franchisees. Current optional programs include catering, breakfast and local
menu items. To offer optional goods or services, yoti must be in compliance with your Franchise Agreement
and the Operations Manual and meet any additional requirements we may have for the program, including state
or local licenses, training, marketing, and insurance. The Operations Manual and other written or electronic
materials we distribute contain written lists and requirements for optional programs.
We adopted the Marketwide Option Program (MOP), Region Option Program (ROP) and Store Option Program
(SOP) to promote consistency of items offered for sale, including methods of preparation and presentation,
throughout an advertising fund market or region. You will make the decision for your restaurant on certain
options categorized as SOP items. You will have to follow the decision made for the market on items
categorized as MOP items, unless we grant you a waiver. You will have to follow the decision made for the
region on items categorized as ROP items. Your lease may contain restrictions or you may have space or other
limitations that prevent you from participating in a program approved for your market. The decision on MOP
items will be made for the market by the favorable vote of both the local advertising fund board (see Item I I)
and the Development Agent (or the Development Agents representing at least two-thirds of the restaurants in the
market) if the investment cost to implement the item is less than $100 (not including the cost of product
inventory). If the investment cost is $I 00 or more, the decision on the MOP item will be made by the
franchisees in the market. The owners of two-thirds of the open restaurants in the market must sign a
commitment form for a Marketwide Option Program item costing more than $100 to be mandatory in the market.
Certain MOP items have default selections. If a MOP item is not approved by the market within 30 days of the
introduction of the product, the default selection will become a required item until the market makes a decision.
If a MOP item does not win approval for the market, you may not implement the item in your restaurant unless
we grant you a waiver. If a program is under test however, the restaurants in the markets approving the program
will each need approval to implement the program. We permit exceptions to allow restaurants to continue
offering the program if it is not approved by their market. You may have some choices for your own restaurant
after your market approves a MOP, like flavors of soup to offer. See Item 7.
We do not impose any restrictions or conditions that limit your access to customers, but you may not sell any
goods or services to another vendor for resale without our consent. You may not sell goods or services except
from your approved location without our prior written consent. Under our school lunch program, you can sell
only to students, faculty, staff, and normal visitors, and not to the general public. See Exhibit A-5.
See Items 8, 9, I I and 12 for more information about your obligations and restrictions.
Item 17
RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
This table lists important provisions of the franchise and related agreements. You should read these provisions
in the agreements attached to this Disclosure Document. The provisions of the Franchise Agreement
("F A")(Exhibit A) apply for any location, except as modified by the Satellite Rider ("SR")(Exhibit A-2), the
Non-Traditional Location Riders ("NTLR") including the Non-Traditional Location Franchise Agreement
Addendum ("NTLRA")((Exhibits A-3 and A-4), School Lunch Rider ("SLPR") (Exhibit A-5), Specific
Location Rider ("LR") (Exhibit A-6), Co-Brand Location Rider ("CBLR") (Exhibit A-7), Rider for Entity
Franchisee Operating Traditional Location ("EFR") (Exhibit A-9), Direct Lease Rider ("DLR") (Exhibit A-12),
Food Service Provider Rider ("FSPR") (Exhibit A- I 5), Dual Location Test Rider ("DL TR") (Exhibit A- I 6),
87
Short Term Satellite Rider ("STSR") (Exhibit A-18), or SUBWAY CAFE00 Program Rider ("SCPR") (Exhibit
A-19).
THE FRANCillSE RELATIONSHIP
Provision
a.
Length of the
franchise term
Paragraph in FA, SR,
NTLR, SLPR, CBLR,
LR, EFR, DLR,
FSPR, DLTR or
SCPR
FA Paragraph 7 and
Paragraphs !.b.,
5.a.(l)
Summary
Term is 20 years, but you must sign Sublease or
Sublicense (as applicable) within 2 years of franchise
purchase or franchise terminates. We may grant you an
extension. See Item 5. If you purchase a franchise at a
reduced fee to establish a restaurant at a location you
operate as a franchisee of another approved concept, we
may terminate your Franchise Agreement if we don't
approve your location within 90 days after you sign your
Franchise Agreement.
NTLR Exhibit A-3
Paragraph V, Exhibit
A-4 Paragraph III;
FSPR Paragraph VI
!fyou sign a Non-Traditional Location Rider, the term is
20 years, but you must open for business (rather than sign
a Sublease or Sublicense) within 2 years or franchise
terminates. We may grant you an extension. See Item 5.
We may terminate if we do not approve your location
within 90 days after you sign your Franchise Agreement.
SR Paragraphs R.3,
R.4, VII, X
Term for a satellite restaurant is from the date of the
satellite Franchise Agreement until the expiration or
termination of the Franchise Agreement for the Base
Restaurant. You must sign Sublease or Sublicense within
90 days of satellite franchise purchase or the satellite
Franchise Agreement expires, with no right to any
extension. If we allow you to operate a satellite restaurant
in a non-traditional location, you must open for business
within 2 years after you sign the satellite Franchise
Agreement, including the Non-Traditional Rider. The
satellite Franchise Agreement will automatically terminate,
regardless of the length of term remaining on the Franchise
Agreement for the Base Restaurant, if the lease for the
satellite restaurant or Base Restaurant expires or
terminates. Either party may terminate the satellite
Franchise Agreement by notice if we or our designee is not
able to offer a Sublease or disapproves the location within
90 days of franchise purchase.
STSR Paragraphs R.3, Term for the satellite restaurant is for I year from the date
of the Short Term Satellite Rider or until the expiration or
R.4, VI, IX
termination of the Franchise Agreement for the Base
Restaurant, whichever occurs sooner. You must sign
Sublease or Sublicense within 90 days of satellite franchise
purchase or the satellite Franchise Agreement expires, with
88
no right to any extension. The satellite Franchise
Agreement will automatically terminate, regardless of the
length of term remaining on the Franchise Agreement for
the Base Restaurant, if the lease for the satellite restaurant
or Base Restaurant expires or terminates. Either party may
terminate the satellite Franchise Agreement by notice if we
or our designee is not able to offer a Sublease or
disapproves the location within 90 days of franchise
purchase.
SLPR Paragraphs IV,
X
b.
Renewal or extension
of the term
Term for a school lunch location is 5 years but you must
sign contract, license, or lease (if applicable) and open for
business within six months of franchise purchase or
franchise terminates with no right to any extension.
LR Paragraph II
Term is 20 years, but you must sign Sublease for the
specific location within 30 days after we or our designee
offers it or your Franchise Agreement expires with no right
to any extension. If we or our designee is not able to offer
a Sublease or disapproves the location after six months of
franchise purchase, your Specific Location Rider will
automatically terminate, you will have no further rights to
the location and the franchise will be deemed a standard
franchise. We will refund the franchise fee provided you
send us prior written notice no later than 60 days after such
termination.
DLR Paragraphs I, II
Term is 20 years, but you must open for business and
commence operation of the restaurant within two years
after signing the Franchise Agreement or franchise
terminates. We may grant you an extension. See Item 5.
We may terminate the Franchise Agreement and refund
your franchise fee if we do not grant final approval for the
location within 90 days after you sign the Franchise
Agreement.
DL TR, Paragraph II
Term is 20 years, but you must sign the Sublease for the
Dual Location Test Site within 30 days after we or our
designee offers it or your Franchise Agreement expires
with no right to any extension. If we or our designee is not
able to offer a Sublease or disapproves the location after I
year of franchise purchase, we or you may terminate the
Franchise Agreement. We will refund the franchise fee
unless it was your fault we disapprove the location or we
or our designee cannot offer you a Sublease.
FA Paragraph 7
Your franchise will automatically renew for additional20
year periods unless either party chooses not to renew and
sends written notice to the other at least 6 months prior to
expiration of the Franchise Agreement. We have the right
to refuse to renew ifyou are not in full compliance. If you
dispute our notice of intent not to renew, you must request
89
to arbitrate the decision. Refer to Item 17.u. for arbitration
procedures.
SR Paragraph VI
Your franchise will automatically renew for additional 20
year periods in line with the Base Restaurant Franchise
Agreement term, unless either party chooses not to renew
and sends written notice to the other at least 6 months prior
to expiration. We have the right to refuse to renew if you
are not in full compliance. If you dispute our notice of
intenet not to renew, you must request to arbitrate the
decision. Refer to Item 17.u. for arbitration procedures.
STSR Paragraph VI
Your franchise may be renewed for an additional I year
term by mutual agreement of the parties, provided you
send written notice at least 60 days prior to the expiration
of the initial! year term. We have the right to refuse to
renew if you are not in full compliance. If you dispute our
notice of intent not to renew, you must request to arbitrate
the decision. Refer to Item 17.u. for arbitration
procedures.
SLPR Paragraph X
If you are in full compliance, you may renew for five
years.
c.
FA Paragraphs 7; SR
Requirements for
franchisee to renew or Paragraph VII; SLPR
Paragraph X
extend
Upon renewal, you may continue under the terms of your
existing Franchise Agreement and your royalty rate will
increase to I 0% or you may sign our current Franchise
Agreement that may contain differing terms before the 20
year period ends and your royalty rate will remain at 8%.
d.
Termination by
franchisee
None
You do not have the right to terminate the Franchise
Agreement, but if we do not cure a default within 60 days,
you can seek arbitration. See Paragraph ll.j. of the
Franchise Agreement.
SLPR Paragraph X
You may stop operating a school lunch location or a nontraditional location at any time after 30 days' notice.
NTLR Exhibit A-3
Paragraph X, Exhibit
A-4 Paragraph VI;
NTLRA Exhibit A-3
and Exhibit A-4
In some circumstances, we may require you to sign an
Addendum to the Franchise Agreement which provides
that you may stop operating your restaurant at any time
after 180 days notice and we or a bonafide SUBWAy®
franchisee will have the option to purchase the franchise
for your restaurant during the notice period. See o. below.
You must comply with the post termination covenants.
SCPR Paragraph V
You may withdraw from the SUBWAY CAFE® Program
at any time; withdrawal is effective 30 days after we
receive your written notice of withdrawal. See Item I.
None
We may terminate only for good cause.
e.
Termination by
franchisor without
90
cause
NTLR Exhibit A-3
Paragraph X, Exhibit
A-4 Paragraph VI;
FSPR Paragraph XII
We may terminate the Franchise Agreement for a nontraditional location for any reason within 30 days after you
sign the Franchise Agreement.
f.
Termination by
franchisor with cause
FA Paragraphs 8, 10.g We can terminate if you default. See u. below.
g.
"Cause" definedcurable defaults
FA Paragraphs 8.a
and 8.b
You have I 0 days to cure: abandonment; non-payment of
money due us, affiliates, master landlord, or for which we
may become liable, including under your Sublease,
Sublicense, or Equipment Lease; eviction for non-payment
of rent or related charge; failure to obtain approval from us
or your Development Agent to open your restaurant or; reopening your restaurant after a re-location without
obtaining the necessary approval from us or your
Development Agent to re-open; unauthorized use of the
restaurant premises; fail to report gross sales properly.
You have 60 days to cure: any other defaults under the
Franchise Agreement; loss of the premises (other than due
to eviction for non-payment); insolvencyfbankruptcy; loss
of permit or license; noncompliance with the Operations
Manual. These provisions will apply to any existing
Franchise Agreement you have.
SR Paragraph Vlll;
STSR Paragraph VII
A default under the Base Restaurant Franchise Agreement
will be a default under the satellite Franchise Agreement.
h. "Cause" defined- non- FA Paragraphs 8.c,
curable defaults
10.b, 14
Repeated defaults under the Franchise Agreement, even if
cured. This provision will apply to any existing Franchise
Agreement you have. lfyou breach your Sublease or
Sublicense or your Franchise Agreement, your sublessor
or sublicensor may terminate your Sublease or Sublicense
upon 10 days written notice and remove you from the
premises. The arbitration clause in the Franchise
Agreement does not apply to defaults under your Sublease
or Sublicense. See Exhibits A and D or D-1. Your
Franchise Agreement will automatically terminate if you
do not sign a Sublease or Sublicense (as applcable) or
open for business (as applicable) within the time allowed.
See a. above.
We may terminate the Franchise Agreement without an
opportunity to cure (unless prohibited by law) if i) you fail
to comply with all civil and criminal laws, ordinances,
rules, regulations and orders of public authorities, ii) you
intentionally under-report gross sales, falsify financial
data, make a material misrepresentation to us, or otherwise
commit an act of fraud, iii) you are convicted or plead
guilty or "nolo contendre" to a felony, crime of moral
91
turpitude, an indictable offense, unfair or deceptive trade
practices, or any other crime or offense that we believe to
be injurious or prejudicial to the SUBWAy® system, the
marks or the goodwill, iv) you use the restaurant or
restaurant location for illegal use, v) we are prohibited
from doing business with you under any anti-terrorism law
enacted by the US, including but not limited to the USA
PATRIOT Act or Executive Order 13224, vi) you are
dismissed from the training program, or vii) you violate the
covenant not to compete, or viii) you engage in behavior
that results in physical harm or the threat of physical harm
to an employee or representative ofDAI, its affiliate or a
Development Agent or (ix) you fail to complete any
transfer or assignment of your restaurant in accordance
with Subparagraphs 9.a., 9.b., or 9.c. of your Franchise
Agreement, as applicable. This provision will also- apply to
any existing Franchise Agreements you have. See Item 6,
Note 2.
The satellite Franchise Agreement will automatically
SR Paragraphs R.3,
VII; STSR Paragraphs terminate, regardless of the- length of term remaining on
R.3, VI
the Franchise Agreement for the Base Restaurant, if the
lease for the satellite restaurant or Base Restaurant
terminates or expires.
1.
Franchisee's
obligations
on termination/
non-renewal
FA Paragraphs 8.e,
8.g, 8.h, 8.i, ll.b, 13,
14; NTLR Exhibit A3 Paragraphs XI, XII,
ExhibitA-4
Paragraphs VII, VIII;
FSPR Paragraphs
XIII, XIV, XV
Obligations include de-identification (unless instructed
otherwise), return of Operations Manual, automatic
assignment of telephone numbers, and cancellation of
Social Media accounts, domain names, internet addresses,
permits, registrations, certifications or other consents.
Also see r., Item 6, Note 2 and Item 15. Your franchise
rights revert to us if you abandon or if we revoke the
agreement. If we or our affiliate terminates your Sublease
or Sublicense, you must quit and surrender the restaurant
premises to your sublessor, but you will be liable for the
balance of the rent or license fee due or under the
Sublease, primary lease, sublicense, or license. See
Paragraph 6 of the Sublease, Exhibit D or Paragraph 4,
Exhibit D-1.
SCPR Paragraph V
You may withdraw from the SUBWAY CAFE® Program
at any time; withdrawal is effective 30 days after we
receive your written notice of withdrawal. See Item I.
j.
Assignment of
contract by franchisor
FA Paragraph 9.d
No restriction on our right to assign.
k.
"Transfer" by
franchisee -definition
FA Paragraph 9
Includes transfer of contract or assets or ownership change.
I.
Franchisor approval
of transfer by
FA Paragraphs 9.a,
We have the right to approve all transfers. We will not
9.b; NTLR Exhibit A- unreasonably withhold our consent to a transfer.
92
franchisee
m. Conditions for
franchisor approval
of transfer
3 Paragraph XIII;
FSPR Paragraph XVI
FA Paragraphs 9.a,
9.b
New franchisee qualifies, passes our standardized test (if
not already our franchisee, see Item 5), you pay transfer
fee (see Item 6), we approve purchase agreement, new
franchisee successfully completes training, new franchisee
signs current agreement and assumes the Sublease or
Sublicense, you pay all money due in full for all your
restaurants, you are not in default, you and the new
franchisee sign a general release, you transfer the
Operations Manual for the restaurant to the new franchisee
on the date of transfer, and you bring the restaurant into
full compliance with the Operations Manual at or prior to
transfer. Consent to assignment of the Sublease or
Sublicense by our affiliate does not release you from your
obligations under the Sublease or Sublicense.
You may assign your rights to operate the restaurant, but
not the Franchise Agreement, to a newly organized
operating entity you control. You must remain, at all
times, the owner of the controlling voting interest and
majority ownership interest (more than 50%) of the
operating entity. Each individual who signs the Franchise
Agreement must own no less than 25% of the operating
entity, unless we allow otherwise pursuant to your written
request. You will remain the franchisee and you may not
use the word "SUBWAY" as part of the operating entity's
name. The operating entity must assume your obligations
and the stockholders must guarantee the corporation's
obligations. You, the operating entity and all shareholders
or members must sign a general release.
n.
Franchisor's right of
first refusal to
purchase franchisee's
business
SR Paragraph X.B;
STSR Paragraph IX
You can only transfer a satellite restaurant and its
Franchise Agreement together with the Base Restaurant
and its Franchise Agreement to the same buyer, except in
isolated circumstances where there is a good business
reason to allow transfer of only the satellite restaurant and
its Franchise Agreement, as determined by us. See Item I.
CBLR Paragraph I
You cannot transfer a restaurant and our Franchise
Agreement separately from your business licensed by the
third party franchisor and your Franchise Agreement with
the third party.
FA Paragraph 9.a
We can match any offer for your business within 30 days
of your written offer to us. We will assign to a franchisee
with limited exclusivity rights to a territory the first
opportunity to exercise our option. If we and any
franchisee with limited exclusivity rights don't accept, you
can sell to a third party, subject to our transfer
requirements, but you can't sell at a lower price or on ·
93
better terms than what you offered to us.
SR Paragraph IX.B;
STSR Paragraph IX
The option to repurchase applies to the Base Restaurant
and any satellite restaurant together. See m. above.
CBLR Paragraph I
The right of first refusal applies to the restaurant and the
third party franchisor's concept. Seem. above.
o.
Franchisor's option to NTLR and NTLRA
purchase franchisee's Exhibit A-3 and
business
Exhibit A-4
For certain non-traditional locations, we may require you
to sign an Addendum to the Franchise Agreement
requiring 180 days notice to us before ceasing to operate
your restaurant. During the notice period, we will have
the option to purchase or arrange for a bonafide
SUBWAy® franchisee to purchase your franchise for the
restaurant and you will agree to enter into a lease for the
restaurant with our designated leasing company for a 24
month term at a gross rental equal to 7% of the annual
gross sales oftherestaurant.
p.
Death or disability of
franchisee
Paragraphs 9.a., 9.c;
NTLR Exhibit A-3
Paragraph XV; SLPR
Paragraph XIII; FSPR
Paragraph XVI
Your rights may pass to your next of kin or legatees. They
must assume your obligations under the Franchise
Agreement and Sublease, pass our standardized test (if not
already our franchisee, see Item 5), agree to attend the
next training session, have a satisfactory credit rating, be
of good moral character and successfully complete
training. We do not have an established disability policy,
but will permit you to sell the franchise, or keep it if you
operate it with trained personnel.
FA Paragraphs 5.d,
8.g., 8.h, I O.e
No direct or indirect association with a Competitive
Business anywhere; if you breach you must pay $15,000
·for each business and 8% of gross sales, or $100,000
(whichever is higher), and we may seek termination of
your Franchise Agreement, an injunction and/or damages.
You may not disclose any confidential or proprietary
information to any unauthorized person or we may seek an
injunction, damages or both.
SLPR Paragraph VII;
NTLR Exhibit A-3
Paragraph VII,
Exhibit A-4 Paragraph
IV; FSPR Paragraph
VIII
You may not sell sandwiches at other areas of the site you
control. You may sell "branded" sandwiches at another
location if we do not approve the other location for a
SUBWAy® restaurant. You may not use our recipes,
formulas, or other distinctive features at another location.
This modification only applies to institutional-type
franchisees signing a School Lunch Rider in the form of
Exhibit A-5, a Non-Traditional Location Entity Rider in
the form Exhibit A-3, or a Food Service Provider Rider in
the form ofExhibit A-15, and all franchisees signing a
Non-Traditional Location Individual Rider in the form of
Exhibit A-4.
q. Non-competition
covenants during the
term of the franchise
94
r.
Non-competition
covenants after the
franchise is
terminated or expires
EFRPara.V
You agree that you will not sell "Branded Sandwiches" (as
defined below) or operate a Branded Sandwich food unit,
franchised or company-owned, ata Non-Traditional
Location except as we permit in this subparagraph. You
will give us the first opportunity to approve for a
SUBWAy® restaurant location any Non-traditional
Location in which you want to operate a Branded
Sandwich unit. You may only operate a Branded
Sandwich unit that is not a SUBWAY® restaurant if we
have, in writing, denied you approval to operate a
SUBWAy® restaurant at the proposed Non-traditional
Location. If you operate a Sandwich unit that is not a
Branded Sandwich unit, you agree that you will not
market the Sandwich unit concept as a franchise system or
an independent chain. You will send a written request for
approval of all proposed Branded Sandwich unit sites to
the FWH Development Team department.
FA Paragraphs 8 .e,
8.g, I O.e
No direct or indirect association with a Competitive
Business for 3 years after termination, expiration or
transfer of the Franchise Agreement within a 3 mile radius
of where a SUBWAy® restaurant operates or operated
within the prior year; if you breach you must pay $15,000
for each business and 8% of gross sales, or $100,000
(whichever is higher), and we may seek an injunction
and/or damages. You may not disclose any confidential or
proprietary information to any unauthorized person or we
may seek an injunction and/or damages.
SLPR Paragraph XI;
NTLR Exhibit A-3
Paragraph XI, Exhibit
A-4 Paragraph VII;
FSPR Paragraph XIII
You may not sell "branded" sandwiches for three years
from the same location. This modification only applies to
institutional-type franchisees signing a School Lunch
Rider in the form of Exhibit A-5, a Non-Traditional
Location Entity Rider in the Form of Exhibit A-3, or a
Food Service Provider Rider in the form of Exhibit A-15,
and all franchisees signing a Non-Traditional Location
Individual Rider in the form of Exhibit A-4.
s.
Modification of the
agreement
FA Paragraph 5.b
No modifications generally after Franchise Agreement
signed, but the Operations Manual is subject to change.
We may negotiate changes to the Franchise Agreement
with large institutional-type franchisees only. We may
also negotiate changes for a school lunch franchise with a
school system or institutional food service provider
franchisee.
t.
Integration/merger
clause
FA Paragraphs 13, 14
Only the terms of,the Franchise Agreement are binding
(subject to state law), however, nothing in the Franchise
Agreement is intended to disclaim or waive any
representations in this Disclosure Document. Any other
promises may not be enforceable. The provisions of
95
Paragraph 13 will apply to any existing Franchise
Agreement you have.
u. Dispute resolution by
arbitration or
mediation
FA Paragraphs 10, 14,
17. Also see FA
Paragraphs 5.d, 8.d,
8.e, 8.h; NTLR
Exhibit A-3 Paragraph
XIV; LR Paragraph
III; CBLR Paragraph
I; CR Paragraph IV;
FSPR Paragraph XVII
Except for certain claims we may bring, you must arbitrate
in the forum noted in v. below, all disputes under the
Franchise Agreement. Your claims are limited under
Paragraph 17. Paragraphs I 0 and 17 will apply to any
existing Franchise Agreement you have. The Franchise
Agreement contains other important provisions concerning
dispute resolution.
v.
FA Paragraphs I O.a,
IO.d., 18
Arbitration and any litigation will be held in Connecticut,
subject to state law. The Franchise Agreement allows us
to bring an action for injunctive relief in any court having
jurisdiction if you breach the provisions of the Franchise
Agreement concerning use of the trademarks, or
confidentiality, or the covenants not to compete. You may
not bring litigation in court under the Franchise
Agreement.
FA Paragraphs I O.c.,
13, 14
Connecticut law applies, except the United States
Arbitration Act governs the arbitration provisions, subject
to state law. This provision will apply to any existing
Franchise Agreement you have.
Choice of forum
w Choice of law
A provision in the Franchise Agreement that terminates your franchise upon your bankruptcy may not be
enforceable under federal bankruptcy law (II U.S.C., Sections 101 and following).
Item 18
PUBLIC FIGURES
We do not use any public figure to promote our franchise.
You do not have the right to use the name of a public figure in your promotional efforts or advertising without
prior written approval from us.
Item 19
FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial
performance of its franchises and/or franchisor-owned outlets, if there is a reasonable basis for the information,
and if the information is included in the Disclosure Document. Financial performance information that differs
from that included in Item 19 may be given only if: (I) a franchisor provides the actual records of an existing
outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for
example, by providing information about possible performance at a particular location or under particular
circumstances.
We do not make any representations about a franchisee's future financial performance or the past financial
performance of company-owned or franchised outlets. We also do not authorize our employees or
representatives to make any such representations either orally or in writing. However, if you are purchasing an
96
existing outlet, we may pro' ide you with the actual records of that outlet. If} ou recei'e any other financial
perforn1ance infonnation or projections of your future income, you should report it to the franchisor's
management by conlacling any of the follov. tng mdividuals: Donald Fcrtman at fcrtman d'lilsubw~;:.~om, 1800-888-4848 e~tension I 320; Janet Gsell licsscr at •
1-800-888-4 848 extension
1480; Tracey Devine at devine T!iilsubway.com
You may also conLact the
Federal Trade Commission and the appropriate state regulatory agencies.
Item 20
OUTLETS and FRANCIIISJ:E INFORMATION
S,5~emwide
Table No. I
Outleo Summary for years 2010 to 2012
U S I otol O"'l<l<
"
Table No.2
"'ew
Transfer of OutleLS from ~ ranchi<ecs to
Owner> (other than !he FranchiSor)
For 'ears 20 10 to 20 12
"'