The North American Association of Subway Franchisees is backing a Subway franchisee who initiated an arbitration case against the sandwich chain over its remodel mandate, the association said in a statement posted on its website.
The NAASF said that the remodel program costs a minimum of $100,000 and creates financial burdens without any guarantees of a return on investment.
Subway’s Fresh Forward 2.0 remodel, which debuted last November, includes interior elements like bold wall graphics, more localized messages and signage, warmer wood tones and better lighting. It also creates more support for digital channels.
Subway included digital elements like menu boards and kiosks in some locations as part of its first Fresh Forward remodel package in 2017. At the time, the cost of a new location under this remodel was $200,000 to $300,000, according to Nation’s Restaurant News.
In 2019, Subway gave franchisees $10,000 to cover a quarter of the remodeling costs for older stores, but only about half of its U.S. franchisees completed remodels as of 2023.
The chain previously told Restaurant Dive that restaurants typically come due for remodels every seven to 10 years, and units would be remodeled with the new image based on this timeline. Subway said that its Fresh Forward 2.0 reimage was tested across all regions and led to positive feedback from guests, operators and staff. But some franchisees are dissatisfied.
“Subway has imposed a non-negotiable remodel timeline that treats franchisees not as business partners, but as corporate ATMs,” NAASF said. “These aren't cosmetic touch-ups — we're talking about six-figure investments that could devastate family businesses, drain retirement savings, and force store closures across communities nationwide.”
Subway wrote in an email to Restaurant Dive that it could not discuss details regarding this legal matter, but said the franchisee is “not in good standing with the brand” and is facing issues beyond being overdue for a remodel.
Subway added that it has been making moves to cut remodel costs for franchisees. The brand extended deadlines from seven years to 10 years, and is offering various remodel options depending on franchisee needs.
“Our goal is to help balance their investment with meaningful results — ensuring franchisees can remain competitive in a cost-effective and sustainable way,” the company wrote.
Subway said that customers expect a “consistent, modern and inviting dining experience,” and that meeting this expectation is key given the competitive environment in the restaurant sector.
“Maintaining this modern restaurant image is necessary and may require remodeling for any Subway restaurants that currently have an outdated image. This is standard industry practice,” the chain wrote.
But these moves have not been enough to assuage franchisees’ financial concerns.
“This case is seeking a declaration that franchisees cannot be forced into these economically ruinous remodels without penalty — a decision that could protect thousands of small business owners which are struggling to protect themselves from corporate overreach,” the NAASF said.
Earlier this year, Subway provided rebates to franchisees equal to about 10% of average weekly sales for the first half of the year, according to Restaurant Business. Those rebates were related to Subway’s shift from Coke to Pepsi, and were intended to fund equipment maintenance, though some operators came to rely on them during slow periods.
These rebates are unlikely to help fund the cost of remodels, however, as Subway’s average unit volume is fairly low.
Subway and its franchisees have butted heads in the past. In 2019, franchisees accused the chain of arbitrarily targeting franchisees for closures. In 2020, franchisees filed a Federal Trade Commission complaint against the franchisor over the return of the $5 Footlong promotion. Franchisees claimed that Subway was bullying them to honor the deal, even though it didn’t make them any money.
