{"id":384335,"date":"2021-12-22T03:33:13","date_gmt":"2021-12-22T00:33:13","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/subway-exploited-immigrants-and-victimized-franchisees-lawsuit\/"},"modified":"2021-12-22T03:33:13","modified_gmt":"2021-12-22T00:33:13","slug":"subway-exploited-immigrants-and-victimized-franchisees-lawsuit","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/subway-exploited-immigrants-and-victimized-franchisees-lawsuit\/","title":{"rendered":"#Subway exploited immigrants and victimized franchisees: lawsuit"},"content":{"rendered":"<p>&#8220;<strong>#Subway exploited immigrants and victimized franchisees: lawsuit<\/strong>&#8221;<\/p>\n<div>\n<aside class=\"single__inline-module alignleft\">\n<\/aside>\n<p>Subway\u2019s massive chain of sandwich shops has become a hotbed of financial exploitation for overseas immigrants, victimizing those it has t<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ed as franchisees and even driving some to ruin, an explosive lawsuit claims.<\/p>\n<p>For years, the fast-food giant has recruited immigrants, mostly from Asia, to expand a US chain that a decade ago had spanned more than 25,000 locations nationwide. While aspiring entrepreneurs believed they were buying into the American Dream, some instead were caught in a loosely managed corporate network that was rife with corruption, according to a suit filed last month in Nevada state court.<\/p>\n<p>In particular, the suit claims that some of Subway\u2019s so-called \u201cbusiness development agents,\u201d or BDAs \u2013 typically large franchisees themselves who were also given managerial power to oversee hundreds or even thousands of locations in a given territory \u2013 have systematically socked unwitting franchisees with nitpicking rules and costly fees.In some cases, rogue BDAs have used Subway\u2019s overgrown schedule of rules and fees to steal away the stores of other franchisees, according to the suit. Even worse, the BDAs are given access to franchisees\u2019 books, enabling them to determine which locations are ripe for cherry-picking, the suit claims.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/sized-raj-mehta.jpg?quality=90&amp;strip=all\" alt=\"Headshot of Raj Mehta\" class=\"wp-image-20574538\" width=\"156\" height=\"227\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/sized-raj-mehta.jpg?quality=90&amp;strip=all&amp;w=230 234w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/sized-raj-mehta.jpg?quality=90&amp;strip=all&amp;w=153 156w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/sized-raj-mehta.jpg?quality=90&amp;strip=all&amp;w=77 78w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/sized-raj-mehta.jpg?quality=90&amp;strip=all 300w\" sizes=\"auto, (max-width: 156px) 100vw, 156px\"\/><figcaption>Raj Mehta contends that Subway pressures franchisees into opening more stores.<\/figcaption><\/figure>\n<\/div>\n<p>\u201cSubway is allowing its BDAs to profit off the backs of minorities, Indian Americans and\/or Indian immigrants who have oftentimes invested their entire life savings on their franchises,\u201d according to the suit, which was filed last month in Nevada state court.<\/p>\n<p>The incendiary allegations come as Subway is scrambling to get a tighter handle on its 56-year-old chain, which critics say co-founder Fred DeLuca expanded into a nationwide web of regional fiefdoms run by the BDAs. In some cases, BDAs have used intimidation tactics against smaller franchisees who were actively recruited by Subway from abroad, according to the suit.<\/p>\n<p>\u201cSubway was trying to capitalize on the concept of the American dream. They were telling immigrants in other countries to get your cousin here to fund your Subway and that is what happened,\u201d said Mark Shearer, an Ohio-based attorney who has represented Subway franchisees in arbitration cases, and who isn\u2019t involved in the latest suit in Nevada.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/chirayu-patel.jpg?quality=90&amp;strip=all\" alt=\"Headshot of Chirayu Patel\" class=\"wp-image-20574544\" width=\"202\" height=\"271\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/chirayu-patel.jpg?quality=90&amp;strip=all&amp;w=200 202w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/chirayu-patel.jpg?quality=90&amp;strip=all&amp;w=100 101w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/chirayu-patel.jpg?quality=90&amp;strip=all 290w\" sizes=\"auto, (max-width: 202px) 100vw, 202px\"\/><figcaption>A lawsuit claims that, as a Subway business development agent, Chirayu Patel hectored franchisees.<\/figcaption><figcaption><span class=\"credit\">LinkedIn<\/span><\/figcaption><\/figure>\n<\/div>\n<p>\u201cI know for a time there were ads in the Middle East and India where Subway was targeting these people specifically,\u201d Shearer added. \u201cSubway wants naive franchisees who don\u2019t understand their rights.\u201d<\/p>\n<p>According to the Nevada suit, Subway on average charges $15,000 in fees to open a new store \u2013 far less than McDonald\u2019s or Burger King, which charge around $45,000 in franchise startup fees. That smaller up-front fee attracts a less-sophisticated operator \u2013 even when it comes to simple English and math skills, according to the suit. About 50 percent of Subway\u2019s locations are owned by minorities, compared to 30 percent of franchises overall, according to International Franchise Association figures cited by the suit.<\/p>\n<p>Asked about the Nevada lawsuit, a Subway spokeswoman said in a written statement that the company \u201cis proud of its diverse franchisee network, many of which are small or minority-owned business owners.\u201d She added that the company\u2019s \u201ccurrent recruitment strategy focuses on experienced franchise operators with strong business acumen\u201d and that applicants \u201cmay be required to take a standardized test.\u201d<\/p>\n<p>\u201cOur lower cost of entry makes us an attractive investment opportunity and we then work hand-in-hand with our dedicated franchisees to provide them with the tools and support needed to grow their business and ensure long-term success,\u201d the company said.But for some powerful BDAs, according to the Nevada lawsuit filed by former franchisee Raj Mehta, the strategy was to recruit franchisees who were willing to pay the fees and foot the bill to open an ever-greater number of Subway locations \u2013 whether it was in their best interest or not.<\/p>\n<p>Subway \u201cfueled its expansion by \u2018encouraging\u2019 its immigrant franchisees to open stores within blocks of existing locations under the subtle threat that if they did not do so, then Subway would recruit another franchisee to open a competing store in the im<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>te vicinity,\u201d according to the suit.<\/p>\n<p>Subway now has about 22,000 US restaurants \u2013 all owned by franchisees, and eclipsing McDonald\u2019s 14,000 and Starbucks\u2019 15,200 locations for the title of biggest US fast-food chain. Nevertheless, Subway\u2019s number of locations has shrunk by more than 10 percent over the past decade, as opening a restaurant near an existing outlet can cannibalize its sales.<\/p>\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-04.jpg?quality=90&amp;strip=all&amp;w=1024\" alt=\"Subway sign\" class=\"wp-image-20574555\" width=\"618\" height=\"411\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-04.jpg?quality=90&amp;strip=all&amp;w=1233 1236w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-04.jpg?quality=90&amp;strip=all&amp;w=925 927w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-04.jpg?quality=90&amp;strip=all&amp;w=618 618w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-04.jpg?quality=90&amp;strip=all&amp;w=308 309w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-04.jpg?quality=90&amp;strip=all 1024w\" sizes=\"auto, (max-width: 618px) 100vw, 618px\"\/><figcaption>Fifty percent of Subways have minority ownership, according to International Franchise Association figures cited by the suit.<\/figcaption><figcaption><span class=\"credit\">NurPhoto via Getty Images<\/span><\/figcaption><\/figure>\n<p>The story of many of those closures has been brutal, according to critics and multiple lawsuits that have been filed against Subway. The chain for years used a rule book some 350 pages long to evaluate franchisees, with each containing at least 10 compliance points \u2013 creating more than 3,000 ways for a store to fall afoul of the rules, the Nevada suit claims.<\/p>\n<p>Examples of petty infractions include smudged windows and improperly sliced cucumbers, according to Mehta\u2019s suit \u2013 and the consequences could be dire. A franchisee marked out of compliance by a BDA can be forced to pay a higher royalty rate to Subway \u2013 as much as 10.5 percent of gross sales, up from 8 percent, the suit claims.<\/p>\n<p>It was the alleged playbook employed by Chirayu Patel, Mehta\u2019s former BDA, to sign up other Indian Americans to run restaurants in his territory \u2013 before he used \u201chit men\u201d to write up new franchisees for alleged violations of Subway\u2019s rule book, the suit claims. Likewise, franchise agreements pushed by Patel and Subway also force new restaurant owners to buy their sandwich ingredients from pre-picked suppliers at set prices \u2013 even if they could find better deals elsewhere, the suit claims.<\/p>\n<p>Bringing franchisees to the brink of bankruptcy with his fees and clampdowns, Patel \u2013 who owned his own stable of Subway restaurants, along with overseeing a territory in California and Nevada \u2013 would then acquire the distressed locations for a pittance, according to the suit.<\/p>\n<p>\u201cPatel is an Indian American and most of his victims are Indian Americans,\u201d the suit claims. \u201cStated simply, Patel finds it easiest to prey on those with whom he has the most in common and exploits the relationship of trust instilled between people who come from the same culture and circumstance.\u201d<\/p>\n<p>Subway BDAs typically own restaurants in the territories they oversee \u2013 an arrangement the suit claims is an \u201cextreme\u201d conflict of interest. Because of their positions as regional managers, the BDAs can see the books of the Subways in their territories, knowing which restaurants are most profitable, the suit says.<\/p>\n<p>Subway in 2017 terminated the agreements for Mehta\u2019s two stores in Reno, Nev. \u2013 allegedly for minor violations of the rule book, the suit claims. Patel then used his power as a business development agent to stop Mehta from selling his two restaurants to a qualified buyer for $472,000, according to the suit.<\/p>\n<p>Patel took one of the restaurants for himself and resold it, keeping the proceeds, the suit claims. The suit claims Mehta is out more than $4 million when including lost opportunity, investment and profits.<\/p>\n<p>Franchisees can\u2019t sue Subway itself because of clauses they sign in their contracts that force them into arbitration. Attorneys for Mehta claim in the suit, which accuses Patel of racketeering, that another co-plaintiff could be named and that they will bring other franchisees as witnesses.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"683\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/john-chidsey.jpg.jpg?quality=90&amp;strip=all&amp;w=1024\" alt=\"John Chidsey\" class=\"wp-image-20574562\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/john-chidsey.jpg.jpg?quality=90&amp;strip=all&amp;w=2048 2048w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/john-chidsey.jpg.jpg?quality=90&amp;strip=all&amp;w=1536 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/john-chidsey.jpg.jpg?quality=90&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/john-chidsey.jpg.jpg?quality=90&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Under CEO John Chidsey\u2019s leadership, Subway is on a \u201ctransformational journey,\u201d the company told The Post.<\/figcaption><figcaption><span class=\"credit\">Getty Images<\/span><\/figcaption><\/figure>\n<p>Patel recently stepped down from his BDA position at Subway corporate amid a separate lawsuit that said he stiffed his workers out of nearly $40 million.<\/p>\n<p>In an e-mail to The Post, Patel said his staff members were \u201cfollowing Subway legal requirements to protect our customers and brand.\u201d He declined to comment further, citing pending litigation.<\/p>\n<p>\u201cNow I can finally spend more evenings home and hopefully learn to play some golf,\u201d he said in an e-mail last month to franchise owners.<\/p>\n<aside class=\"single__inline-module alignright\">\n    <\/aside>\n<p>Meanwhile, another Subway franchisee, Puneet Kalia, has made similar racketeering charges against Patel in two suits being heard in Nevada and California. Those suits, like Mehta\u2019s, allege Patel\u2019s Letap Group engaged in violations of those states\u2019 racketeer influenced and corrupt organizations acts, also known as RICO laws.<\/p>\n<p>Over the last several years, Subway has begun to phase out its BDA system and has started to run some territories itself. In a second written response to queries by The Post, a Subway spokesperson said the company is \u201con a multi-year transformational journey\u201d under Chief Executive John Chidsey, a former Burger King executive who took the helm in November 2019.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-01.jpg?quality=90&amp;strip=all&amp;w=1024\" alt=\"An employee makes a sandwich in a Subway store\" class=\"wp-image-20574572\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-01.jpg?quality=90&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-01.jpg?quality=90&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-01.jpg?quality=90&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Some franchisees complain of alleged pressure to buy ingredients from certain suppliers whether or not they offer the best deals.<\/figcaption><figcaption><span class=\"credit\">REUTERS<\/span><\/figcaption><\/figure>\n<p>\u201cTo ensure we\u2019re delivering a gold standard of support for our franchisees, we also evolved the business developer model. In certain markets across North America, a traditional franchisor\/franchisee model was adopted with the introduction of Subway Market Operations (SMO),\u201d the spokesperson said. \u201cBoth the SMO teams and business developer roles have evolved to be more focused on training and operations support to our franchisees.\u201d<\/p>\n<p>But much of the country is still covered by BDAs, some of whom have allegedly done a lot of damage \u2013 and not only among new immigrants.Jack El Turk, a franchisee in the Cleveland area who was represented by Shearer, the Ohio attorney, sued his development agents for allegedly abusing their positions, terminating him, and not allowing him to sell his restaurant. He was forced by the courts into arbitration with Subway and in 2018 reached an agreement where he left the Subway system in exchange for being allowed to sell his restaurant.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-03.jpg?quality=90&amp;strip=all&amp;w=1024\" alt=\"The lighted interior of a Starbucks at night\" class=\"wp-image-20574578\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-03.jpg?quality=90&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-03.jpg?quality=90&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-03.jpg?quality=90&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Subway has more stores than either Starbucks or McDonald\u2019s.<\/figcaption><figcaption><span class=\"credit\">Bloomberg via Getty Images<\/span><\/figcaption><\/figure>\n<p>Charles Fritschler in Massachusetts sued Subway and his development agents for allegedly inducing him to buy restaurants they knew would fail. In 2020, he was also forced by the courts into arbitration.<\/p>\n<p>Such arbitrations show the contentious relations Subway has with its franchisees: Subway initiated 702 arbitration actions against US franchisees in 2017, said John Gordon of Pacific Management Consulting Group, citing documents filed with the Federal Trade Commission. That compares to one by McDonald\u2019s, two by Dunkin\u2019 and none by Pizza Hut, Burger King or Wendy\u2019s.<\/p>\n<p>Aggressive tactics against franchisees are gaining some national critics. Franchisee Advocacy Consulting, a group that lobbies for franchisee rights, in late September asked the FTC to investigate alleged abusive practices at Subway, as well as several other chains, including 7-11.\n                        <\/p><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/nypost.com\/2021\/12\/21\/subway-exploited-immigrants-and-victimized-franchisees-lawsuit\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#Subway exploited immigrants and victimized franchisees: lawsuit&#8221; Subway\u2019s massive chain of sandwich shops has become a hotbed of financial exploitation for overseas immigrants, victimizing those it has tapped as franchisees and even driving some to ruin, an explosive lawsuit claims. For years, the fast-food giant has recruited immigrants, mostly from Asia, to expand a US&#8230;<\/p>\n","protected":false},"author":1,"featured_media":384336,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/12\/subway-restaurant-lawsuit-02.jpg?quality=90&strip=all&w=1024","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[122286,70446,122353,72179],"class_list":["post-384335","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-12-21-21","tag-lawsuits","tag-racketeering","tag-subway-sandwiches"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/384335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=384335"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/384335\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/384336"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=384335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=384335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=384335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}