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Dear Subway, You Stink. Love, Freshii


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Melissa Gallagher is VP of marketing at Freshii, the Toronto-based fast-casual franchise whose stock price sank since going public in January 2017.

A franchisee revolt at Subway over its $5 footlong promotion and declining sales has prompted Freshii to publish an open letter yesterday in the Chicago Tribune, offering a “sincere proposal,” as the letter said.

“Rather than risking the closure of another 900 Subway stores in 2018, let’s explore a partnership. Let’s work together to convert select Subway stores to Freshii restaurants,” said the letter, signed by founder and CEO Matthew Corrin, with the closing, “Love, Freshii.”

Corrin has published such letters before, aimed at frozen-yogurt, cupcake and juice franchise operators in 2016 and most famously, offering to put Freshii stores in McDonald’s with a letter to the then-CEO in May 2015.

But it’s not just another publicity stunt, insists Melissa Gallagher, vice president of marketing. “This is absolutely a real offer. We did it in a very public way, so we could be transparent and direct, and cause action on their part,” she said, referring to corporate Subway.

“The circumstances are quite extreme, from what we’ve read,” for Subway franchisees. “I personally have a lot of meaningful relationships with people who worked for Subway. The time is right to support them,” she said. Gallagher’s parents operated Subway stores in Ontario, Canada, and she worked in an operations role for Subway and then at an agency on the advertising side. She joined Freshii in October 2016.

Freshii’s latest open letter is the first it has published since the company went public, in January of 2017 on the Toronto Stock Exchange. Freshii was hammered in its third-quarter “re-guidance” to shareholders, when Corrin scaled back its growth plans and sent its stock to an all-time low. Freshii expected between 90 and 95 net new openings by the end of 2017, down from the previous target of between 150 and 160, including closures, Corrin said last September.

Shares were priced at $11.50 in the January IPO and were trading at $7 a share this January. FRII was one of three biggest losers year to date, down 6 percent, on Franchise Times Scoreboard in January.

Gallagher said the “re-guidance” disappointed shareholders but not franchise partners. “We’re not opening fewer stores,” she said, but rather slowing down the pace of openings. “None of them were upset,” she said about franchisees. “We’re doing things at the pace we can handle.”

She hadn’t heard anything from Subway corporate yet, just a day after the letter published. “Hopefully their silence has been their contemplating the offer. But we’ve had a real outpouring form the franchise community,” she said.  “The goal is to open that conversation with Subway, to allow their franchise partners to convert stores when it makes sense. If we can inspire some of these franchise partners to look at Freshii as the future of what they were once trying to achieve with Subway,” she would consider that a win.

One can only imagine Subway’s response, at least in its thought-bubble mode: Dear Freshii, Drop dead. Love, Subway.

 

 

 

 

 

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is associate editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is editor-in-chief of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is staff writer at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Laura MichaelsLaura Michaels is managing editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
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