North American Association of Subway Franchisees Inc. (NAASF)
vs. Doctor's Associates Inc., Subway franchisor
Last summer, North American Association of Subway Franchisees Inc., with the support of the Subway Franchisee Advertising Fund Trust, filed a lawsuit against Doctor's Associates Inc., which owns Subway, seeking to bar Subway from revising its franchise agreement to include new terms. The groups allege the new terms threatened to compromise franchisee control over a $400 million advertising fund, a trust set up in a 1990 agreement between Subway and the NAASF, into which franchisees pay 4.5% of their weekly sales. They claim the new agreement would give Subway the power to redirect franchisee advertising contributions to a separate entity at any time, and ultimately create more campaigns that drive up sales at the expense of profits. Doctor's Associates Inc. declined to comment on the litigation.