Subway has agreed to police franchisees’ compliance with federal wage and hour laws under a program the U.S. Department of Labor hails as an enforcement model other franchisors should follow.
According to the announcement posted on the DOL’s website, Subway “has agreed to enforce its rights under the franchise contract if it becomes aware of a legal disposition that a franchisee knowingly violated a federal labor law.”
Those rights were not specified. A franchisor typically has several recourses if a franchisee does not operate in accordance with the franchise agreement, which usually mandates lawful operation. In qualified instances, the franchisee can even be booted out of the system.
The arrangement with the DOL’s Wage and Hour division also requires that Subway educate franchisees on wage and hour regulations. The DOL noted that Subway has also invited Department personnel to the chain’s annual meeting, and has included articles written by Wage and Hour in Subway’s electronic newsletter.
"We encourage other franchisors to take similar measures to ensure compliance among their franchisees," said Mary Beth Maxwell, acting deputy administrator of the Wage and Hour Division.
Subway is the industry’s largest franchise chain.
In 2012, several Subway franchisees were sued by the DOL for violations of hour and wage regulations.