One of Subway’s more controversial development agents stepped down from his role last week.
Chirayu Patel, who goes by the name Akki, told franchisees in an email last week that he was leaving his position, several sources told Restaurant Business. Patel oversees the Subway system in Northern California and parts of Nevada.
It is uncertain whether Patel, whose company is the Letap Group, will continue operating Subway locations.
But his departure ends the tenure of an agent whose practices had come under fire in recent years for alleged unpaid wages and for the way he ran his territory.
As a development agent, Patel was both a franchisee of Subway and the overseer of a large territory where he sold franchisees, approved new buyers, conducted routine inspections and terminated those franchisees that didn’t meet standards.
Patel’s stores recently agreed to pay $550,000 to settle a wage-and-hour lawsuit filed in California. The company had been accused of underpaying workers by $38 million.
In 2019, Patel was a subject of a New York Times piece that investigated some of the practices in the system. The story featured allegations that he would have inspectors treat his stores differently from other stores, often took over ownership of stores that were terminated and targeted specific operators for termination.
In a statement, Subway confirmed that another group is taking over the Northern California territory. “We can confirm that the territory in Northern California is transitioning to another business development group,” the company said. “As the transition is ongoing, we are unable to share additional details at this time.”
Patel did not respond to requests for comment.
It is uncertain whether Patel resigned or was pushed out of the system. But his continued presence as a development agent had frustrated franchisees, who argue that the wage and hour lawsuit should have been enough to keep him from overseeing other franchisees’ restaurants.
It also highlights what many believe has long been a conflict of interest in the way Subway has operated over the years. Development agents helped fuel the brand’s growth beyond what many inside and outside the company believe was reasonable. And their ownership of stores and oversight of inspections have been highlighted as an inherent conflict of interest.
Subway under CEO John Chidsey has been moving away from that system, which Patel referenced in his email. It has been buying out various development agents while encouraging more large franchisees to come into the system, a move that would put the company more in line with many other large, legacy restaurant chains—notably Burger King, which Chidsey led more than a decade ago.
The shift may be the most fundamental change at the brand, which also includes a shift in marketing, a move of some headquarters functions to Miami and massive changes in the executive team.
The changes come as the company has worked to come out of a years-long decline, including nearly 4,000 closures over the past three years. Sales have recovered from the pandemic this year, according to the company, but it still has a number of locations in retail areas and nontraditional locations that are struggling.
UPDATE: This story has been updated to include comment from Subway.
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