Subway enters into 'model' enforcement pact with DOL

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.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Workforce

Restaurants have a hot opportunity to improve their reputation as employers

Reality Check: New mandates for protecting workers from dangerous on-the-job heat are about to be dropped on restaurants and other employers. The industry could greatly help its labor plight by acting first.

Financing

Some McDonald's customers are doubling up on the discounts

The Bottom Line: In some markets, customers can get the fast-food chain's $5 value meal for $4. The situation illustrates a key rule in the restaurant business: Customers are savvy and will find loopholes.

Financing

Ignore the Red Lobster problem. Sale-leasebacks are not all that bad

The decade-old sale-leaseback at the seafood chain has raised questions about the practice. But experts say it remains a legitimate financing option for operators when done correctly.

Trending

More from our partners