Chain franchisee fracas deepens
$38M PAY-BITE INDIGESTION
Questionable tuna isn’t the only thing the Subway sandwich chain is standing behind.
The embattled fast-food giant continues to back a top regional manager who recently settled a lawsuit that alleged he underpaid nearly 3,000 workers by $38 million, miffed franchisees complained to The Post.
The suit claims that Chirayu Patel, who’s also a franchisee, stiffed workers out of overtime pay, didn’t pay them for all of the hours they worked and didn’t allow them meals or rest periods.
That same manager — who oversees more than a thousand Subway locations in California — had been exposed in 2019 for practices that led some franchisees to lose their businesses. Subway stood by him then, too.
Privately held Subway, which recently caught heat from franchisees when it hired firebrand soccer player Megan Rapinoe as a TV spokeswoman, declined to comment, including answering questions as to why it continues to stand by Patel.
“The overarching message at Subway is anything goes,” a lawyer who has represented Subway franchisees told The Post.
Franchise lawyer David Paris, who is not involved in the Patel case, said it is unusual for a large national chain not to take action when a franchisee is allegedly underpaying workers.
“There would be a fullscale investigation in other brands. They would be all over it,” he said. “I think it is incumbent on Subway to do something.” Paris, of law firm Paris Ackerman, said Subway’s lack of action tarnishes its brand.
Subway, run by former Burger King boss John Chidsey, itself wasn’t named in the suit for alleged underpayment. Doctor’s Associates, Subway’s parent company, did answer a subpoena in 2018 as part of the proceedings, suggesting the corporate office was aware of the suit, a source said.
It’s estimated Patel owns about 15 Subway restaurants in Northern California, according to a source familiar with the matter. Even with those holdings, Patel claimed he couldn’t afford to pay the workers any more than the settlement that was reached July 30: It amounted to $188 per worker, or $550,000, according to court filings.
A source familiar with the situation said Subway’s silence speaks of a lack of leadership at the chain, whose sales fell to $8.3 billion, in 2020, according to market researcher Technomic, from $12.3 billion, in 2013.
“They did not think of getting rid of him,” the source said. “The morality did not play a role. My sense is, quite frankly, Patel got the benefit of Subway being screwed up.”
Patel told The Post: “We have always practiced business to the highest Subway standards and in accordance with state laws,” declining to comment further.
It’s not the first time Patel has been accused of bad behavior at Subway: Along with his franchises, he’s also the Subway development agent for much of Northern California. It was in that role that he was exposed in a 2019 New York Times story for another questionable practice by allegedly sending his own inspectors to certain restaurants that were competing with him — or that he wanted to buy — to find problems so he could force them out of business.
As a development agent, Patel oversees about 1,000 Subway restaurants, for which he gets a percentage of sales. Headquarters uses these agents to sell franchises in a given territory and to oversee compliance with corporate standards.