The army of franchisees that operate Subway’s 1,600 UK stores are paying their shop rents; the sandwich chain just isn’t passing the money on, according to a group of its landlords.
Subway Realty is exploiting the UK’s ban on evictions by holding the rent from franchisees during the coronavirus crisis in the knowledge it can’t be pursued, the landlords say.
The UK government extended the measure last week to help small businesses that can’t afford rent, while urging those that can to pay up.
“Subway is fully aware that no action can be taken against them because of the moratorium on commercial tenant evictions, even though the moratorium is intended to protect those tenants who really do need help and can’t pay their rent,” said Adam Coffer, chairman of the Property Owners Forum, a group set up during the pandemic that represents more than 100 independent landlords, including some who say they are owed rent by Subway.
A Subway spokesperson said they are paying landlords who have provided the necessary payment information.
They said that at least half of Subway’s UK landlords would receive rents by next month, and that the rest haven’t submitted the “correct paperwork.”
"We continue to work to do the right thing for our franchisees and the broader UK economy. We are negotiating reasonable rent reductions for franchisees who are predominantly small business owners and have been significantly impacted by the economic downturn."
"These Subway franchisees represent exactly the type of business owners intended to be protected during this time.”
In June, Subway outlined changes to long-standing arrangements for rental payments that were previously handled directly by UK franchisees.
Under the new system, Subway Realty, which holds leases on the company’s stores on behalf of franchisees, now collects payments from individual operators and passes them on to landlords.
However, some landlords say they have received no rent since March, even though they know their franchisee tenant paid it to the parent company.