Subway warns it won’t make some rent payments

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Subway sandwich shops say they will reduce or postpone rent payments on many locations starting April 1, 2020.

The chain has 20,000 locations in the U.S., including franchised locations.

The chain is also cutting franchise royalty fees and advertising fees in half for the time being.

Franchise owners of national restaurant chains such as Subway typically have to pay the corporation a portion of their sales as part of their franchise agreement. Most franchised businesses also collect advertising fees from local owners that are supported to cover the cost of national or regional advertising campaigns that, in turn, are designed to bring business to the franchisees.

Franchise royalty fees can be a big expense for local owners — and also often represent a significant source of profit for the corporation collection them.

Restaurants often have thin profit margins, meaning they are being affected particularly hard by the coronavirus outbreak, even if they have switched to a “to go” model only.