Introduction
Subway is a U.S franchise-based chain of fast food restaurants, whose major specialties include salads and submarine sandwiches. Doctor’s Associates, Inc acts as an owner and operator of Subway. Subway is one of the fastest expanding franchise networks in the world that encompasses more than 44 thousands fast food restaurants in 111 countries and regions (Subway, 2016). The headquarters of Subway are located in Milford, Connecticut. It also owns a range of regional offices in Europe, Australia, New Zealand and Africa.
Subway’s expanding to each new location requires an in-depth analysis of factors, forming external and industry environment. The experience of opening Subway restaurants in more than 100 locations allows summarizing major political, legal and technological factors, influencing the business.
Political and legal factors
The political aspect of external environment focuses on the role the government plays in the functioning of the business. The political factors include political stability, trade restrictions and embargoes, as well as tariff policy. Political stability is an important factor for any kind of business, because it determines one’s ability to rely upon existing laws and regulations, as well as predict long-term developments in governmental policies. Trade restrictions and embargoes may be specifically important for Subway, because fast food restaurants tend to import various ingredients from different locations. In this regard, the government’s tariff policy (especially, export tariffs) is crucial for the activities of Subway.
Major legal aspects that are to be taken into account, when launching a Subway franchise include employment laws, health and safety regulations, as well as competition legislation and taxation. Employment legislation is crucial, because Subway hires staff at all the location, where new restaurants are being opened, and is also known for inventive schemes, aimed to avoid paying workers (Jamieson, 2014). Health and safety regulations, as well as their effectiveness represent a cornerstone for Subway’s adapting to external environment. A franchise owner needs to comply with sanitary rules, when choosing a location for a restaurant and ensuring the functioning of necessary facilities. Furthermore, special attention needs to be paid to the regulations in relation to food (e.g., the use of GMOs; introduction of sugar-related taxes). Moreover, if the legislation provides for intense food safety health awareness campaigns, it can have a significant impact upon citizens’ attitudes to fast food and sugar-containing drinks. Therefore, it is important for franchise owners to take into account not only the actual provisions of legislation, but the way legal factors may shape public opinion. Finally, the competition legislation needs to be thoroughly considered before opening a Subway restaurant due to a possible need to obtain special permits. Finally, it is important to understand the tax system of a new Subway location to select a proper tax regime and optimize the structure of taxes.
Technological factors
Technological equipment plays a significant role in ensuring the functioning of Subway. Apart from buying proper energy-efficient equipment for fast food restaurants, it is also necessary to consider a strategy of using technologies for promotion. One of the important aspects of Subway activities needs to deal with e-sales. Furthermore, there is a need to get to know how local population tends to obtain information about cafes and restaurants, and develop a relevant marketing strategy.
References
Jamieson, D. (2014). Subway franchise invented fictional workers to avoid paying overtime: lawsuit. Retrieved 17 February 2016 from http://www.huffingtonpost.com/2014/08/07/subway-franchisee-wage-theft_n_5659915.html
Subway (2016). Explore our world. Retrieved 17 February 2016 from http://www.subway.com/subwayroot/exploreourworld.aspx
