Subway Strips Franchises From Serving Soldier
LTC Leon Baties, Jr.
Then he was called to serve his county, as a member of the Army Reserve. He did a tour in Afghanistan, and came home expecting to resume a normal life.
Except, Subway had taken his franchises away from him.
“I had these grandiose dreams of opening nine, 10 Subways,” said Batie, 41, a South Carolina native who lived in Rowlett in 2002. “I had wanted to … be a franchisee for the rest of my life.”
Batie’s vision became more concrete in the summer of 2002, when he opened his first Subway at 3125 Grand Ave., now wedged between a Family Dollar store, Badd Kreationz Unisex salon and Star Beauty Supply.
“It was a diamond in the rough,” he said. “I knew that by going into that area and providing a service to the people … the chances of being successful would be pretty good.”
With about $50,000 from savings and $300,000 in loans from two banks and the city of Dallas, Batie became a sandwich maker.
In the summer of 2003, he opened a second store on Gaston Avenue, a half-mile from Baylor University Medical Center at Dallas. He planned to open a third.
When Batie’s marching orders came in March 2005, sending him off to help train the Afghan army, he said he left the care and feeding of his two Subway outlets to his younger brother, Chris, franchisee Travis Brown and Brown’s wife, Natalie.
Hands-on management is the best way to build a business. Batie could not do that. The business suffered, and got behind in bills.
The amounts owed is in contention. What is certain is that Subway took the franchise back, and sold it as a remarkably generous price to the local Subway developers, who then resold it at nearly 400% of what they paid for it.
Leon Batie is now on active duty with the Army. He has to make a living somehow. The loans he took out to begin his business still must be paid.
He’s suing Subway and Travis Brown. His lawyer is pursuing the suit under the U.S. Servicemembers Civil Relief Act which prevents service members from being fired for serving. It says nothing explicit about franchise owners.
Batie has seen his dreams taken by a large corporation. Corporate insiders raided his small franchise and left him with his debts.
More information:
Dallas Observer
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You won’t catch me or any of my family in a Subway ever again.
Actually, according to a legal expert on the Servicemember Civil Relief Act, it may also cover franchise agreements. However, the real issue based on everything I’ve read about this case boils down to the fact that Subway violated the requirement of obtaining a court order before kicking him out of the real estate property where the store was located. So even if franchises are not specifically covered by the law, there is no question it covers leases–and that is where Subway broke the law and violated his rights. Here is an excerpt from an article in Franchise Times magazine:
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Creditors, franchisors, landlords and others have to take into consideration a reservist’s active status into account when it comes to loans or leases because the SCRA frequently trumps existing contracts. In the case of a franchise, Odom said the act takes precedence over the franchise agreement when provisions in the deal favor the franchisor.
“I spend a lot of time telling creditors’ counsel that I don’t care what the contract says,” Odom said. “You can put it any way you want to. But once the franchisee or the obligor goes on active duty, he or she gets a protection they didn’t have when they signed a franchise agreement.” Yet many businesses, he said, don’t know this.
Franchisors that terminate the agreement of a franchisee in active duty must tread carefully. Such an action cannot be done without a court order, Odom said. The court must be informed that the franchisee is a member of the military, and then the court must appoint an attorney to act in the franchisee’s stead. That attorney must then be given 90 days to notify the franchisee.
Odom said cases of a reservist getting his franchise terminated while he is on active duty are rare. In most cases, he said, the franchise tries to work with the company.
“The franchisee’s main job for the period he’s called up is to kill bad guys and not get killed himself,” said Odom, who was commenting on general issues and knows nothing of the Batie-Subway case. “The whole rationale behind the SCRA is so the military member doesn’t have to concentrate on non-military things during the period of his or her active service.
“We don’t want Batie wondering how many sandwiches are being sold when he’s in Afghanistan. It’s counterproductive. It gets him and the people in his unit killed when his attention is diverted.”
Asked to respond to Batie’s allegations, an attorney for Subway said that commenting about ongoing litigation is against corporate policy. Calls to Travis Brown, the franchisee who ran the stores, were not returned.
Batie opened his first Subway in South Dallas in August 2002, just a few months after he was laid off from his job as a manager of a telecommunications company. Batie tapped into a neighborhood revitalization program for the city that provided him with a low-interest loan for opening the store in an economically depressed part of town.