September 10, 2014 by Alex Counts
(L-R): Arcelia Gomez and Alex Counts of Grameen Foundation meet with Fred DeLuca, co-founder and president of Subway Restaurants, at the 2014 Subway Convention.
What do Grameen Foundation and the Subway® restaurant chain have in common? More than you might think.
Fred DeLuca, co-founder and president of Subway Restaurants, has long been a supporter of microcredit and is also a living example of its success. Fred (as he insisted I call him from our first meeting when I was barely 30 years old) opened his first sandwich shop (then called Pete’s Super Submarines) at just 17 years old with a $1,000 loan from friend and co-founder Peter Buck in 1965. He soon aimed to have 32 stores in operation by 1975. Then and now, he was a humble, hard-working, plain-spoken man – much like Professor Yunus, my mentor from the age of 20.
By 1974, there were just 17 Subway stores, and Fred realized that he wouldn’t be able to reach his goal of 32 stores on his own. That’s when the partners decided to go to a franchise model, where individual entrepreneurs pay a relatively small franchise fee to open and operate their own Subway restaurant.
After moving to the franchise model, the Subway chain grew to 166 stores in 1981 and 10,000 stores in 1994. It is now the largest restaurant chain in the world, with 42,425 stores in 108 countries. As Subway’s chief development officer, Don Fertman, put it, “…the company-owned outlets don’t get the attention and hands-on benefit of an entrepreneur whose livelihood depends on that store.”
Like Professor Yunus before him, Fred saw the power of enabling large numbers of people of modest means to take charge of their economic destinies. In other words, he harnessed the power of people’s dreams to be their own boss, employ others, and create new opportunities for their children.
While parallels between a huge multinational restaurant chain and an international humanitarian organization that grew out of a specialized bank for the poor in Bangladesh may not be immediately evident, there are many similarities. Like Fred, I started my organization with a tiny amount of capital: $6,000 provided by Nobel Laureate Professor Muhammad Yunus. And just like Fred, I soon realized that to be successful, Grameen Foundation needed to be efficient. And that meant partnering with like-minded organizations in the countries where we work. Our partners are not franchisees per se, but the relationship is not too dissimilar.
Fred first found people around the U.S. and around the world who wanted to propagate his model of quick-service restaurants and then supported them in growing to major scale. Grameen Foundation identifies small, local organizations like Cashpor in India and RUMA in Indonesia and provides them with the capital and know-how that helps them become major forces for poverty reduction, and replicable models for others to follow.
Partly as a result of seeing the parallels himself, Fred has long been a champion of Grameen Foundation, having supported us from our very first year (1997) and featuring us in his terrific book, Start Small, Finish Big. Fred has designated that 100% of the profits from the e-version of his book go to Grameen Foundation. (Another great reason to buy Fred’s book!)
I recently caught up with Fred at the chain’s annual convention in San Diego. I had spoken at the convention in Atlanta in 1999, but had not been back to this celebration of all things Subway since. Fred’s colleague and longtime friend of Grameen Foundation, Michele DiNello, encouraged us to come back and set up an exhibit to meet the growing Subway community of franchisees, store managers, sandwich artists, development agents, and office employees. It was remarkable to meet so many people and see how the store that Fred started with a $1,000 loan had led to thousands of entrepreneurs running their own businesses around the world. On a personal level, it was satisfying to hear how many of these franchisees had first heard of Grameen Foundation from reading Fred’s book!
My colleague Arcelia Gomez, a native of San Diego who attended the convention with me, agreed. “After engaging in conversations with the many franchisees that came to our booth, I was delighted to see that they were truly interested in our work, asking questions to deepen their understanding and even looking for ways to get involved. It’s exciting to think that franchisees from across the country and even the world will be able to go back home and talk to others about Grameen Foundation.”
So, the next time you go to a Subway restaurant, don’t just think about what to get for lunch or dinner. Think about the franchisee who had the guts and the entrepreneurial spirit to open a restaurant. And think about how a small loan can make a big difference and change the life of one person – and then many, many more.