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Subway throws a tantrum
While the Chetcutis began preparing the space to open their café,
Subway franchise owners Tom and Doris Odren took heed. In a letter
to FRP dated February 14, 2000, Tom Odren noted that his wife had
"noticed a sign in the [Atom's] window showing the menu
that Atom's intends to offer when they open. On that menu sign,
3 of the items caught her attention: soup, salads and sandwiches.
This is totally unacceptable to my wife and I, and also to the
Subway Corporation. We also are selling these menu items and this
would be in direct competition with us. Upon reviewing our copy
of the lease, it clearly states in paragraph R18 that the sale
of these menu items at Atom's would be in violation of the lease."
Odren demanded that FRP stop Atom's from selling these items, threatening
a lawsuit.
Shortly thereafter, on March 7, Subway Corporate delivered a terse
letter to FRP stating they had learned Atom's intended to open soon.
Subway promised to sue FRP if FRP did not "halt the opening"
of Atom's.
A few days later, after John Chetcuti had learned what was going
on, he wrote to FRP himself, stating that he did not agree that
the products in Atom's menu competed with Subway. "We are serving
no meat, no cheese, no subs," wrote Chetcuti. "Our target
audience is the health conscious crowd and those with special diets
such as macrobiotic, alternatives for lactose intolerant, etc."
In his letter Chetcuti stated that Odren had only begun carrying
soups in their Subway in November of 1999, months after he had learned
from Chetcuti and others that Atom's intended to sell soup when
they opened. Chetcuti noted in his letter that Odren had said he
was now serving soups at his Subway because Subway Corporate had
"mandated" it. However, Chetcuti stated that executives
at Subway later contradicted this, saying it was "up to each
owner whether or not to carry soup."
Chetcuti also says that Odren began selling juice at Subway only
after Atom's publicly announced it would be selling juices. It seemed
outrageous to Chetcuti for Odren to decide to begin selling items
Atom's was selling, and to then use that as a pretext to claim Atom's
was competing with Subway.
Subway fires legal torpedo
Shortly after Atom's opened, a lawyer from Subway Corporate wrote
to FRP once again, stating FRP was in violation of their agreement
with Subway, repeating the portion which said FRP could not lease
their property to "any entity whose business competes with
[Subway]."
The Subway lawyer claimed that FRP's
"permission for Atom's inclusion of sandwiches, salads and
soups on its menu blatantly violates the above-referenced non-compete
clause. Furthermore, Atom's portrayal of these items as 'the healthiest'
directly competes with [Subway's] marketing of the nutritional
value of its menu, especially the '7 Subs With 6 Grams of Fat
Or Less' campaign."
The Subway letter ended with a promise of legal action if Atom's
was permitted to continue "competing" with Subway. Subway
and the Franchise owners subsequently filed suit against FRP on
October 12, 2000.
FRP lashes out - at Atom's
In court documents responding to Subway's suit, FRP denied that
it had violated its lease with Subway.
Then, even though FRP reportedly had approved the Chetcuti's menu
for Atom's Café prior to the Chetcuti's signing their lease, in
November of 2000 FRP turned around and sued the Chetcutis. In its
lawsuit, FRP claimed John and Dave Chetcuti had violated the non-compete
clause they had agreed to by selling soup, tea and juice, among
other things. They asked for at least $25,000 in damages from the
Chetcutis, along with their agreement to stop selling many of their
menu items, including an injunction to stop Atom's from selling
soup, tea, juice "or any other foods or drinks." They
also sought an order from the court forcing the Chetcutis to indemnify
FRP against any damages or losses FRP may be found liable for in
the future under FRP's agreement with Subway Corporation.
The Chetcutis could not believe it. FRP was seeking money from
them to "compensate" FRP for "injury" they said
they had sustained due to Atom's Cafe -- which had only done what
they had legally contracted with FRP to do.
The Chetcutis countersued FRP alleging breach of contract, fraud,
and intentional interference with business relations. Not only had
FRP induced the Chetcutis to sign the lease by first approving the
menu items, the Chetcutis asserted, but the lease itself specifically
said the Chetcutis could sell "juice, soup and tea." How
could FRP now sue the Chetcutis to stop them from selling what the
contract said they could sell, and to try to force Atom's to pay
FRP a huge sum of money because they were selling what the contract
said they could sell?
Curiously, FRP recently claimed it was suing the Chetcutis in some
sort of act of good faith. In an interview with the Detroit Metro
Times published January 10, 2001, FRP's lawyer, Vincent Hoyumpa,
said he does not see Atom's as competing with Subway. FRP sued the
Chetcutis only to ensure that they have a "voice in the case,"
said Hoyumpa. In fact, FRP said that it is Subway that is competing
with Atom's.
"Subway was not selling juices until after Atom's opened,"
he said. "They did the same with soup."
Gary M. Wilson, the attorney for the Chetcutis, doesn't buy the
idea of suing someone with a baseless lawsuit just to "give
them a voice" in another lawsuit.
"If you find yourself with an 800 pound gorilla - the Subway
Corporation - on one side of you," Wilson said recently, "and
two peace-loving, gentle-living innocents on the other, what do
you do if you have no conscience? You join the big bullies in going
after the little guys."
Wilson believes FRP's lawsuit against Atom's is malicious, and chiefly
intended to inflict legal mayhem in order to drive the fledgling
store out of business, thus making the whole thing go away.
"John and Dave managed to scrape together $180,000 to get this
little family business off the ground. Now they need to spend 10,
20 or 80 thousand dollars to defend a big lawsuit just so they can
'have a voice?'"
Surprisingly, on March 1, 2001, in response to court documents
filed by Atom's, FRP has admitted that Atom's use of the property
does not compete with Subway. Nevertheless, against their own legal
position (and perhaps common sense), FRP continues to press their
suit against Atom's.
Getting Personal
John
Chetcuti juicing at Atom's |
John Chetcuti says he was inspired by author John Robbins and went
vegan 15 years ago. He and his brother have dreamed for years about
opening a vegan, eco-friendly diner in Grosse Pointe.
The situation is taking a big toll on their pocketbook - the Chetcutis
haven't been able to draw salaries since November due to legal fees.
"Our lawyer has really gone above and beyond the call to keep
our costs and fees down," said John Chetcuti. "He's doing
everything he can to help, but it's still incredibly expensive."
Chetcuti believes the other side is trying to make the legal fight
as big and complex as they can."I think they were betting that
we would be overwhelmed and just lay down and give up," said
Chetcuti. "That's not going to happen."
The stress of the situation has taken a personal toll, too. John
Chetcuti's wife is currently in the hospital with pneumonia.
"Until recently, when the story has started to get out in the
media, we've felt all alone in this," said John. "And
the owners of Subway have made their displeasure well known to us."
Chetcuti said in addition to having insults hurled at them, "people
from Subway" come in and order "meat sandwiches"
in loud, sarcastic voices (Atom's sells only soy sandwiches). Recently
Chetcuti said he came out to the parking lot to find his car smeared
with mayonnaise.
An AP story earlier this week spotlighting the Chetcutis' plight
has been helping their business, said Chetcuti. He said the store
was full of people at the lunch hour yesterday, wanting to show
support for the brothers. Chetcuti doesn't believe the publicity
has pleased the Subway owners.
"Just today I saw Doris Odren in the parking lot, and she flipped
me off," John said. "It's just unbelievable."
Doris Odren was contacted for this article, but hung up abruptly
when asked if she was willing to answer some questions about the
litigation.
What does "direct
competition" with Subway really mean?
Let's say FRP rented one of their storefronts to a liquor store.
If Subway went out and got an alcohol license and started selling
beer, could they then force the landlord to put the liquor store
out of business because that store is now in "direct competition"
with Subway? According to their current actions and legal position,
Subway would probably say "yes." Their idea of "direct
competition" doesn't seem limited to someone selling assembly-line
subway sandwiches, but virtually any kind of food.
Yet the idea that Subway products are the same as the vegan products
sold by Atom's is fairly ridiculous, at least to the type of clientele
Atom's attracts.
Subway
napkin, comparing Subway's products to McDonald's and Burger
King |
The fact is Subway has never competed with small niche granola-and-tofu
diners. Subway's "7 Subs With 6 Grams of Fat Or Less"
campaign, which appears on many of their promotional materials,
compares their products not with soyburgers, vegan salads and wheatgrass
juice - but with Big Macs and Whoppers. Subway's advertising is
clearly intended to compete for customers with McDonalds and Burger
King and the other major fast food franchises. Few if any vegans
would ever dream of frequenting such stores.
In fact, the word vegan is nowhere to be seen in Subway's website,
in their ad literature, or stores. A quick glance at their menu
reveals no vegan foods whatsoever, other than coffee, juice and
soft drinks.
And when you talk to their employees - including an employee at
Doris and Tom Odren's Subway - they don't even know what the word
"vegan" means. In a phone call to the Odren's Subway shop
yesterday, the employee who answered the phone could not even assure
that their bread was vegan. And this, after filing a lawsuit over
this issue?
Checking the Subway website, however, it appears that most of their
breads contain honey, milk or eggs, and their wraps contain L-cysteine
which, according to the site, "may be derived from animals."
When asked about whether a vegan meal could be found at Subway,
the employee at Odren's Subway waffled, at first saying "yes,"
then "no," then, "I don't know." When pressed
further, Odren's employee said, "If you want a vegan sandwich,
you should go to a vegan restaurant."
Exactly.
"We're 60 percent organic in our foods now," said John
Chetcuti, "and we're aiming for 100 percent when we can do
it. We want customers who care about the health of the planet and
all the creatures on it."
The point of a vegan diet or lifestyle is to avoid animal products,
period. This is not easy to do at Subway unless you order a stack
of their non-organic shredded iceberg lettuce, onions, GMO tomatoes,
green peppers and olives, have it served on a plate, and avoid the
various Subway dressings which contain animal products.
Peaceful coexistence
A Subway store at the corner of Mason and Devonshire in Chatsworth,
California, is situated right next door to Vincenzo's Pizza Parlor.
Vincenzo's, which leased the space next to Subway a few years after
Subway let its space, sells Italian subs, such as meatball, sausage,
steak, salami, cheese and other coldcut subs.
Good neighbors
Chatsworth Subway and Vincenzo's
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Crystal Tillman, the manager of the Chatsworth Subway, was asked
about the situation in the Grosse Pointe situation. When told that
the Odrens are trying to drive Atom's Café out of the mall on a
non-compete basis, she responded, "That's insane. That sounds
very silly and selfish."
Tillman noted that their own neighbor, Vincenzo's, has Karaoke.
"People order sandwiches from us and go next door to listen
to the Karaoke," she said. "Likewise, people sometimes
order food from Vincenzo's, and come over here to eat. It's not
a problem, and besides, subs are not Vincenzo's primary thing."
Added Tillman, "We have a mutual understanding with Vincenzo's.
As long as our customers are happy, we're happy." Asked whether
the Chatsworth Subway has a non-compete clause in their lease agreement,
Tillman responded, "I can't remember. It's not really important
to us."
Subway: "The Worst
Franchise in America"
In his new book, Fast Food Nation, investigative reporter
Eric Schlosser writes:
During the 1990s, Subway was involved in more legal disputes
with franchisees than any other chain -- more than Burger King,
KFC, McDonald's, Pizza Hut, Taco Bell, and Wendy's combined. Dean
Sager, a former staff economist for the U.S. House of Representatives'
Small Business Committee, has called Subway the 'worst' franchise
in America. "Subway is the biggest problem in franchising,"
Sager told Fortune magazine in 1998, "and emerges as one
of the key examples of every (franchise) abuse you can think of."
(Fast Food Nation,
Houghton Mifflin, January 2001, p. 100)
Subway Corporate does not seem to understand - or care - that
most vegans do not want to eat their sandwiches, they don't want
to eat their products. In fact, there are many vegans who do not
want to set foot in an establishment that sells meat. They can't
lose those customers to Atom's Café because those are customers
they never would have had in the first place.
The whole situation is apples and oranges, or in this case chicken
breast sandwiches versus a soy wrap. Yes, they're both sandwiches
of a sort, but they're very different animals, so to speak.
Subway Corporate needs to take a lesson from the nice people who
run the Chatsworth Subway: peaceful co-existence is preferable to
nasty and destructive litigation.
Should - God forbid - a court actually find that Subway's extremely
broad non-compete clause and downright slimey business tactics means
they can force Atom's to shut down, it would appear that FRP must
have been either negligent or fraudulent in leasing the store to
the vegan diner in the first place. In that instance, FRP would
seem to owe the Chetcutis a great deal in order to pay for Atom's
to move their operation to a new location, to recoup lost revenues,
and to reimburse considerable legal expenses they are forcing Atom's
to incur.
Neither FRP's attorney nor its leasing representative returned
phone calls to be interviewed for this story. Subway Corporate's
public relations representative said Subway was not able to discuss
information regarding pending lawsuits.
Veg Leaders Speak Out;
What You Can Do
Celebrated author John Robbins, who was heir to the Baskin-Robbins
corporation and knows a bit about franchises, had this to say about
the situation: "We need to support efforts like John and Dave
Chetcuti's. They're serving food that a particular group of people
wants to eat, and that is not easily available in the fast food
market."
Says EarthSave President Howard Lyman, "If you could get a
good vegan meal at Subway, they might have a point. But a pile of
dry lettuce is not all that appealing to me. On the other hand,
the kinds of things John and Dave Chetcuti are serving - not from
a fast food carton but mostly organic and prepared by a qualified
vegan chef on the premises - that definitely attracts me."
"It shouldn't be Subway versus Atom's; it should be Subway cooperating
with Atom's," says another bestselling author and vegan expert,
Joanne Stepaniak. "As a vegan for more than 20 years, I can state
categorically that Subway food doesn't interest me, no matter what
store is or isn't next door to them. It's not just their sandwiches;
their business practices are anathema to vegan values."
Groups in San Diego, New York and elsewhere are currently planning
and organizing campaigns to boycott Subway nationally in protest
of Subway's practices. To be fair, you might want to check out your
local subway, if you do frequent it occasionally, and see if they
are receptive to trying to put pressure on Subway Corporate to back
down. If they are, then perhaps they should not be penalized.
You can help by taking some or all of the following actions:
- Tell Subway Corporate what you think about the situation, at
asksubway@subway.com
or at 1-800-888-4848.
- If you live in the Grosse Pointe/Detroit area, let the Odren's
Subway store know how you feel.
- By all means, take everyone you know to Atom's Juice Café,
and leave giant tips!
- Donate money to the Chetcutis legal defense. This is perhaps
the most important thing you can do. John and Dave Chetcuti are
up against a ruthless and deep corporate pocket. Consider sending
a substantial contribution to Atom's Juice Café Legal Defense
Fund at:
Atom's Juice Café Legal Defense Fund
345 Fisher Road
Grosse Point, MI 48230
Discuss this article on the Community
Issues Board
Update
- Mar 14, 2001
Subway Backs Down!
Public Protest Works!
Click
here for full update
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Atom's
is a vegan juice, tea, soup and sandwich-wrap shop in Grosse Pointe,
Michigan, which prides itself in being the state's first certified
green restaurant. That means that it is 100% eco-friendly, using
no styrofoam, and only homemade cleaners such as vinegar and water.