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   Investigative Reports | VegSource Interactive, Inc.

Subway Versus the Vegan Café
VegSource Staff

March 2, 2001 -- The Subway Real Estate Corporation, a Delaware Corporation which leases Subway stores and helps set up local Subway franchises, wants to put Atom's Juice Café out of business.

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.

If the Subway Corporation has its way, its questionable business tactics may just succeed in destroying the lifelong dream of two brothers who pooled their life savings - and those of their families - to create a delicious haven for vegans in the Detroit/Grosse Pointe area.

The good news is that those of us in the vegan and vegetarian community may be able to help prevent that from happening.

Subs and competition

Groundwork for the present problem began in 1991, when Subway Corporate signed a lease with Fisher Road Properties (FRP), the landlord of a small strip mall on Fisher Road in Grosse Pointe. In order to enter into the 20-year lease, the Subway Corporation insisted that the FRP, the landlord, agree not to lease any properties in its mall to "any entity whose business competes with [Subway's] use."

In December of 1998, Tom and Doris Odren purchased the Subway franchise on Fisher Road leased by FRP, and began operating it.

On September 1, 1999, John and Dave Chetcuti began leasing from FRP an empty storefront a few doors down from Subway. The Chetcuti brothers intended to open Atom's Juice Café, a vegan diner which would sell only foods containing no dairy, eggs or other animal products. The Chetcutis were concerned by the lease agreement FRP had presented to them. It specified that the Chetcuti's use of the premises would be "…only for a vegetarian juice, soup and tea bar," and would not to compete with Subway or Farm's Market, another storefront in FRP's mall.

To insure that their intended use would be permitted, prior to signing the lease the Chetcutis say they presented their menu to FRP, showing the various items they intended to sell. According to pleadings later filed in Michigan Circuit Court, FRP reviewed the menu and approved the items. Based on FRP's assurances about their menu, the Chetcutis signed the lease and moved in.


 



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
 

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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