The owners of a Subway sandwich shop in Brooklyn prevented the loss of their successful franchise by using surveillance footage to fend off bogus charges accusing them of violating company policies, The Post has learned.
Brothers Mina and George Hanna were stunned to get dragged into a possible arbitration hearing by the nation’s largest fast-food chain after a Subway inspector claimed the shop didn’t bake fresh bread or mop up at night, according to legal filings obtained by The Post.
Subway, which owns the brand but none of its roughly 21,000 US locations, has come under fire for predatory practices by its development agents that target mom-and-pop franchisees, writing them up for what seem like minor violations so they could take away and resell their restaurants and collect more fees, The Post has previously reported.
HBO host John Oliver skewered the company for the way it treats its franchisees during a May 22 episode of “Last Week Tonight with John Oliver” – a segment that forced the company into damage control.
Subway said Oliver based his segment on old facts and that it has changed its practices when it named John Chidsey as the first non-founding family CEO on Nov. 18, 2019.
The Post reported in May 2019 that Subway in 2018 took 718 legal actions against its franchisees and 955 in 2017. That compared to less than 10 per year during that time filed by McDonald’s, Burger King and Wendy’s.
At the time, a Subway spokeswoman said the monthly inspections “are ensuring the high standards demanded by us and expected by guests are met.”
Last year, Subway took only 13 actions against franchisees, according to federal filings.
The half-baked charges against the Hannas – which came days after Chidsey took over – surfaced in a separate lawsuit brought by the franchise owners against the Connecticut-based company over a rent dispute after the video helped save their restaurant.
The young Egyptian immigrants opened their franchise near an N train station on property owned by the MTA in Bensonhurst in January 2019.
Less than a year later, Subway inspector Aaron Knier — working for area manager Restaurex (also known as a development agent) – came to see if they were complying with the roughly 800-page operations manual.
Knier claimed the store was not baking fresh bread daily, a requirement at all franchises. The shop usually makes between 70 and 80 sandwiches a day, according to the court filing.
He took a picture of an empty bread cabinet that holds thawing bread as proof that no bread was being prepared.
However, the brothers had their own security cameras on the premises that told a different tale, a source familiar with the situation said.
The video showed Knier watching an employee on Nov. 21, 2019, rolling dough on a cutting board to be baked in batches of 50 loaves, the source said, sharing the security camera footage with The Post.
“When checking [my] cameras it was clear that this person was making up reasons to fail me that were literally impossible,” Mina Hanna said in a January 2022 Connecticut Supreme Court action against Subway, explaining that he can only cook 50 loaves at a time.
“That was insane as he stood in front of the second batch of bread baking but had actually waited for my employees to remove the thawing bread to take a picture of the empty rack he’d use for his made-up evaluation.”
Knier also reported no one had mopped the store the night before. Yet, there was security camera video from Nov. 20, 2019, showing a worker mopping, based on a screenshot reviewed by The Post.
Knier declined comment, referring The Post to Restaurex. The development agent declined to comment.
Subway found the brothers out of compliance and prepared to take the Hannas to arbitration – putting them at risk of losing their store – until they sent the surveillance footage to Subway case manager Sharon Rook-Fallgren, the source said.
After reviewing the video, Subway stopped all legal proceedings against the brothers and said their shop was in compliance.
“Franchisees are key to our success – when they succeed, we succeed,” a Subway spokesperson told The Post. “That’s why our new leadership team is focused on providing ongoing support and fostering positive relationships with our dedicated network of franchisees. As part of this effort, we are transitioning to independent, third-party evaluations to help franchisees increase their profitability. In the example that you reference, an error was made in the inspection which we corrected.”
Subway enforces a broad non-disparagement clause in its franchise agreements that stops franchisees from criticizing the brand. The Hannas declined comment for this story saying they did not want to break the clause.
But after saving their franchise, the Hannas still took the fast-food giant to arbitration, claiming the company denied them the opportunity to open a more expansive Subway Café at their Bensonhurst location. Subway Cafés contain “upscale décor” such as upholstered seats and a larger menu than a traditional branch.
Soon after the Hannas signed the lease with Subway and the New York City Metropolitan Transportation Authority in 2017, company brass claimed it was discontinuing the concept, the Connecticut suit said.
The decision forced the brothers to pay for new architectural plans and pay rent while delaying the restaurant’s opening.
“I … [wasted a year filing new design plans and] spent over $60,000 in rent,” Mina Hanna said in the court filing.
But in February 2020, the Hannas learned Restaurex had opened a Subway Café in November 2019, the Connecticut suit said.
“I was being singled out,” Hanna said in the filing.
The Hannas took Subway to arbitration to recover the back rent.
The brothers lost their case after the American Arbitration Association on Dec. 16, 2021, ruled in Subway’s favor, saying the Hannas had no contractual right to operate a cafe.
To pour salt on the wound, the Hannas had to pay roughly $20,000 to the arbitration court for hearing their case, court filings said.
They appealed the verdict by going to the Connecticut Supreme Court to vacate the arbitration. But on March 25 the court ruled they had missed the 30-day deadline to challenge an arbitration ruling – because they filed their case three days too late.