How a $1,000 loan for medical school tuition created the world's largest franchise
In short: In 1965, a 17-year-old student borrowed $1,000 from a family friend to fund his medical education. Instead of becoming a doctor, he opened a sandwich shop in Bridgeport, Connecticut. That modest venture eventually transformed into Subway, a global fast-food empire that redefined the mechanics of modern franchising and aggressive retail expansion.
Fred DeLuca, born in 1947, originally intended to study medicine. His path shifted when Peter Buck, a family friend, suggested he open a fast-food business to cover his college expenses. The duo opened their first shop on August 28, 1965. Initially named 'Pete's Submarines,' the brand was rebranded as 'Subway' by 1968. DeLuca later admitted that his first location was a 'crummy' site, a mistake he corrected by prioritizing high-visibility spots for subsequent outlets.
The business model evolved significantly as DeLuca and Buck shifted toward franchising. This transition triggered explosive growth, with the chain reaching 100 stores by 1978 and 1,000 by 1987. By 1993, the company was opening 1,100 units annually. DeLuca’s strategy was notably aggressive; he often required franchisees to open new locations near existing ones to preempt competitors, effectively saturating markets to maintain dominance.
The brand's trajectory was further accelerated by the 2000s marketing campaign featuring Jared Fogle, who claimed to have lost 245 pounds eating Subway sandwiches. However, the company’s later years were marred by controversy regarding Fogle’s criminal activities. Following DeLuca's death from leukemia in 2015, the chain faced a period of contraction, experiencing a net loss of approximately 7,000 locations between 2015 and 2023, though it remains a massive presence in the industry.
Throughout his career, DeLuca maintained a family-oriented management style, involving his mother, sister, and wife in the company's operations. Despite his lack of a medical career, he was eventually honored by his alma mater, the University of Bridgeport, with an honorary Doctor of Humane Letters in 2002. His legacy remains tied to the sheer scale of the franchise he built from a single, poorly located storefront.
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- Summary by Intellect · source: Fred DeLuca
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