A freshly layered submarine sandwich rests on a wood counter in a warmly lit deli.

Fred DeLuca Biography: The Franchising Decision Behind Subway’s Growth

by

Fred DeLuca and Peter Buck built Subway by changing how their sandwich business expanded. After struggling through the early years, they began recruiting other operators and developing a franchise network that eventually spread far beyond Connecticut.

The venture had started in 1965 as a way for a teenager to help finance college. Decades later, Subway passed McDonald’s in worldwide restaurant count, though its reach also brought disputes over franchise relationships and questions about crowded markets. The contrast between the chain’s scale and the challenges of sustaining it runs through DeLuca’s story.

A Quick Look at the Life of Fred DeLuca

Biography Summary

Fred DeLuca (1947–2015) was an American entrepreneur who co-founded Subway with physicist Peter Buck in 1965 and remained the sandwich chain’s chief executive until his death. The pair developed a franchise model that carried Subway from Connecticut to international markets. DeLuca’s career also encompassed unsuccessful business experiments, disputes involving the growing franchise system, weakening U.S. sales, and a management transition during his treatment for leukemia.

Profile

Name: Fred DeLuca (also identified as Frederick A. DeLuca)

Born: October 1947, Brooklyn, New York

Died: September 14, 2015, aged 67

Nationality: American

Education: University of Bridgeport, graduated 1971; a published company history identifies a bachelor’s degree in psychology

Best Known For: Co-founding Subway with Peter H. Buck

Major Role: Long-serving Subway chief executive

Notable Business Milestone: Subway passed McDonald’s in worldwide restaurant count in 2010

From the Bronx to Bridgeport

Fred DeLuca was born in Brooklyn in 1947 and grew up in the Bronx, including time in public housing. His family later moved to Schenectady, New York, and then to Bridgeport, Connecticut, where he finished high school. As a teenager, he worked in a hardware store and needed a way to pay for college.

DeLuca wanted a college education and considered becoming a doctor. A conversation about paying for school instead helped set him on a path into the sandwich business. While the new shops were operating, he attended the University of Bridgeport and graduated in 1971. A published company history identifies his degree as a bachelor’s in psychology.

The $1,000 Partnership and Its Difficult First Shops

In 1965, when DeLuca was 17, he spoke with Peter Buck, a physicist and family friend, about the cost of college. Buck suggested a submarine-sandwich business and provided $1,000 in startup financing. They became partners and opened Pete’s Super Submarines in Bridgeport that summer.

The first shop was no instant success. In a 2009 interview, DeLuca recalled financially uncertain early years and said he opened a second store partly to offset the first store’s losses and create an appearance of progress. The second location opened in 1966; a more visible site for a third shop brought improvement.

In DeLuca’s recollection, the fifth shop was the point when he began to believe the business could endure. As he told interviewer Rieva Lesonsky: “Finally, the company I created had stabilized.” It was a far more modest milestone than the store-count records Subway would eventually set.

The name changed, too. The original Bridgeport shop was called Pete’s Super Submarines; the company dates the first use of the Subway name to 1968. The much bigger change would come when the partners reconsidered how to open more stores.

Sixteen Shops and the Decision to Franchise

By 1974, DeLuca and Buck had reached 16 Connecticut locations, still short of their 32-shop target. Running stores farther from the founders’ home area presented challenges. Rather than relying only on shops the partners would open and operate themselves, they began selling franchises that year; the first franchised Subway restaurant was in Wallingford, Connecticut.

DeLuca later described the move as a learning process undertaken without much specialist guidance. In a 2013 interview, he recalled initially charging a $5,000 franchise fee, struggling to recruit operators, and temporarily reducing the fee to $1,000 before raising it again.

Franchising brought many more operators into the work of expanding Subway. Local franchisees could open and run restaurants, while the growing organization built ways to recruit and support them. DeLuca said making distant locations easier to operate became an important part of the effort.

How Local Operators Helped Build an International Chain

As the franchise network spread, DeLuca described using development agents—experienced franchisees given incentives to help establish restaurants and support other operators within particular territories. He credited the system with allowing expansion in multiple places at once. Independent business reporting in 1987 documented the resulting rapid growth in franchise sales, while also noting Subway’s relatively low entry costs.

Subway began its international expansion in Bahrain in 1984. By 1987, it counted about 1,000 restaurants. DeLuca later recalled feeling underprepared to lead a business of that size. In a 2013 interview, he said the chain had reached 5,144 locations by 1990.

Operators already in the system were also opening additional stores. In a 2003 interview, DeLuca estimated that existing franchisees accounted for 60 to 70 percent of new restaurants in a typical year at that time. He credited those franchisees, development agents, and company leaders with helping manage the growing network.

The chain also pursued formats suited to smaller or nontraditional retail spaces. Its marketing highlighted fresh-baked bread and, by the 1990s, low-fat menu options; a prominent seven-sandwiches-under-six-grams-of-fat campaign appeared in 1997. The advertising was part of Subway’s positioning as a lighter alternative in the fast-food market.

When Subway Overtook McDonald’s in Locations

Subway’s restaurant count became a defining measure of its reach. Around 2002, it passed McDonald’s in the number of U.S. locations. In 2010, Subway moved ahead worldwide as well: a report issued the following year put the totals at 33,749 Subway restaurants and 32,737 McDonald’s locations.

DeLuca recalled comparing Subway’s store density with competitors and setting more ambitious expansion goals. Restaurant count was the measure in which Subway led; the comparison did not extend to revenue, profits, or customer traffic. Later criticism of Subway’s U.S. store density put the limits of this growth measure in sharper focus.

Leading a Vast System—and Testing Other Ideas

Reporting described DeLuca’s visits to restaurants and his attention to day-to-day details. He also spoke about staying in contact with franchisees, testing changes to menus and advertising, and working with other company leaders. Even as the network expanded, he acknowledged the work of people beyond the founder’s office.

By the early 2000s, he described a system advisory council bringing together company representatives, franchisees, and development agents. DeLuca believed coordinated decisions on products and marketing helped improve results.

Beyond Subway, DeLuca tried several other business concepts. He later said the fried-chicken venture Cajun Joe’s failed, while his haircut chain We Care Hair reached about 200 locations. He also described Q Burger as a small experiment that did not prove viable. In discussing these ventures, he distinguished opening more units from proving that a concept could last.

He also shared business advice in Start Small, Finish Big, co-written with John P. Hayes and published around 2000. In a 2003 interview about whether he might sell or leave Subway, he said “I just love Subway”—and remained its leading executive rather than retiring after the chain had grown.

Franchise Tensions and a Significant Court Ruling

Rapid expansion also brought franchisee disputes. Reporting in the 1990s described complaints about territorial competition, the pace of growth, and the financial prospects presented to potential operators. Some franchisees alleged that recruiters oversold possible returns. These were reported complaints, rather than findings of personal deception by DeLuca.

One major lawsuit arose from a landlord leasing dispute. In Jannotta v. Subway Sandwich Shops, Inc., a jury found named defendants including DeLuca and Buck liable for fraud and breach of contract. The jury awarded $328,993.99 in compensatory damages and $10 million in punitive damages. In 1997, the U.S. Court of Appeals for the Seventh Circuit vacated the punitive award because of erroneous jury instructions and sent that issue back for a new trial. The defendants did not challenge the compensatory award or underlying liability findings in that appeal.

A separate 1999 federal appellate decision involving Doctor’s Associates Inc., the company associated with Subway’s franchise system, concerned arbitration and an injunction affecting 57 franchisees. The appeals court vacated the challenged parts of the injunction. That procedural ruling did not resolve the merits of the franchisees’ underlying allegations.

The disputes exposed tensions within a system built for rapid expansion. Contracts, territorial decisions, and the interests of different operators became increasingly consequential as the network spread.

Slowing U.S. Sales and the Final Years

The later years of DeLuca’s leadership brought a less encouraging set of business measures. Industry reporting put Subway’s 2014 U.S. systemwide sales at roughly $11.9 billion, about $800 million below the prior year, even as the company operated more U.S. restaurants than its largest fast-food rivals. The figure reflected consumer spending at U.S. restaurants across the franchise system, distinct from revenue received by Subway headquarters.

Analysts questioned whether the concentration of nearby Subway shops was contributing to declining sales, alongside competition from other restaurant chains.

Another crisis concerned longtime Subway advertising spokesman Jared Fogle. The company ended its relationship with him amid a 2015 criminal investigation. Before DeLuca died, Fogle had agreed to plead guilty to sexual offenses involving minors and child sexual-abuse images.

Leukemia, the Leadership Transition, and Death

In 2013, Subway disclosed that DeLuca was receiving treatment for leukemia. He remained chief executive, although his activity was reduced during treatment. In June 2015, his sister Suzanne Greco became president and assumed day-to-day management responsibilities.

DeLuca died on September 14, 2015, at age 67, shortly after Subway’s 50th anniversary. He remained CEO until his death. By then, the chain had more than 40,000 restaurants worldwide. He was survived by his wife, Elisabeth, a son, and his sister Suzanne.

The Legacy of the Franchise Model

DeLuca’s interest in education and economic independence reappeared beyond the restaurant business. Subway says he established the Frederick A. DeLuca Foundation in 1997 with a focus on self-sufficiency and education. The foundation later supported scholarships in his memory.

In April 2024, nearly nine years after DeLuca’s death, Subway announced the completion of its sale to affiliates of Roark.

DeLuca and Buck began with one sandwich shop; franchisees and development agents helped build it into a vast international network. Subway’s reach was a remarkable business achievement, but it also brought disputes over franchise relationships and questions about the economics of dense expansion. DeLuca’s legacy includes both the model that enabled the growth and the tensions that accompanied it.

Timeline

These milestones trace the major decisions, changes in scale, and challenges in Fred DeLuca’s life and Subway’s development.

Timeline.

1947

Fred DeLuca is born in Brooklyn, New York, in October.

1965

At 17, DeLuca and Peter Buck open Pete’s Super Submarines in Bridgeport, Connecticut, with $1,000 supplied by Buck.

1968

The business first uses the Subway name.

1971

DeLuca graduates from the University of Bridgeport.

1974

With 16 shops, DeLuca and Buck start franchising; the first franchised Subway restaurant opens in Wallingford, Connecticut.

1984–1990

Subway expands internationally, beginning in Bahrain in 1984; it reaches about 1,000 shops in 1987. DeLuca later recalls a count of 5,144 by 1990.

1997

Subway promotes low-fat menu options. According to Subway, DeLuca establishes the Frederick A. DeLuca Foundation.

A federal appeals court vacates a $10 million punitive-damages award in a landlord dispute involving DeLuca and other defendants.

2000

DeLuca publishes Start Small, Finish Big with John P. Hayes around this year.

2002

Subway’s U.S. restaurant count is reported ahead of McDonald’s.

2010

Subway surpasses McDonald’s in worldwide restaurant count, not sales.

2013–2014

Subway announces DeLuca’s treatment for leukemia in 2013. Industry measures show falling U.S. systemwide sales for 2014.

June–September 2015

Suzanne Greco becomes president in June and manages day-to-day operations. DeLuca dies on September 14, aged 67, while still CEO.

2024

Nearly nine years after DeLuca’s death, Subway completes its sale to affiliates of Roark.

FAQs

Did Fred DeLuca found Subway on his own?

No. Fred DeLuca and Peter Buck were partners from the beginning in 1965. Buck suggested opening a submarine-sandwich shop and provided the initial $1,000 in financing.

Was the first Subway restaurant called Subway?

No. The first shop, opened in Bridgeport in 1965, was called Pete’s Super Submarines. The company dates the first use of the Subway name to 1968.

Did Subway become bigger than McDonald’s?

Subway surpassed McDonald’s in restaurant count in the United States around 2002 and worldwide in 2010. Those milestones concern the number of locations, not higher sales or profits.

Was the $10 million punitive award against Fred DeLuca upheld?

No. A jury awarded $10 million in punitive damages in a landlord dispute involving DeLuca and other defendants, but a federal appellate court vacated that award in 1997 and remanded the punitive-damages issue. The defendants did not challenge the underlying liability findings or compensatory award in that appeal.

Did Fred DeLuca retire before his death?

No. DeLuca remained Subway’s CEO until he died in September 2015. His sister Suzanne Greco became president in June 2015 and handled day-to-day management during his illness.

Interviews

How DeLuca Built Subway’s Franchise Network

In a 2013 Inc. interview, DeLuca looks back at the uncertain first years, his early franchise-fee experiments, and the importance he placed on development agents. He also discusses store-count goals, his sense of the challenges of leading a larger company, and business concepts he tried outside Subway.

Read the Inc. interview

His Approach to Franchisees and Leadership

This 2003 Entrepreneur interview focuses on DeLuca’s continuing involvement with franchisees, management responsibilities, and his reasons for staying with Subway. It also offers his own account of how the expanding organization coordinated decisions and brought existing franchisees into new-store growth.

Read the Entrepreneur interview

The Early Mistakes and the Fifth Store

In a 2009 interview with Rieva Lesonsky for AllBusiness, DeLuca revisits the first stores, explains why he opened another location despite weak early results, and recalls when he thought the business had stabilized. It is a useful firsthand companion to the later story of Subway’s rapid scale.

Read the AllBusiness interview

Food, Advertising, and Franchise Planning

A 2001 Entrepreneur interview captures DeLuca discussing Subway’s marketing, product choices, and franchise-system planning at an earlier stage of global expansion. Read alongside the later interviews, it shows how he described coordination among operators and company representatives while the chain was still growing.

Read the 2001 Entrepreneur interview

Sources