Fred DeLuca, founder of Subway, on his seven business lessons

DeLuca started Subway at the age of 17

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The Independent Online

Fred DeLuca has died at the age of 67 after a two-year battle with leukaemia.

DeLuca started Subway at the age of 17 using $1000 borrowed from a family friend and grew it into one of the most successful franchise restaurants in the world. Today, it has more branches than its nearest rival, McDonald’s.

During his life, DeLuca did his best to pass on what he had learned about franchising a business. In 2013, the year he was diagnosed with leukaemia, he told inc.com magazine his tips for a successful business.

1. Give people incentives to do their job

"We set up a program for select franchisees in which we paid them for getting new stores open and for supporting other franchisees in their region," DeLuca said.

2. Train your employees in the business

Then, once they are experts, pay them to be ‘development managers’ and train other franchises in the area. "There was no way a company like ours could have added so many people and so many locations simultaneously without those development agents," DeLuca said.

3. Hire people who live in the territory you want to open stores in.

4. Make it easy for people to invest.

Compared with other restaurants, Subway had a low franchise fee and a low upfront investment. The stores were simple and inexpensive to build. When DeLuca couldn’t get people to start franchises for a flat $5000 fee, he cut it to $1000.

5. Tackle controversies head on

When Subway started getting accused of cannibalisation, it set up a site review system for franchisees opposing new stores got the chance to speak up. "Getting through a controversy like that is not as magical or mysterious as you might think," DeLuca said.

6. Pace yourself

DeLuca did not make any announcements or any celebrations when Subway passed McDonald’s US and global store counts. "A lot of stuff happens daily when you're running a company like Subway. If you get too happy about some things or too unhappy about others, you get worn out. It's best if you can pace yourself a little bit more,” he said.

7. Set goals

But not the goals people expect. When DeLuca was diagnosed with leukaemia, he was not working on increasing store count, but increasing store profitability by $1000 a week. "That probably doesn't sound like a terribly exciting goal. But we know that if we can boost profitability, we'll have an easy time building out our store network, because our franchisees will be getting a better return on their investment," he said.

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