A "Nudge"

Sometimes aspiring entrepreneurs just need the right person to come along and nudge them into action. In the summer of 1965, Fred DeLuca had just graduated from high school and wanted to attend college. He was a hard-working, competent, and dependable young man, but the $1.25-per-hour minimum-wage job that he had at the local hardware store wouldn’t begin to pay for an education.

Tentatively, he approached a family friend, Dr. Peter Buck, to ask for some advice. It was a bit of a leading question because he half expected the generous Dr. Buck to offer to loan him the money. But Dr. Buck came back with a surprise response: “I think you should open a submarine sandwich shop.”

Fred was totally caught off guard and asked, “How does it work?” Dr. Buck explained that all one had to do was rent a small store, build a counter, buy some food, and open for business. Customers would come in, put money on the counter, and Fred would have enough to pay for college. They decided to become partners, and Dr. Buck wrote a check for $1,000 as an initial investment. Fred hoped to gain financial independence with this venture.

For the next six years, Fred worked hard, made thousands of subs, and paid his way through college. At the end of nine years in business, he and Dr. Buck had opened nine SUBWAY restaurants. This was a success story by any yardstick, but they weren’t satisfied. They decided to sell franchise rights to their restaurants. Franchise rights allow the purchaser (the franchisee) to use the brand name and proven operations system of the master company (the franchisor).

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