Minneapolis-based Fallon, part of Publicis Groupe, will take over the account immediately, taking on responsibility for the company's strategic planning and creative development globally, with the first new commercials ready in time for an autumn campaign.
The review was called in May by the Subway Franchisee Advertising Fund Trust, the group responsible for overseeing the overall Subway brand identity, after it split with Euro RSCG MVBMS Partners. The New York agency had originally agreed to defend the account but it pulled out of the running in June.
Fallon was appointed to the business after a pitch against Wieden & Kennedy, Portland; Interpublic Group's Deutsch in New York; and Omnicom Group's Goodby Silverstein & Partners, San Francisco.
Chris Carroll, marketing director for SFAFT, said: "Every single one of the agencies did a great job providing strategic insights and creative that will take the brand to the next level of success. In the end, it was a hard decision to make. We selected Fallon based on its outstanding team and exciting creative recommendations."
The appointment comes as Subway plots major expansion in the UK, with plans for 2,000 stores by 2011. The US-owned chain currently has 125 UK outlets, up from 30 two years ago.
Positioning itself as the healthy alternative to fast food, the chain, like a lot of US companies, views the UK as its stepping-stone into Europe.
The first UK advertising is likely to come towards the end of this year as the chain reaches critical mass with around 250 stores.
During the review and final negotiations process, Subway worked with agency search firm Joanne Davis Consulting.
David Lubars, Fallon president and executive creative director, said: "Subway is a well-established brand in the competitive quick service restaurant industry and we look forward to taking its advertising to the next level. We believe we can bring the brand's message to consumers in a fresh, new way.'"
Media planning and buying remains unchanged and are handled by Grey Global Group's MediaCom.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .