About Subway Franchise
Did you know Subway is among the top eight largest QSR restaurant chains in the country? Subway was started in Connecticut in 1964 with a single store as a one-off plan between two close college friends to pay for their tuition fees.
Subway began franchising in 1974, and according to the website, it has more than 43,000 stores globally. Subway is one of the top-performing franchises in the world, and its impressive performance has given many people a misconception that becoming a Subway franchise is a profitable endeavour, but that isn’t the case. Explore this guide to see if Subway is the right opportunity for you.
Which Subway Franchise Should You Buy?
Subway offers two different franchises depending on how the company appraises its ability to handle affairs in your geographical location.
- Traditional Stores– These stores are located within shopping complexes and busy streets.
- Non-traditional Stores– These stores are located in non-traditional locations like airports, hospitals, universities, etc.
In addition to store types, Subway has several unique franchising options tailored specifically to your needs and capacity.
- Become a franchise owner – You can become a franchise owner. You or your organization would purchase the right to open up a new business location with full support from the parent company.
- Become a landlord– Lease the space to an experienced franchise owner who will invest, build-out, staff, and operate the restaurant while paying the rent to you.
- Collaborate with Food Service Management Company (FSMC) – The FMSC can be your head contractor who is in a position to both construct and manage your Subway restaurant.
How to Buy Subway Franchise?
Opening up a Subway franchise is more than just finding the right location and convincing investors to give you money. It’s also about following all of the procedures that have been carefully laid out for you in the franchise agreement so you can successfully make your franchise’s debut. The steps are as follows-
- Request a franchise brochure
- Submit franchise application
- Meet local development agent
- Review disclosure document
- Conduct local research
- Secure financing
- Sign the franchise agreement
- Attend training
- Secure a location and build your restaurant
Company Provisions
The company has carefully laid out the plans and provisions for new franchisees to follow. Some of the basic guidelines are:
- When starting your franchise, franchisees receive two weeks of intensive training.
- You will be provided with the store plans targeted specifically for the unique location where your business will be located.
- You are expected to include some uniquely customized features such as decorations, furniture, or menu items while putting together their restaurant concept.
- You will also have to pay for any construction expenses, and design elements specific to the décor.
- After opening you will receive continued support from a field representative.
Cost of a Subway Franchise
Financing is one of the main issues when considering buying a franchise. Let us look at the cost of buying a subway franchise.
| Name of Fee | Low | High |
| Initial Franchise Fee | $15,000 | $15,000 |
| Real Property | $2,000 | $12,000 |
| Leasehold Improvements | $40,900 | $200,000 |
| Equipment, Furniture and Décor | $75,000 | $150,000 |
| Optional Security System (not including monitoring) | $2,450 | $3,550 |
| Freight Charges (varies by location) | $3,000 | $14,000 |
| Outside Signage | $1,600 | $8,000 |
| Opening Inventory | $4,400 | $6,050 |
| Insurance | $1,200 | $5,000 |
| Supplies | $500 | $1,300 |
| Training Expenses (including travel & lodging) | $2,500 | $4,500 |
| Legal and Accounting | $1,000 | $3,500 |
| Opening Advertising | $2,000 | $4,000 |
| Miscellaneous Expenses (business license, utility deposits & small equipment) | $4,000 | $8,000 |
| Additional Funds – three months | $12,000 | $42,000 |
| ESTIMATED TOTAL* | $167,550 | $476,900 |
Advantages and Disadvantages of Buying Subway Franchise
When considering buying a Subway franchise, you need to analyze whether it is a profitable business or not. Here are the advantages of buying a Subway franchise
- Independent ownership of a Subway franchise offers many benefits to larger businesses, with the autonomy and relationships commonly found within a small business.
- Franchisors need not have previous business experience.
- It is easier to secure financing than some other franchises.
Although there are some advantages, there are also disadvantages to buying a Subway Franchise.
- Subway has one of the highest royalty fees in the industry at 8%.
- At 4% Subway’s marketing fees are also one of the highest in the industry.
- The market is oversaturated with Subway stores.
Subway Franchise: A Valuable Investment Opportunity in 2022?
While Subway has strong name recognition, from an investor standpoint it isn’t the best franchise to see high ROI. With its high fees and over-saturation of the market, it’s hard for new franchisees to build great wealth with Subway.
From an investment standpoint, other emerging brands like Subway competitor, Ike’s Love and Sandwiches, is a more attractive franchises.
Fransmart, the leading franchise development company for emerging brands can help you evaluate the Subway franchise and help you find more profitable Fast-casual franchise opportunities. Fransmart, the company that took Five Guys and The Halal Guys from one location to international sensations can help new franchisees find the perfect opportunity for them.
Conclusion
Contact Fransmart today for individualized help finding your next franchise with brands like Ike’s or Brooklyn Dumpling Shop Franchise, Curry Up Now Franchise, or The Halal Guys.