Many people in the U.S. who want to invest in any business start with franchise opportunities. The reason is simple: the brand name, the return on investment (ROI), and the operation know-how such as recipes, procedures, and advertising know-how. When we try to find the top restaurant franchise opportunities in 2022, we look for well-established brands with a proven track record.
There are plenty of franchise opportunities available in fast food, casual dining, and family dining restaurants. Some of the most famous names in this category are McDonald’s, Subway, Dunkin Donuts, and Starbucks.
The restaurant industry is constantly changing. The use of new technology, shifts in consumer preferences, and increased competition are some reasons why this industry never slows down. So, where is the best place to invest your money? Here are some concepts that are doing well right now:
A Greek restaurant franchise like GFG provides customers with traditional, authentic, fresh, and healthy Greek food.
Some innovative new concepts in the food industry are also paving the path to success for entrepreneurs. For example, a healthy fast-food franchise can be a profitable investment, while a hand-free restaurant concept has a very low-risk factor and requires a smaller initial investment. However, there are so many more options to choose from! Some of the most successful franchises have been operating for more than two decades.
Why Do People Invest In A Subway Franchise?
There are many reasons why many people prefer the Subway franchise over other franchises. Some had great experiences at Subway restaurants; others may like the food or like Subway’s brand image.
Subway is a big player in the market with vast networks of franchises worldwide. However, you should know that it is possible that not buying the Subway franchise might be the best decision for you.
Hey, I am Dan Rowe from Fransmart. If you are thinking about buying a Subway franchise, we would love to help you get started! We are experts on everything from finding a great franchise to financing to opening day. If you have any questions, leave a message here, and we will get back to you as soon as possible!
Here, I will help you with all the information you need to set up a Subway franchise.
Types Of Subway Franchise
There are two types of subway franchises.
- Traditional location: In this, the franchise is a full-service restaurant, and the whole purpose of this restaurant is the operation of a Subway restaurant.
- Non-Traditional location: These are also full-service restaurants, but they are housed with another business. Examples of non-traditional locations include convenience stores, gasoline stations, highway rest stops, universities, schools, convention centres, airports, theme parks, national parks, bus and railroad terminals, military bases, business complexes, and similar locations.
How much Does It Cost To Buy Subway Franchise?
Subway is an American multi-national fast food restaurant franchise that primarily sells submarine sandwiches (subs), wraps, salads, and beverages. The success of Subway has made it a ubiquitous franchise throughout America.
Subway Franchise Cost Breakdown
Food franchises are expensive; there is no hidden fact about this. Let us see what a Subway franchise for both traditional and non-traditional locations can cost you.
- Initial Franchise Fee: $15,000
- Real Property: $2,000 – $12,000
- Leasehold Improvements: $40,900 – $200,000
- Equipment Lease Security Deposit: $7,500 – $15,500
- Optional Security System: $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
- Royalty: 8%
- Advertising 4.5% of total gross sales.
- ESTIMATED TOTAL: $100,050 – $342,400
The total initial investment of a Subway franchise can range from $100,050 – $342,400 and will vary depending on the cost of remodelling and construction work you will need to do.
Subway has a franchise fee of $15,000. Like other big QSR companies, it also requires much investment in real state complexes and similar locations. Some applicants may waive the initial franchise fee if they qualify for the Subway Discount offers.
The franchise fee is a charge paid by the buyer to the franchisor and is used to compensate the franchisor for the franchise’s name and the brand image that comes with it.
Franchise fees can be payable in instalments or one lump sum, depending on what contract you sign. The franchise fee typically covers training, marketing support, and legal support.
Like all other similar costs and expenses involved in franchise businesses, Subway opening costs incorporate acquiring real estate, renovation or construction costs, signage, professional fees, including license, accounting and lawyer fees, and more.
Subway Franchise Fee Discounts
Subway offers a discount on the franchise fee for the following exceptions:
- They offer a discount to Qualified U.S. Veterans.
- Subway offers a discount of $10,000 to the franchise fee to the franchisee buying its first franchise and qualify under their minority loan program.
- They also offer to finance $10,000 of the franchise fee to the franchisee opening a franchise in a low-density market.
- They charge a reduced fee of $5,000 to the Subway franchisees who desire to open a satellite restaurant. This fee will be reduced to $1,000 if the satellite operates for one year or less.
- They do not charge any franchise fee from the satellite locations in the same facility as the base Subway restaurant.
- They have waived off the franchise fee for school lunch locations.
Requirements For Opening A Subway Franchise
Subway requires liquid cash of at least $40,000. It is the amount a franchisor suggests a franchise must have in savings to access it at the time of emergency and setbacks when opening the business. It also accounts for daily expenses until the store starts generating profit good enough for the franchisee to take-home wages.
Terms of Agreement And Renewal
The term for a Subway franchise is 20 years, except for satellite restaurants and the school lunch program. After 20 years, the contract is renewed automatically for more than 20 years unless the franchise does not want to continue except for satellite restaurants and the school lunch program. Subway has the right to refuse renewal if franchisees are not fully compliant.
What Is The Return On Investment On A Subway Franchise
The return on investment on a Subway franchise is not that good. The profit of an average Subway franchise owner is around $50-60,000 per year. Return on investment ranges from 10 to 13%, which is not very good compared to other food franchises.
For a better understanding of how one can calculate return on investment, watch the given video:
Top 5 Franchise Opportunity Cost Comparison Chart
*Cost Comparison Chart. – As shown in the FDDs at the time this article was written.
| Company name | UPS | Mcdonald | Paymore | Subway | Taffers Taverns |
| Total Investment Cost(Estimated) | $167,825 – $474,193 | $1,008,000 – $2,214,080 | $152,050 – $267,450 | $116,000 – $263,000, | $1,040,000 – $1,602,000 |
| Profit Owner earning (Estimated) | $39,288 | $110,000 | $65,000 | $65,000 | $62,000 |
What will you choose?
Franchising is a considerable investment in 2022. Many advantages and disadvantages are involved, but it is not as risky as opening your own business. The income you can earn from your franchise investment depends on various factors, but there are some general benchmarks stated in FDD item 19 for every business.
Would you like to buy an old franchise with low profits or a new franchise with high profits like Halal Guys, Greek From Greece, Greek Xpress?
No Exclusive Territory Granted
Subway franchisees do not receive any territorial rights. There are no radius restrictions or minimum or maximum population requirements limiting the franchisor’s license or opening another Subway restaurant.
It results in competition among the same brand in one area, which is not beneficial for the sales. Whereas the new fast-food chains, which have a limited number of franchises like Rise Southern Biscuits & Righteous Chicken, Slapfish, Curry Up Now, provide you with a whole territory, which will make you exclusive in that area. Thus, providing you with a firm revenue stream and customer base, you can scale quickly and profitably within your means.
Frequently Asked Question
Is owning a Subway Franchise Store profitable?
The Subway franchise has successfully competed with international franchises such as Domino and Pizza Hut. The profits differ from one franchise to another based on the location and type of store. Since opening a restaurant takes time and money, you should do your due diligence and start working on your restaurant right away if you want to make it in this business.
How much does a Subway Franchise owner make?
The average Subway franchise owner makes $50-60,000 per year but has an ROI of 10 to 13%. The returns are not as high as some other franchise concepts.
Is Subway Franchise Dying?
Subway has struggled to keep up with competitors like McDonald’s and KFC, dominating the industry over the past year. In 2019, Subway’s U.S. outlets sales totalled $8.3 billion, down from $10.2 billion in 2018.
What franchise can I buy with 1 million dollars?
With the help of our experts, we have an excellent combination of Multibagger and some award-winning franchises with low risk and capital.
- PayMore Electronics
- Taffer’s Tavern by Jon Taffer
- JARS Sweets and Things by Fabio Viviani
- GLO30 Skincare
- Schmackary’s Cookies
Sources:
- https://www.eposnow.com/us/resources/how-much-do-franchise-owners-make/
- https://www.franchisedirect.com/directory/subway/ufoc/915/
- https://www.franchisedirect.com/information/howmuchdoesitcosttoopenasubway/
- https://en.wikipedia.org/wiki/Subway_(restaurant)
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