Key Takeaways
- Subway is one of the most ubiquitous and successful global fast-food chains.
- Those looking to franchise a Subway store can expect to shell out around $200,000 in startup costs plus a $15,000 initial licensing fee.
- Subway's franchise fees tend to be lower compared to its competitors.
Full Answer
Is subway a good franchise to buy?
Why you may not want to buy a Subway Franchise: PRO Relatively stable brand - low failure rate Relatively low investment Very Well known brand name Relatively predictable and stable income CON Massive market saturation (The problem in franchising is the brands that are most visible get the most people applying for a franchise.
How much does it cost to buy a Subway franchise?
To buy a franchise with Subway®, you’ll need to have at least $40,000 in liquid capital and a net worth of $80,000 – $310,000. Franchisees can expect to make a total investment of $150,050 – $328,700. Subway® charges a franchise fee of $15,000. They also offer financing via 3rd party.
Can you make money with a Subway franchise?
Well, becoming a Subway owner can bring the exact opposite. If you are planning to own a single-unit of a Subway franchise, unless you spend your time running the business, you will make very little money out of it. So you will need to be involved, and that means actively managing a business operation that is open 7 days a week, for long hours…not very appealing…
Is a Subway franchise a good investment?
Whether or not Subway is a good investment is completely up to you. There are definitely times where it is. For example, if you find a good area where there aren’t many Subways around, you can definitely earn more than the average franchise. This is due to the fact that you will have a mini monopoly on the area.
See more
Is owning a Subway franchise profitable?
In 2021, Subway saw a 21.3% increase in revenue, growing from $634 million in 2020 to $769 million in 2021. Based on the average sales calculated above, at an average of a 15% profit margin, it will take approximately 7.3 years to recoup your investment, which is longer than most franchise opportunities.
How much does a Subway owner make a year?
The average salary for an Owner is $122,713 per year in United States, which is 35% higher than the average Subway salary of $90,583 per year for this job.
Should you invest in Subway?
The Bottom Line. With the benefits of an established business, low startup costs, and parent company support, a Subway franchise is a good option for entrepreneurs interested in opening a franchise business.
How much can you earn owning a Subway?
Average Sales / Revenue per Year They generate an annual average of $422,000 sales per franchise unit. Statistically speaking, most franchises make only an average of 7.5% of their annual sales, which comes around to $31,000 profit.
Which franchise makes the most money?
What is the most profitable franchise to own? According to the Franchise 500 list of 2021, Taco Bell is the most profitable franchise to own. The food chain has been franchising for nearly 6 decades and is still seeking franchises worldwide. As of 2021, they have 7,567 open units.
What is the most profitable franchise to own in 2022?
Most Profitable FranchisesDunkin'7-Eleven.Planet Fitness.JAN-PRO.Taco Bell.Orangetheory Fitness.Great Clips.Mac Tools.More items...•
How much is it to open a Subway franchise?
How much is the franchisee fee? The initial franchise fee ranges from $10,000 - $15,000* (US dollars) depending on your country.
What are the requirements to own a Subway franchise?
To buy a franchise with Subway, you'll need to have at least $40,000 in liquid capital and a minimum net worth of $80,000. Franchisees can expect to make a total investment of $150,050 - $328,700.
How much is a Starbucks franchise?
What are the Financial requirements for a Starbucks licensed store? You need to pay the licensing fee of between $50,000 – $315,000 and you must have over $1,000,000 in liquid assets to be considered for a licensed store by Starbucks.
Do franchise owners make money?
Franchise Business Review found that the average annual pre-tax income of franchise owners in America is $80,000. Only 7% of franchise owners make more than $250,000 annually, and 51% earn less than $50,000. Legally, franchisors cannot give income amounts or forecasts of future income.
How much does a franchise owner make a year?
According to a survey done by Franchise Business Review involving 28,500 franchise owners, the average pre-tax annual income of franchise owners is about 80,000 dollars.
What percentage do franchise owners make?
Franchise royalties range from 4% of your revenue all the way up to 12% or more. The amount has to do with the type of franchise business. For example, a food franchise is a high-volume business. A lot of individual items are purchased by a high-volume of customers.
How much does a franchise owner make a year?
According to a survey done by Franchise Business Review involving 28,500 franchise owners, the average pre-tax annual income of franchise owners is about 80,000 dollars.
How much can you make owning a franchise?
Buying a franchise might seem like easy money, but those royalties and fees will quickly cut into profit margins. The majority of franchise owners earn less than $50,000 per year.
How do franchise owners get paid?
How do franchise owners get paid? Franchise owners can pay themselves a salary or depending on their business entity, they may be able to take a draw from their accumulated equity.
How much do fast food franchise owners make?
Fast food franchises are incredibly profitable compared to other types of businesses. According to a McKinsey study, the average fast-food franchise makes a gross profit of more than 20 percent on revenues of $2.5 million per year. That's more than twice the profitability of the average small business.
How much does it cost to open a subway?
Initial costs for a store site include its real estate and construction expenses. For a Subway business, it is estimated the total cost for the initial restaurant site ranges from $150,050 to $342,400, much lower than other competing fast food franchises.
Why do entrepreneurs want to own a franchise?
With franchise ownership, franchisee entrepreneurs gain the benefit of licensing an established business's procedures and processes from the franchisor. These licensing benefits give the business owner numerous advantages, including an association with an established business and the benefits of an already established branding strategy.
How much does it cost to franchise a McDonald's?
An initial startup licensing fee of $15,000 is required to begin the business, compared with a $40,000 to $90,000 licensing fee for Dunkin' ( DNKN) or the $45,000 fee that Mcdonald's ( MCD) charges. Annually, royalty fees are also required. Subway royalty fees are 8% of annual gross sales, which are higher than the 5% and 4% that Dunkin' and Mcdonald's charge, respectively. Additionally, the franchisee is required to pay an ad fund fee that is 4.5% of total gross sales.
What are the benefits of franchise?
One of the greatest benefits of a franchised business is the ability to gain use of the company’s operational procedures, trademark rights, and branding. With these licensed business advantages, franchisees can primarily rely on the established marketing of the franchised business for its sales.
Is subway the largest fast food company?
In fact, Subway is the largest fast food company in the world in terms of store count. It is one of the most popular businesses to franchise and is also known to have among the lowest franchising costs. For 2020, it is ranked #107 on Entrepreneur Magazine's " Franchise 500 Ranking .".
Is subway a licensor?
These licensing benefits give the business owner numerous advantages, including an association with an established business and the benefits of an already established branding strategy. In the fast food industry, Subway is an extremely well-established licensor of its sandwich stores. In fact, Subway is the largest fast food company in ...
Is subway a privately owned company?
Subway has a long history in the fast food business. It is a privately owned company that opened its first restaurant in Connecticut by founder Fred DeLuca in 1965 under the name "Peter's Super Submarines.". Its deep roots have allowed the company to build a strong strategic brand around its sandwiches and ...
How to find a subway franchisee?
You can easily find Subway franchisees either by looking into the company’s disclosure document (where you’ll find their contact information), or simply stopping at a Subway and talking to a franchisee.
Is subway a good franchise?
Subway must be a good franchise investment for some people because many of the franchisees have been with the company since almost its inception, and (now answering the second question) it seems impossible to “get one” in the USA.
Do subway franchisees own one unit?
Franchisees are usually willing to discuss their experiences with prospective franchisees, and if they have insights as to how to “get one” they’ll tell you. However, it seems to me that few Subway franchisees own just one unit — they own multiple units (it would be a good idea to ask them why) and so they may not be too eager to help someone buy a unit unless it’s far from where they’d like to own another one.
Why is subway franchise bad?
They didn’t have territory protection. So that’s why you see sometimes where you have one franchisee or one Subway franchise, located on one corner and then down the block, you have another Subway franchise. This is a big issue for franchisees because this leads to sales cannibalization. Where one store negatively impacts the sales of another store. And this decreases the sales for both stores.
What is the difficulty of a subway operator?
Another difficulty in the Subway operator or Subway franchisee is there’s high employee turnover. Like many food services, and businesses, there’s a lot of employee turnover. They work for a short amount of time and then they leave. And so as an owner or an operator, you need to keep finding people, constantly finding people, and train them.
Is subway a bad investment?
Our opinion is quite definitively that it is a bad investment decision, a bad franchise to invest in the U.S. at this time. And there’s a number of reasons for this. A brief summary is that Subway was founded in 1965 in Bridgeport, Connecticut by Fred DeLuca and Peter Buck. Since then, Subway has become one of the largest franchises in the world, in terms of the number of units with over 44,000 units worldwide.
Can foreigners own subways?
And one of the biggest issues for someone looking to do a Subway franchise investment is if you’re a foreign national looking and doing E-2, L-1, or EB-5 investor visa. Subway does not allow foreign nationals as franchisees in the U.S. The person needs to be a green card holder or be an American citizen. Which means it’s not even an option for someone looking to do an investor visa like the E-2,L-1, or EB-5. I hope you found this insightful. Again my name is Jack Findaro. I’m the finance director at Visa franchise. And if you’d like to learn more, please visit our website www.visafranchise.com. Thank you.
Why are subway franchisees unhappy?
Unhappy franchisees: Just google it and you will find a lot of information about franchisees who are struggling and extremely unhappy with their Subway franchise! The reasons are very diverse, from the low margins mentioned before in this article, to the aggressive expansion of the system (creating competition among franchisees), questionable marketing tactics that squeeze owner profits, and so on.
Why do people want to become a subway owner?
Undesirable Lifestyle: many of the people we talk to want to become a business owner in order to achieve a better lifestyle, have more personal time, and ability to dedicate more to their families. Well, becoming a Subway owner can bring the exact opposite. If you are planning to own a single-unit of a Subway franchise, unless you spend your time running the business, you will make very little money out of it. So you will need to be involved, and that means actively managing a business operation that is open 7 days a week, for long hours…not very appealing…
What is the highest royalties in the food industry?
One of the highest royalties charged in the food industry: Subway charges 8% royalty fees of their franchisees!! That’s one of the highest royalties charged in the food franchise industry! McDonald’s for example, charges 4%, and most other food franchises will range between 4 and 6%. When you take into account that 8% is being charged out ...
How much is subway marketing fee?
Super high marketing fee: Subway charges, in addition to 8% royalty fee, a 4.5% marketing fee. That again is charged on top of your gross revenue. So you are leaving 12.5% to Subway off the bat, and that’s not yet even discounting all the other costs you will incur (cost of goods, rent costs, employees, licenses, taxes, and more).
How much is the average gross revenue per store in 2016?
The system is showing signs of decline – per unit sales are declining: In 2016, the average gross revenue per store was U$422.5K. As compared to 4 years before, average sales per unit were U$482,000. That’s a decline of U$60,000 per store. It has been reported, in 2017, that location traffic has fallen over 25% during the past 5 years. For an inexperienced business investor, looking at the gross revenues number, it may still sound appealing, but first, you don’t want to invest in a system with declining revenues (as this is a bad sign), but also, when you consider all your costs (super high fees, rent, employment costs, cost of goods, taxes, etc), and on top of that the fact the product cost is super cheap, with very low gross margins, how much really is left for the owner…hum…no wonder why so many stores have been closing, huh!?
How many subways are there in the US?
Subway was founded in 1965 by Fred de Luca and the concept was franchised in 1974. Currently they have 25,835 locations in the US, plus 18,317 locations in 98 countries! Yes, this has been a very successful business for Fred de Luca, even though as you will see in this article, the system is showing very concerning signs of an incoming crash (for example, over the past 2 years, hundreds of stores closed each year). Even though the corporation has been successful, that doesn’t mean that for you, the aspiring franchisee, this would be a great business as well.
Is subway keeping up with new demands?
Consumer habits are changing, and Subway is not keeping up to new demands: this applies to all the mature fast-food concepts out there. The new generation of consumers are much more informed on the true nutritional value of products, and are coming with many new food habits and demands. More and more you see people looking for healthier food choices, with fresh and organic ingredients, and demands such as Vegan menu, gluten free, lactose free, etc. All restaurants with a healthy appeal, or farm-to-table concepts, tend to be always packed and very successful. Keep in mind that when you sign up for a franchise, you sign an agreement of 5 or 10 years term, and you should think about what should happen to consumer habits and market trends over this time frame and how this could impact your business. When it comes to businesses such as Subway, McDonald’s or Pizza Hut, this is an area of concern!
How much does it cost to open a subway?
Your total investment to open a new Subway franchise will range between $150,000 to $328,700. Be prepared for a $200,000 plus investment on average. Your payments to Subway will include 8% of your total gross sales as well as 4.5% of your gross sales that will be allocated to advertising. There are other fees including your local rent/license fee, equipment leases, software maintenance call us for specific details.
What does it mean when a subway has thousands of locations?
It means they have thousands of locations -and that means that you will very likely have a competing Subway store very close to your own. Then I ask if they have previous food service experience. Most don't.
What is franchise city?
Franchise city helps aspiring investors find profitable franchises. We'll tell you the good and the bad and work with you to identify and research option best suited to your operational preferences, business goals, market demand, exit strategy and other criteria. We work with several food franchises that can compare against Subway. There is no charge for our service, just like your real estate agent, and your franchise will never cost you more by using a broker. Learn more by clicking the link above.
How many subway stores were closed in 2016?
2. Store Closures and Corporate Decline. Subway had about 357 store closures in 2016, the first time ever. 864 stores closed in 2017. For the past 6 years we have been cautioning Subway investors on what appeared to be a potentially over saturated and overheated market. Despite all the red flags people are still lining up to buy this big name. It is an interesting phenomenon
Is subway legal?
Needless to say Subway has a very active legal department. Of course there are Subway franchise owners who are successful. Most of those are pioneers who invested long ago. Often those who choose to join early with emerging brands will have the most success.
How much does it cost to license a subway franchise?
In comparison, Subway franchises are much more affordable to the average small business owners in the United States. Their licensing fee is at $15,000, much cheaper than other popular food brands like McDonald’s.
How much did the subway franchise make in 2012?
In 2012, prior to Subway’s decline, the average Subway franchise generated $482,000 in revenue. By 2016, that had dropped to $422,500. These numbers have to do with the fact that more Subways are opening but are not earning as much thanks to the increased competition.
How much does subway royalty cost?
Subway’s royalty fees are at 8%, which is twice of what McDonald’s charges its franchisees at 4%. It’s a small number, but for small business owners it can mean significant thousands of dollars that could be the difference between profitability and loss.
How many subways are there in 2020?
As of 2020, there are over 41,500 Subways worldwide, all of them independently owned.
Why is the subway so fast growing?
Arguably, the reason for Subway’s fast growth and appeal to potential franchise owners is its low-cost high-return model.
How much does it cost to open a subway?
The total cost of opening a Subway is estimated at $150,000 to $300,000. In terms of franchising, that’s the cost of a less popular restaurant franchise. Yet, Subway’s popularity rivals the big names of the fast-food industry yet keeps its franchising costs low.
What is the subway's open kitchen?
Unlike other fast food restaurants like McDonald’s, you can see the fresh ingredients put into your sandwich and see to it that the Subway staff are making it according to your directions . This has allowed Subway to gain the “healthy” fast food advantage in an industry where health is a hard-to-reach advantage.
Background
Subway is the world's largest submarine sandwich chain. The company has more than 40,000 locations globally. Its becoming ta leading choice for people seeking quick, nutritious meal options that the whole family can enjoy. From the beginning, Fred DeLuca has had a clear vision for the future of the Subway brand.
Support and Training Offered By Subway
On-The-Job Training 20 hours Classroom Training 80 hours Additional Training Training available in Australia, China, Germany, India, Montreal, Canada & Miami Subway also offers in-house and third-party finance options
2022 Franchise Requirements Needed to Own a Subway Franchise
Veteran Incentives: A veteran's franchise fee waived if opening on a military or government funded location. Additionally, they'll receive 50% off the franchise fee if opening a non government location with government financing
Franchises Similar to Subway
The International Franchise Professionals Group (IFPG) is an internationally recognized membership-based franchise organization. IFPG Franchise Consultants guide aspiring business owners through the process of identifying and investing in franchise businesses. The IFPG represents more than 550 franchises.
