Full Answer
How much does it cost to start a Subway franchise?
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. Subway has a long history in the fast food business.
What are the costs involved with opening a Subway franchise?
Subway is one of the cheapest major fast-food restaurants to franchise. Subway's fee for becoming a franchisee is $15,000, and startup costs, which include construction and equipment leasing expenses, range from $116,000 to $263,000, according to the company.Jul 11, 2019 Originally Answered: How much does it cost to open a Subway franchise?
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…
What is the average income of a Subway franchise?
There was a survey of several hundred owners performed by a Subway owners association that showed the average store profit is in the $28,000 per year range. Any loans taken to purchase the store (ave. store cost to build is in the $200K range) needs to be subtracted from this number.
See more
Why did Subway become a franchise?
By 1974, Fred and Dr. Buck owned and operated 16 submarine sandwich shops throughout Connecticut. But, to take the brand even further and reach their 32-restaurant goal in time, the pair decided to begin franchising — a business model that launched the Subway® brand into a period of incredible growth and popularity.
Is Subway considered a franchise?
Subway is one of the cheapest restaurant franchises to enter. Total initial investment can run between $150,000 and $328,000 for a traditional location (and $89,550 to $209,400 for a non-traditional location), assuming you lease your equipment from Subway, according to the Franchise Disclosure Document.
Is Subway a franchisee or franchisor?
With an 8% royalty fee, we can calculate the estimated average gross sales for the 22,201 franchised outlets that were open in 2020. Subway franchise is one of the most valuable privately held franchises in the world.
Is Subway a successful franchise?
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.
Do Subway franchises make money?
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.
Is McDonald's franchised?
McDonald's has been a franchising company since 1955 and has relied on its franchisees to play a major role in the system's success. Currently, about 95% of all U.S. restaurants are franchised to independent franchisees and about 5% are company-owned.
What type of business is Subway?
fast-food chainSubway, restaurant chain specializing in submarine sandwiches. In 2002 it became the largest fast-food chain in the United States, measured by number of outlets. The company operates in more than 100 countries. Headquarters are in Milford, Connecticut.
Who owns Subway now?
Doctor's Associates, Inc.Subway / Parent organization
What does a Subway franchise owner make?
The average Subway franchise generates around $400,000 in revenue, with profit averaging around $41,000 per year.
What is subways franchise fee?
For Subway, and most franchises, the franchise fee is due in full when the franchise agreement is signed. As noted in the chart above, the standard Subway franchise fee is $15,000. However, exceptions do apply. Subway currently offers a discount of the franchise fee for qualified US Veterans who purchase a franchise.
How much is it to franchise a McDonald's?
McDonald's franchisee applicants must have a minimum of $500,000 available in liquid assets and pay a $45,000 franchise fee. Those looking to launch a new McDonald's franchise can expect to shell out between $1,314,500 and $2,306,500. Existing franchise prices can cost upwards of $1 million or more.
How much does Subway make per sandwich?
According to Smart Money, Subway franchisees make a “Profit of roughly $1.20 a sandwich.” Product discounting is one of the hottest topics in franchising. Here's why: Franchisors make money off the gross sales of their franchisees, regardless of franchisee profitability.
Is Subway a corporate or franchise?
Subway is an American multi-national fast food restaurant franchise that primarily sells submarine sandwiches (subs), wraps, salads and drinks.
How long does a Subway franchise last?
Term of Agreement and Renewal: The length of the franchise term is 20 years, with the exception of satellite restaurants and the school lunch program.
Is Starbucks a franchise?
Starbucks Coffee doesn't franchise. Even though franchising is a classic, successful growth strategy for myriad beloved, familiar brands, Starbucks does not grant franchises. It's not because franchising isn't a time-tested model for growth. Many companies offer franchises.
Is Dunkin Donuts a franchise?
For savvy investors eager to establish themselves with a brand known around the world, Dunkin' is a franchise opportunity that can't be beat.
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.
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 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 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.
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!
Is there a picture of a hand scratched note on the subway door?
Late last month on a discussion forum hosted by the North American Association of Subway Franchisees, a Wisconsin store operator posted a picture of a hand-scrawled note from an irate customer taped to the front door of his shop.
Does the subway own the stores?
Subway doesn’t own any of its nearly 22,000 locations , but it charges franchisees 4.5 percent of their revenue for a national advertising fund and controls how the money is spent. Now, many store operators — particularly those in red states — say they’re facing a harsh backlash from the parent company’s decisions.
Does Rapinoe have a subway endorsement?
Rapinoe this year has inked other endorsement deals besides Subway , including a tie-up with Victoria’s Secret in June.
Why did the subway bring back the $4.99 promotion?
It started when Subway corporate decided to temporarily bring back the $4.99 footlong promotion in hopes of revitalizing dwindling sales.
What is the reason for subway's continued struggles?
That's when CBC Marketplace did DNA testing on six different fast food chicken items, including two Subway sandwiches: the Roasted Chicken Sandwich and the Sweet Onion Chicken Teriyaki.
How often do subways deliver vegetables?
They spoke to a number of Subway franchisees and managers, and found most locations only get shipments of vegetables and produce once a week. Some busy locations get fresh produce in twice a week. While Subway stated they worked with around 100 suppliers and family farms to make sure all their locations had the freshest produce available, those on the front lines had other things to say. One Pennsylvania employee said, "A lot of the lettuce we receive is often near-expiry and is already turning brown even though the bags are vacuum sealed. The same goes for tomatoes. Often they are delivered and within a week are mushy and rotting."
What does subway look like?
Subway built their brand on the idea of eating fresh, so if you've been to almost any location in recent years, you may have been surprised to find your sub toppings looking a little less than crispy, crunchy, and brightly-colored. According to Business Insider, it's not your imagination — and there's a business-breaking reason for that.
How many subways were closed in 2016?
CNN reported that in 2016, Subway closed 359 locations and 2017 was even worse. According to Business Insider, that year saw Subway closing another 909 stores across the country, and to put that in perspective, that accounts for about three percent of their domestic footprint. Closing that many stores isn't a decision that's taken lightly, ...
Is the subway franchised?
Subway is 100 percent franchised, and Business Insider said those closest to the inner workings of Subway say there's another problem going on here — too many franchisees. Mark Shearer is an attorney who has represented a number of franchise owners in lawsuits against Subway corporate, and he told BI, "This level of dysfunction has risen to the level of being flat-out evil."
Does Shearer collect franchise fees?
Shearer says corporate is less concerned with giving their franchisees a chance to grow than they are with collecting the franchise fees. Stores open right on top of each other, corporate collects the fees, and the stores are left to scramble for business. Even worse, any complaints directed to corporate, about corporate, have led to what Shearer described as "Mafia-style" techniques employed to sabotage stores. Subway, of course, says none of that is true.
