The Cost of Buying a Subway Franchise

Many entrepreneurs favor franchise possession over beginning distinctive companies within the small enterprise business. With franchise possession, franchisee entrepreneurs profit from licensing a longtime enterprise’s procedures and processes from the franchisor. These licensing advantages give the enterprise proprietor quite a few benefits, together with an affiliation with a longtime enterprise and the assistance of an already established branding technique.

Within the quick meals business, Subway is an especially well-established licensor of its sandwich shops. The truth is, Subway is among the many largest fast-food firms on the earth when it comes to retailer rely, with greater than 37,000 eating places. It’s no shock that additionally it is one of the vital standard companies to franchise.

Key Takeaways

  • Subway was based in 1965 by Fred DeLuca beneath the title “Pete’s Subway.”
  • Subway is without doubt one of the most ubiquitous and profitable international fast-food chains.
  • These seeking to franchise a Subway retailer can anticipate to shell out between $207,000 and $470,000 in startup prices, a $15,000 preliminary licensing charge, and pay a royalty charge of 8% of product sales and an promoting charge of 4.5% of product sales.
  • Subways are a lot inexpensive to franchise and have much less stringent monetary necessities.

Subway: An Overview

Subway has a protracted historical past within the quick meals enterprise. It’s a privately owned firm that opened its first restaurant in Connecticut by founder Fred DeLuca in 1965 beneath the title “Pete’s Subway.”

Its deep roots have allowed the corporate to construct a robust strategic model round its sandwiches and the general quick meals expertise. Between 2013 and 2017, the corporate grew aggressively. This development, mixed with much more since, has helped the whole retailer rely enhance worldwide to about 37,000 places as of 2023.

The Price of Franchising a Subway Restaurant

One of many prime promoting factors for a Subway sandwich store is the low value of opening a franchise. As step one in opening a franchise operation, the franchisee should sometimes determine a retailer web site and pay the preliminary prices. Preliminary prices for a retailer web site embody its actual property and development bills. For a Subway enterprise, it’s estimated the whole value for a franchisee ranges from $207,000 to $476,900. As well as, whilst you’re working, Subway fees you royalty charges of 8% of product sales and promoting charges of 4.5% of product sales.

Different prices are concerned in franchising the enterprise. The preliminary startup licensing charge of $15,000 is required to start the enterprise—and you should have a internet value of $150,000 with $100,000 in liquid property.

A Subway franchise is way more accessible to most entrepreneurs. As compared, McDonald’s requires a minimal of $500,000 in internet value to be thought-about for a franchise.

The Process for Franchising a Subway Restaurant

An in-depth due diligence course of is required for a franchise, and the franchisee should move a number of particular necessities earlier than getting into right into a full licensing settlement with a Subway franchisor. After being accepted for franchising by assembly the web value, liquid property, and preliminary outlay necessities, the following step for a Subway franchise entrepreneur is usually getting the enterprise web site accepted. This requires detailed market analysis and can also be the place a considerable amount of the franchisee’s capital is invested.

Upon gaining web site approval and passing the capital necessities, the franchisee enters a licensing settlement with the franchisor. One of many biggest advantages of a franchised enterprise is the flexibility to realize use of the corporate’s operational procedures, trademark rights, and branding. With these licensed enterprise benefits, franchisees can primarily depend on the established advertising and marketing of the franchised enterprise for its gross sales.

The Gross sales From a Subway Franchise

Subway sandwiches and the Subway enterprise are each well-known, which helps Subway be a number one income producer within the quick meals sandwich business. In 2021, Subway tripled its gross sales from 2019, as of the most recent accessible data.

How Many Subway Areas Are There?

In keeping with the corporate, Subway has extra places worldwide than another restaurant chain. As of 2023, there are about 37,000 places unfold throughout greater than 100 nations.

Who Owns Subway?

Subway, Inc. is owned and run by the DeLuca household. Subway was based in 1965 by 17-year-old Fred DeLuca. Headquartered in Shelton, Connecticut, every Subway franchise is independently owned and operated. As a result of it’s privately held and shops are owner-operated, Subway will not be listed on a inventory trade.

What Is Subway’s Most Fashionable Menu Merchandise?

The most well-liked sandwich varies relying on the nation a Subway is in. Within the U.S., the preferred menu merchandise at Subway is commonly the turkey breast or tuna sandwich, or Italian B.M.T. In Australia and New Zealand, the Greek lamb with tzatziki is available in first, and the shrimp avocado sandwich in Japan. Within the U.Okay., the Indian-inspired hen tikka sub is the preferred.

The Backside Line

With the advantages of a longtime enterprise, low startup prices, and mum or dad firm assist, a Subway franchise is an efficient possibility for entrepreneurs eager about opening a franchise enterprise.

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