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Subway Franchise Costs $190K – $522K (2024 Fees & Profits)

Subway, one of the world’s largest quick-service restaurant chains, was founded in 1965 by Fred DeLuca and Dr. Peter Buck. Initially named “Pete’s Super Submarines,” the first store opened in Bridgeport, Connecticut. The franchise quickly gained popularity, and by 1974, Subway began franchising, allowing the brand to expand rapidly across the United States and globally. Today, Subway is headquartered in Milford, Connecticut, and has more than 37,000 locations in over 100 countries, making it a ubiquitous presence in the fast-food industry.

Subway’s menu is renowned for its customizable and freshly made-to-order sandwiches, wraps, salads, and bowls. This emphasis on fresh, personalized meals sets Subway apart from many competitors in the fast-food sector. The brand prides itself on using quality ingredients, including freshly baked bread and a wide array of toppings, which allows customers to tailor their meals to their preferences. This focus on customization and freshness appeals to a broad customer base seeking healthier, convenient food options.

The Subway franchise model is designed to be accessible, offering a relatively low initial investment compared to other quick-service restaurants. Franchisees benefit from comprehensive support, including training programs, marketing initiatives, and ongoing operational assistance. This support structure has been instrumental in Subway’s growth, enabling local entrepreneurs to thrive under the brand’s well-established name and operational system.

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Initial investment

Type Of ExpenditureAmount
Initial Franchise Fee$15,000
Real Property$2,000 to $12,000
Leasehold Improvements$75,000 to $200,000
Equipment, Furniture and Décor$97,200 to $194,400
Optional Security System$2,450 to $3,550
Freight Charges$8,000 to $14,000
Outside signage$2,000 to $8,000
Opening Inventory$4,400 to $6,050
Insurance$1,000 to $6,000
Supplies$500 to $1,300
Training Expenses$2,500 to $4,500
Legal and Accounting$1,000 to $3,500
Grand Opening Advertising$2,000 to $4,000
Miscellaneous Expenses$4,000 to $8,000
Additional Funds – three months$12,000 to $42,000
TOTAL$229,050 to $522,300
TOTAL for a Non-Traditional Location$189,550 to $389,300

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Franchise Fee

The standard franchise fee is $15,000. A reduced franchise fee of $7,500 is available, with an additional $3,750 for each owner who is not an existing Subway® franchisee. For satellite locations, the franchise fee is $5,000, and for short-term satellite locations, it is $1,000. The add-on franchise fee is $11,250.

Royalty Fee

The royalty fee is 8% of gross sales. This fee is collected regularly based on the franchise’s revenue.

Marketing/Advertising Fee

Franchisees are required to contribute 4.5% of their gross sales to advertising efforts. This fee supports both local and national marketing campaigns.

Lease or Rent Fee

Estimated lease or rent fees range from $1,000 to $6,000 per month. These fees can vary based on location and specific lease agreements.

Transfer Fees

The standard transfer fee is 50% of the current standard initial franchise fee, which is approximately $7,500. An additional fee of $3,000 applies for transferring a satellite restaurant.

Renewal Fees

The renewal fee is 25% of the current standard initial franchise fee. This fee is required to renew the franchise agreement for an additional term.

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Franchise pros and cons

The Pros:

  • Simple franchise formats: The franchisor has simple franchise size requirements of 900–1,000+ square feet, making it easy for franchisees to fit into any available real estate opportunity.
  • Multi-unit operations: Subways presents its franchisees with multi-unit opportunities and a chance to increase their investments and earning potential.
  • Flexible franchise formats: The franchisor has a variety of options for its franchisees to choose from: big and small, walk-in drive-thru or built-into high-traffic locations such as convenience stores and gas stations, which gives them additional income streams.
  • Comprehensive training and support: Subway has a detailed 2 weeks intensive online and classroom training program to equip its franchisees with the basics of the business and how to run their franchises successfully.
  • Marketing and branding: The franchisor provides its franchisees with solid marketing systems such as a national advertising program and local store marketing promotional campaigns to help them promote their restaurants and reach a broader geographical market.
  • Site selection: Franchisees get assisted with real estate services to identify a suitable restaurant location in terms of traffic and competition. In addition, it helps them in lease negotiation and construction.
  • Franchise financing: Subway offers its franchisees in-house and third-party financing to cover the franchise fee, equipment, startup costs, and inventory.
  • Passive investment: The franchisor allows for semi-absentee ownership and its franchisees can operate their franchises alongside other obligations.

The Cons:

How to open

1. Research and Understand the Franchise Opportunity

  • Review Subway’s Franchise Information:
    • Visit the Subway franchising website to gather detailed information about the franchise, including investment requirements, support systems, and training programs.
    • Understand the brand’s mission, values, and operational procedures to ensure alignment with your business goals.
  • Assess Your Financial Readiness:
    • Calculate the initial investment, which includes the franchise fee (ranging from $10,000 to $15,000), and additional costs such as equipment, leasehold improvements, and working capital.
    • Ensure you have access to sufficient funds or financing options to cover these expenses.

2. Submit Your Application

  • Complete the Franchise Application:
    • Fill out the franchise application form available on Subway’s franchising website. Provide accurate information about your background, financial status, and business experience.
    • Submit any required documents, such as financial statements or proof of funds, as part of your application.
  • Interview and Evaluation:
    • Participate in an interview with Subway’s franchise team. This step is crucial to determine your suitability and readiness to operate a Subway franchise.
    • Undergo any required assessments or evaluations, such as a basic skills test focusing on English and Math.

3. Secure a Location and Sign the Agreement

  • Find a Suitable Location:
    • Work with Subway’s real estate team to identify and secure a location for your restaurant. Consider factors such as foot traffic, visibility, and proximity to other businesses.
    • Conduct a thorough market analysis to ensure the selected location has the potential for high customer traffic and profitability.
  • Sign the Franchise Agreement:
    • Review the Franchise Disclosure Document (FDD) carefully. This document provides comprehensive details about the franchise relationship, including rights and obligations.
    • Sign the franchise agreement and pay the initial franchise fee to officially become a Subway franchisee.

4. Training and Opening Your Restaurant

  • Attend Training Programs:
    • Complete Subway’s mandatory training program, which includes both classroom and on-the-job training. Training centers are located worldwide, with the main center in Milford, CT.
    • Learn about Subway’s operational procedures, food preparation standards, customer service, and management practices.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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