The Subway franchise has become one of the most recognizable fast food restaurants in the world. It’s no surprise why: its vision for healthy, personalized meal choices, and its steady success over the past several decades have made it an excellent investment opportunity.
Still, there’s a lot of information to consider while researching the Subway franchise, and many questions can arise. Whether you’re just starting to explore franchise ownership or you’re looking to invest in a Subway franchise, it’s important to understand all elements of the process, including the costs, requirements, and risks associated with this major purchase.
In this in-depth guide for aspiring entrepreneurs, we will answer some of the most commonly asked questions about the Subway franchise. Through exploring its development, franchise costs, advertising programs, and support network, entrepreneurs can gain a better understanding of whether a Subway franchise is right for them.
What is the History of the Subway Franchise?
Subway was founded by Fred DeLuca and Peter Buck in 1965, when DeLuca was only 17 years old. His dream was to open a sandwich shop to help pay for college, and he began by opening a single sandwich shop in Bridgeport, Connecticut. DeLuca’s vision for the “submarine sandwich” quickly caught on; within five years, the duo had opened 16 shops, and by 1972 they had 16 locations and were refining their operations and expanding.
From there, Subway’s growth has been exponential. Today, there are nearly 41,000 Subway franchises around the world, and the Subway brand is one of the most well-known fast food chains across the globe.
How Much Does a Subway Franchise Cost?
When considering any franchise, you need to be aware of the many costs associated with startup, such as the initial franchise fee, developing the storefront and related equipment, and ongoing costs like food costs, staffing, and advertising.
For Subway, the total upfront investment ranges from $116,000 to $263,500, depending on the type of franchise you choose. The initial franchise fee is $15,000, and a royalty fee of 8% of gross sales is paid on a weekly basis. Alongside this fee, you’ll need liquid funds of $30,000, and a net worth of at least $80,000.
Significantly, Subway also has a higher-than-average advertising fee, which is 4.5% of gross sales. This can be a major factor to consider for aspiring entrepreneurs when analyzing a potential return on investment.
What Types of Subway Franchises are Available?
One of the benefits of investing in the Subway franchise is the range of franchise types available. Subway’s main two types of franchise owners are: traditional franchise owners and multi-unit owners.
Traditional franchise owners operate a single Subway location, often times augmented by non-traditional partnerships. Non-traditional partnerships are exactly what they sound like; they are owners who have a single location in unconventional places, such as airports, military bases, universities, and hospitals.
Multi-unit owners are entrepreneurs who own and manage multiple Subway locations. Depending on the size, these owners may receive cost savings on certain items, access to larger marketing and promotion opportunities, or the ability to have custom training programs developed specifically for their group.
What Advertising Opportunities are Provided by Subway?
Subway sponsors marketing campaigns both nationally and on a localized level. On a national level, Subway participates in national sports sponsorships, media buying campaigns, special events, and its “Win with Subway” contest. On a localized scale, Subway pays for and provides franchise owners with marketing materials and campaigns to build brand awareness and increase sales.
Subway also offers marketing programs such as MyWay Rewards, which serves at the national loyalty program. Franchise owners can take advantage of these programs to improve customer loyalty and increase profits.
What Support is provided with Subway Franchises?
Subway provides two types of support for franchise owners: pre-opening and ongoing.
For pre-opening support, Subway provides support materials such as operational documents and guidelines, décor toolkits, and promotional materials. These are all designed to help entrepreneurs create an effective working plan before the business opens.
Subway also offers ongoing support services, which include employee training, operational management advice, financial analysis, and marketing planning assistance. These services help Subway franchise owners succeed in the long-term by providing comprehensive assistance.
With so many franchise options available, it’s important to consider all of the factors of each before making an investment decision. For those considering a Subway franchise, understanding the costs, types, advertising opportunities, and support provided is essential for a successful store.
By exploring the history, costs, types, and support offered by Subway franchises, entrepreneurs can make an informed decision on whether or not Subway is the right franchise for them.