How Much Does a Subway Franchise Cost?
Two school buddies started a sandwich shop in 1965 in Bridgeport, Connecticut. After perfecting and streamlining the operation over the ensuing nine years, they decided to franchise the concept and offer what they considered a healthier alternative to the standard fast-food fare commonly found in hamburger and hot dog joints. As of 2008, the Subway family has grown to more than 30,000 stores across the United States, Canada, and eighty-plus foreign countries.
Franchise and Other Fees
The initial franchise fee to own a Subway location is $15,000, which one must pay at the time the franchise agreement is signed. The parent company estimates that one’s initial investment will run between $80,000 and $240,000, plus there is an annual royalty fee of eight percent, which is figured on each store’s gross sales volume. The total investment mentioned above also happens include what the company estimates it would cost the average operator to run the business for its first 90 days. As with any new business, it is always a good idea to know not only your out-of-pocket expenses, but also how much it will cost to keep things running while you are busy building your client base.
There are two ways to become a Subway —open a new store or purchase an existing operation. The company provides loan assistance and complete financial support for its owners, no matter which path to success you might choose. For new stores, Subway offers consulting services to assist in finding the right location, designing the store’s interior, and getting a local marketing program up and running. For buyers of existing locations, the company can provide loans for remodeling and expansion. Either way, new owners attend an intensive, two-week raining course that teaches basic business operations, management techniques, and hiring skills—both in a classroom setting as well as onsite in an actual Subway restaurant. Follow-up educational opportunities exist for store managers and those who own more than one location. Given the company’s growing interest in an international market, training facilities can be found as far away as Australia, China, Russia and South Korea.
A Ton of Sandwiches
In the U.S. alone, it is estimated that Subway shops serve nearly 3,000 sandwiches and salads every minute! As an operation, Subway consistently ranks first among all as measured annually by Entrepreneur Magazine. For 2007, Subway’s sales were $8.2 billion for the U.S. alone and $11.3 billion worldwide. That accounts for a lot of Italian BMTs!