How Much Does a Subway Franchise Cost?
Introduction
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.
Market Entry
There are two ways to become a Subway franchisee—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 franchises 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!
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05/14/09 at 06:05 PM
In Florida and many other states, all new stores are opened by existing franchisees. The only way to get into the system is to buy an existing store. I have also seen franchisees fight with their DA as to who get to open a new store located between the two operators.
As for buying a Subway store, be prepared to pay the price. Multiples of earnings will run at 2.5 to 3 times discretionary earnings (DE), and I have sold some for more than 3 times DE. Subways are pretty low risk investmenst, but their are poorly operated stores and stores in poor locations that tend to go on the market. Subway owners think their stores are worth a multiple of weekly sales, such as 42 to 52 times one weeks sales (as reported on their combo reports). Basing a price on sales volume can be tricky because big sales do not mean profit. A more accurate method that has served me well is selling the stores at a about 4 times EBITDA, where in this case EBITDA = (DE – the market replacement salary of a manager). This assumes the owner is managing the business and he is being replaced at market wages.
09/21/09 at 02:09 PM
Mr. Vescio:
Would you be interested in meeting someone who is looking for a Subway franchise in the Clearwater to St. Pete area? If so, send me a note.
10/13/09 at 08:10 AM
I am looking to buy a new or existing Subway in the Fort Myers, Cape Coral area in Florida.
12/10/09 at 02:12 PM
I am very interested in buying a new or existing Subway franchise in the Charlotte, Waxhaw area of North Carolina. I am also interested in finding out the steps to take in getting more information from Subway franchise headquarters. If anyone can help, it will be greatly appreciated.
01/11/10 at 10:01 AM
I am looking to purchase and existing Subway store in the Atlanta GA and the Huntsville Alabama area. I enjoyed reading the information above. Any additional information or suggestions would be truly appreciated! Have a great day!
02/08/10 at 12:02 PM
I am interested to buy a Subway in Maryland area. Anyone selling?
04/03/10 at 09:04 PM
I am interested in buying a Subway franchise with low cost in Shanghai. Anyone know how to buy a Subway store please drop a line. Thank you!
05/13/10 at 04:05 PM
I am looking to purchase an existing Subway store in Phoenix AZ. Please email me the contact.
06/03/10 at 07:06 PM
So as per the Subway website… it cost $114,800 to $258,300 to start up the store … I have 2 question / confusion 1) do we need all this money at once if not how much money should we have at the initial phase … 2) does this cost includes the store construction including the furniture, equipments etc. If you could please help me on these confusion. I have already asked for the franchise kit. Thanks.
07/12/10 at 03:07 PM
I am very interested to open several new stores in Southern California area. I have good financials and expertise.
Is there any chance on earth to be allowed to open a new store or stores in this area are all gubbled up by existing owners?
08/25/10 at 04:08 PM
Hello Davin, I am also interested in purchasing a Subway either in Atlanta Huntsville or both areas. Hit me back please.
09/23/10 at 10:09 AM
Mike Morgan,
Please contact me via email here or at (321) 255-1309. I can check to see if any Subways are currently available in that area, and if none are not available we can discuss how my staff can find one for you.
Lou Vescio
Coastal Business Intermediaries
09/28/10 at 01:09 PM
I am interested in information regarding buying a Subway franchise in Atlanta Georgia. Thank you.
10/01/10 at 01:10 AM
Hello,
I am interested in opening a Subway via a food concession trailer. Please tell me if that is even possible as I am very serious in opening a concession food trailer buisness here in Hawaii.
10/06/10 at 06:10 PM
I am interested in opening or buying a Subway in Houston, TX.
10/14/10 at 09:10 PM
I am very interested to purchase an existing or new Subway store in DFW area. I will be interested to know how this works.
11/29/10 at 04:11 PM
I am looking to purchase a Subway store in Glendale or Burbank or Eagle Rock California. Please email me.
01/08/11 at 07:01 PM
Hello,
I would like to purchase an existing Subway franchise in the Port Richey, New Tampa area. Would anyone like to change opportunities in their career? Email us with any opportunities.
Thanks,
Vic
01/25/11 at 02:01 PM
I have a question – do you guys find a location and finance?
01/27/11 at 11:01 PM
I am interested in opening or buying a Subway in Everett WA area.
02/07/11 at 08:02 AM
Anyone selling their Subway store in Maryland?
02/10/11 at 02:02 PM
I have land 6 blocks from the University of Alabama campus that would be an ideal location for a Subway restaurant. It is on 10AV in Tuscaloosa. There is an 700 apartment complex going up directly behind the property. There is not another eatery in quite some distance to this location. If interested contact me.
02/26/11 at 05:02 PM
How long does it take to receive a annual return on any given subway store? How many Subway Stores are about to open in Maryland? Is it possible for a person with a injured back to manage a Subway shop? What is the minimum amount of a return of the worst Subway shop in Prince George’s County, MD? How many Subways are for sale in Prince George’s County, MD? What is the employee turn over rate for a subway shop on average yearly?
By owning a Subway Store does that entitled the owner to more stocks within the company at a reduced rate? I’m really considering becoming a owner of a Subway Store so what other information can Subway provide me?
06/01/11 at 09:06 PM
I am interested in opening a Subway in Ko Olina, Hawaii. Could you provide more information?
06/03/11 at 11:06 AM
I am interested on buying a Subway in Louisville, Ky, but I need more info. Thank you
07/07/11 at 07:07 PM
I am looking to purchase an existing Subway / franchise store in Maryland, Washington DC, and Virginia area. Please contact me if you can help me accomplish my goals.
Thank you and hope to hear from you soon.
07/09/11 at 08:07 AM
I would like to buy or open a franchise in Chicago.
07/25/11 at 12:07 PM
I am interested in buying a Subway franchise in Miami. Can someone please help me?
08/30/11 at 03:08 PM
I am interested in purchasing an existing Subway franchise in the St. Louis market. Does anyone know of anyone selling?
11/15/11 at 01:11 AM
I am interested in buying a Subway franchise in the Toronto area.
11/15/11 at 11:11 PM
Would like more information on how to purchase a Subway franchise either in California or Florida. Would the cost of initial start up at around $15,000 or more? What is the percentage of interest on the loan?
06/26/12 at 01:06 PM
I want to buy an existing Subway store in Virginia. Please let me know your procedure. Thank you.
03/16/13 at 10:03 AM
I am looking to open a Subway franchise in Jacksonville, Florida. Please advise.
05/28/14 at 10:05 PM
Looking to purchase an existing Subway in Alaska, anybody got one for sale? Any owners past or current have an idea of annual sales in Alaska? Thanks 🙂