By 1974, the duo owned and operated 16 underwater sandwich shops throughout Connecticut and began franchising that year after realizing they wouldn`t reach their goal of 32 stores on time. Since then, they have rapidly expanded with their long-standing slogan “Eat Fresh”. According to its website, Subway currently operates 36,826 stores worldwide in 100 countries and territories, 56% of which are in the United States. As of December 31, 2021, the company had sold 38,878 franchises in the United States, of which 21,147 are open and 104 are in development. Subway currently offers a discount on franchise fees for qualified U.S. veterans who purchase a franchise. The franchisor also offers to finance $10,000 of franchise fees when franchisees purchase their first franchise and are eligible for its minority loan program. A similar loan program may be available to franchisees who purchase a franchise for a low-density market. The Subway training lasts two weeks and teaches business concepts, operating methods and basic management skills. Training time is spent in a classroom and on-site at a local subway franchise for hands-on experience. At the end of the two weeks, each prospective franchisee must pass an exam to become a Subway franchisee.
The typical length of time between signing the franchise agreement and commissioning the company is two to 12 months, according to Subway. A total of eight to 12 employees are also required to operate a Subway franchise. However, since the median multiple of net sales of more than $5 million on average is high at 0.86, owning multiple Subway franchises increases your earning potential from a resale. For example, if you own 15 Subway franchises, the average net income is about $6,823,155. Using the median multiple of 0.86, the resale value of the 15-franchise system would be approximately $5,867,913. Subway is the largest underwater sandwich chain in the world. The company has more than 40,000 locations worldwide. It becomes the first choice for people looking for quick and nutritious meals that the whole family can enjoy. From the beginning, Fred DeLuca had a clear vision for the future of the Subway brand. As the business continues to grow, franchisees are guided by his passion to delight customers by serving fresh and delicious made-to-order sandwiches in front of all customers. However, the resale prices listed online are significantly lower than the initial investment. We reviewed several ads of Subway franchises for sale on BizQuest.
In Florida, the highest resale price for a Subway franchise is $265,000 in Oakland Park. This is a thriving metro with a long-time loyal clientele. The lowest resale price is $50,000 for multiple subway locations. Most of them were sold due to staff reductions or moves. In Massachusetts, the average resale price is about $126,000. As a result, the resale price is significantly lower than the initial investment and is close to our estimate above. However, most of them are sold not because of the small profit, but mainly because of the change in personal career goals. A Subway franchisee can expect to invest between $139,550 and $342,400 to launch their business. This initial investment covers costs such as construction, equipment, opening inventory, marketing, etc. The cost of opening a franchise varies depending on various factors, such as the size of the restaurant, construction costs, the location of the restaurant, etc. However, Subway offers some of the lowest start-up costs for small business owners, especially compared to other franchise opportunities like McDonald`s.
Franchisees must pay an initial franchise fee of $15,000 for each store. If you are an existing franchisee looking to expand, the initial franchise fee will be reduced to $7,500. If you serve in the U.S. Armed Forces, your initial franchise fee is also $7,500. In addition to franchise fees, you are expected to invest in assets and capital. Site fees, deposits and rent should be $2,050 to $14,500, and $90,000 to $180,000 should be used to purchase equipment. Like any similar business, subway opening costs include costs of acquiring, renovating, and/or building properties, signage, fees (including licensing, accounting, and legal fees), and more. However, the determining costs for the purchase of a franchise are the franchise fees. A reduced franchise fee of $5,000 is also available to Subway franchisees looking to open a satellite restaurant – this fee is reduced to $1,000 if the satellite is in operation for a year or less. Franchise fees would be fully waived for satellite locations located in the same Subway restaurant facility. Franchise fees are essentially cover fees to enter a franchise system and to use the expertise acquired by the franchisor. This generally includes the right to use the franchisor`s system (including trademarks and operating system) and the services the franchisor provides to franchisees, such as location search assistance, training materials, etc.
For Subway and most franchisees, franchise fees are due in full upon signing of the franchise agreement. Subway employees are not permitted to make actual or potential sales claims through the food franchise. Results vary from restaurant to restaurant and cannot estimate the results or potential profitability of a franchise. That being said, the estimated average revenue from the franchise is around $450,000. This figure is based on total revenues estimated at more than $9.6 billion. Investing in a Subway franchise can be an interesting opportunity as it is one of the most well-known restaurant chains in the world. Although more than a thousand franchises have not been put into operation every year since 2019, the failure rate is still below the industry average.