To assign a valuation multiple for Subway franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the Subway franchise as well as its selling price multiples.
Under $1 Million Net Sales
Estimated Selling Price = Net Sales * 0.31
$1 Million – $5 Million Net Sales
Estimated Selling Price = Net Sales * 0.34
Over $5 Million Net Sales
Estimated Selling Price = Net Sales * 0.86
Based on the median multiple of 0.31 and net sales averaging $454,877 in 2021, a Subway Franchise would sell for $141,011. The resale value is less than the midpoint investment of $364,475 by over $200,000 which indicates a very low resale value.
However, since the median multiple of net sales averaging over $5 million 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 sales would be about $6,823,155. With the median multiple of 0.86, the resale value of the 15-franchise system would be approximately $5,867,913.
So, comparing the resale value to the initial midpoint investment of $5,467,125 for the 15 franchises, we see that when you sell your Subway restaurant portfolio you could expect a $500,000 gain on your initial investment. Pretty modest for all the work required to open 15 restaurants!