Buying a Subway Franchise
Top 20 Most Popular Franchises: Subway
Vetted Biz is the leading platform for accessible and analytical data on franchises and businesses available in the U.S. Our research team has reviewed over 3,000 franchises and knows the key facts and data that signal a successful franchiseA franchise is when a business (franchisor) allows a party (franchisee) to acquire its know-how, procedures, processes, trademarks, intellectual property, use of its business model, brand and rights to sell its products and services. The franchisee signs a contract (franchise agreement) with the franchisor to acquire the franchise and generally has a territory granted to operate. What is a Franchise?... More system. Upon extensive review using a number of internet research tools, our team was able to compile a short list of the “Top 20 Most Popular Franchises in the United States.” In the article below, we review the business model proposed by one of these 20 franchises: Subway, as well as the requirements that encompass its franchise application process.
About Subway
Known for their unbeatable Spicy Italian combination, Subway was founded in 1965 by two young 17-year old friends – Fred DeLuca and Peter Buck. At the time, Peter Buck had only $1,000 to invest, while Fred DeLuca was just aspiring to pay for his college tuition with the profits being made from their small sandwich shop in Bridgeport, Connecticut. Although they went through numerous challenges throughout their first years, by 1974 the two friends decided it was time to review their business model which led them to change the brand’s name to “Subway”, and decide to begin franchising the concept. 55 years later, Subway now finds itself in over 44,750 locations across more than 100 countries. Subway is currently headquartered in Milford, Connecticut and is run by its CEO, John Chidsey, who previously served as the chairman of Burger King.
How much does a Subway Franchise Cost?
The first factor to consider when interested in investing in a Subway franchise are the financial requirements accompanying this investment opportunity. The total investment amount to establish a Subway franchise ranges from $116,000-$263,000 including the company’s franchise fee of $15,000 and excluding any land or lease costs. Once the store has been built and operations begin, franchisees are then expected to pay the parent company a royalty fee of 8% on gross salesThe total amount in dollars made in the business before expenses are deducted. See also Gross Revenue...., and an additional marketing fee of 4.5% on gross sales in exchange for the marketing services provided by the franchisor. The franchisor is particularly looking for experienced candidates who have some sort of business background and are either U.S. Citizens or green card holders. Additionally, the minimum net worthValue of all the non-financial and financial assets of a business buyer. There is usually a minimum net worth requirement to qualify as a franchisee and for bank financing.... required to own a Subway is $80,000 and the applicant must have liquid assets totaling at least $30,000.
Subway in Numbers
When evaluating a Subway’s franchise’s potential for growth one does not need to go beyond Quick Service Restaurant numbers to better understand the prospect for success of the opportunity at hand. The fast-food industry generated $200 billion in revenues in 2015 and the industry has since been expected to have an annual growth of 2.5% for the following subsequent years. Subway itself was ranked number 3 in QSR Magazine’s top 50 of 2019 losing only to McDonalds and Starbucks. Looking at the franchise’s internal performance, although limited data was made available on the financial status of the company’s franchisees, it was found that only 1,400 franchises ceased operations in 2019 – an insignificant value when contrasted with Subway’s total $23,800 locations. Moving forward, Subway is looking to establish new units across the US in order to ensure they are able to continue spreading its unique sandwich recipes across the nation.
Summary
Investing in a Subway franchise is an interesting and attractive opportunity, especially for individuals looking to make their mark in the Fast-Food Industry. This specific industry is always looking to expand, and Subway itself doesn’t let its franchisees down making sure their ranking remains at least amongst the top 10 every year. If you are an American citizen or resident with previous business management experience and are willing to invest an amount ranging from $116,000-$263,000 or more, Subway is the right franchise for you!
