Subway Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$190,000

-

$522,000

OPERATING PROFIT

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Emily

Updated

February 20, 2024

Is

Subway

a franchise?

Yes,
Subway
is a franchise and
currently
accepts
franchise
applications

Subway, a global fast-food chain with its headquarters in Milford, Connecticut, offers a broad spectrum of submarine sandwiches, wraps, salads, sides, and drinks.

Established in 1965 by a 17-year-old Fred DeLuca, with financial backing from Peter Buck, it initially operated as Pete's Super Submarines out of Bridgeport, Connecticut. The brand embarked on its franchising journey in 1974, and by 2019, it had opened 41,600 outlets across over 100 nations, inclusive of 24,129 franchises in the US.

Today, Subway holds the title of the largest single-brand restaurant chain worldwide. For aspiring entrepreneurs and investors, owning a Subway franchise could be the golden ticket to investing in a well-recognized sandwich franchise known for its fresh, convenient, and budget-friendly offerings.

Franchisees have the advantage of a robust franchise framework, a validated business concept, a globally recognized brand, and a flexible business model adaptable to a myriad of sizes, forms, and locales.

How many

Subway

franchises

are there?

In 2022, there were
20576
outlets in the United States, of which
20576
are franchises, and
0
are corporate-owned.

What are the

Subway

franchise

fees?

Initial franchise fee

$15,000

Royalty fee

8.0%

Advertising fee

4.5%

Initial Franchise Fee ($15,000)

The initial franchise fee for a Subway franchise is $15,000 per unit. This fee compensates Subway for its selling, administrative, and training expenses. The breakdown of Subway's estimated pre-opening expenditures per sale are as follows: selling - $3,750, training - $3,750; site assistance - $3,750; administrative - $3,750.

There are some variations and additional fees mentioned in the document, including a reduced fee for certain conditions, a fee for satellite restaurants, and additional fees if certain compliance conditions are not met (Item 5 of the 2023 FDD).

Royalty Fee (8%)

Franchisees are required to pay a royalty fee equal to eight percent (8%) of Gross Sales of the Restaurant on a weekly basis or other periodic basis that Subway may determine from time to time (Item 6 of the 2023 FDD).

Advertising Contributions (4.5%)

Franchisees are also required to pay advertising contributions equal to four and one-half percent (4.5%) of Gross Sales of the Restaurant on a weekly basis or other periodic basis that Subway may determine from time to time (Item 6 of the 2023 FDD).

How much does

it cost

to start a

Subway

franchise?

It costs between
$190,000
and
$522,000
to start a
Subway
franchise.

Starting a Subway franchise involves various costs. The total estimated initial investment range for a traditional Subway franchise is $229,050 to $589,800.

Below is a breakdown of these costs:

Type of Expenditure Amount
Initial Franchise Fee $15,000
Real Property $2,000 - $12,000
Leasehold Improvements $40,900 - $200,000
Equipment $44,750 - $194,400
Freight Charges $2,450 - $3,550
Security System $2,000 - $14,000
Insurance $1,000 - $6,000
Supplies $500 - $2,500
Training Expenses (including travel & lodging) $1,000 - $4,000
Legal and Accounting $1,300 - $3,500
Grand Opening Advertising $1,000 - $3,250
Miscellaneous Expenses (business licenses, utility deposits, & small equipment) $4,000 - $12,000
Additional Funds for three months $26,000 - $42,000
Total (For a Traditional Location) $229,050 to $522,300
Total (For a Non-Traditional Location) $189,550 to $389,300

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Does

Subway

provide

training

to its

franchisees?

Yes,
Subway
provides training to its franchisees.

Subway provides a comprehensive training program for franchisees to ensure they are well-equipped to operate a Subway® restaurant successfully. The training is structured and is required to be completed before the franchisee opens for business.

It is recommended that the training be scheduled as close to the restaurant opening as possible for maximum effectiveness.

The training program comprises both online and in-person sessions. The in-person sessions are led by FWH Trainers at regional training centers, and there's also "on-the-job" training conducted at a Subway® restaurant.

The classroom work accounts for approximately 15 hours, on-the-job training comprises approximately 60 hours at nearby restaurants, and there are also two to three hours of homework per evening.

Does

Subway

provides

territory

protection?

Franchisees do not receive an exclusive territory. They may face competition from various sources, including other franchisees, outlets that the franchisor owns, or other channels of distribution or competitive brands controlled by the franchisor.

The rights granted to franchisees are limited to their franchised business location and any additional business locations designated under an Additional Business Amendment to the Franchise Agreement.

If the franchisor offers the opportunity to operate a food truck as an extension of an existing Subway Restaurant location, the food truck can only be used and operated at locations registered and approved by Subway.

Can a

Subway

franchise

be run as

a passive

investment?

A Subway franchise can be run with a recruited acting manager, especially in scenarios where the franchisee operates more than one franchise or does not devote their full time to conducting the restaurant business.

In such cases, the franchisor requires the franchisee to designate one or more competent managers who have completed the necessary training requirements to hold the position of full-time managers for the restaurant.

These designated managers are referred to as "Designated Managers."

The Designated Manager is not required to own an equity interest in the franchise entity and can handle the day-to-day operations of, and reporting requirements for the restaurant.

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