Subway Franchise Costs, Fees & Owner Salary (2023)

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).

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:

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.

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.

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.