Overview of the SUBWAY® Franchise
The SUBWAY® Franchise Concept: Low investment - low overhead - simple operation (no cooking involved) alternative to what other quick service restaurants are offering.
Franchise Fees :
The initial fee is $15,000 for a new store or $7,500 (or less) for an existing store. not a full restaurant.The franchise agreement is for 20 years and is renewable for an additional 20 years without a fee at which time you would sign a new franchise agreement. The franchisee can sell their store at anytime, provided the company approves of the buyer. The initial franchise fee can be applied towards the purchase of an existing location.
The total investment can range from $114,800 to $258,300 for traditional locations and $84,300 to $200,100 for non-traditional locations. Figures do not include extensive exterior renovations. These amounts represent the net investment required if you are eligible for the company's equipment leasing program. If you do not select the equipment leasing program or it is not available, you should substitute the costs for Equipment Lease Security Deposit with $80,000. We suggest that store owners have half of the amount in cash and finance the other half. We prefer that a franchisee does not carry a large debt service.
The SUBWAY® franchise system offers an equipment leasing package that requires a security deposit of 10% of the equipment costs, with a minimum of $1,000. The lease payments are for 60 months. At the end of the lease term you may purchase the equipment for 10% of the original value. The security deposit will be applied towards the purchase. The equipment may be purchased at any time during the lease period using the buyout calculation schedule. For additional information you must refer to the Franchise Disclosure Document.
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What Does a Development Agent Do:
We are franchise brokers licensed under contract and assigned geographical areas and their duties include franchise sales, site selection, training and operational assistance to franchisees. Development Agents also make recommendations as to whether a prospective franchisee in their territory should be granted a franchise. Further information regarding the relationship between Franchise World Headquarters and the Development Agents can be found in the Franchise Disclosure Document
Royalties: You will pay 8% of gross sales minus sales tax to the company on a weekly basis.
Advertising: You will contribute 4.5% of gross sales minus sales tax to the Subway Franchisee Advertising Fund Trust.
SFAFT: The North America Advisory Board with 12 members (one from Canada) is elected by their fellow franchisees. They serve as an advisory board to the Trustees. In the U.S., the 4.5% is broken out as follows:
Global Admin 6.99%
Ad Production/Agency Fees 4.99%
US National Media 51.19%
US Local Markets 36.83%
Conducting Your Research
Obligation to Participate: We strongly recommend you personally devote a substantial amount of time to the franchise business. Franchisees who do not devote their full time to the establishment, operation, and supervision of their restaurants, may have lower sales, higher costs, and less name recognition than franchisees who do devote their full time to their business. Your day-to-day tasks could include supervising employees, checking inventories, reviewing sales and food costs, bookkeeping, and making reasonable efforts to ensure smooth and efficient operations. You must keep your restaurant open within the hours specified in the Operation Manual, subject to local regulations, unless we approve different hours in writing. Further information pertaining to this, can be found in our Franchise Disclosure Document under the table of contents entitled "Obligation to Participate in The Actual Operation of The Franchise Business."
Once you receive the Franchise Disclosure Document you can contact other franchisees to conduct you research. The following is a recommended guide to assist you.
Contacting Other Owners in Conducting Your Research
Company representatives are prohibited from providing profits and projections. Actual results vary from unit to unit and the franchiser cannot estimate the results of any particular unit. To obtain this type of information, the best source is to contact existing owners. Here is the best procedure to follow:
1. Call owners from the list in the Franchise Disclosure Document.
2. When contacting owners, inform them that you have received the disclosure document from us and when visiting stores, bring the
disclosure with you. This will make the owner more receptive to answering your questions.
3. Ask franchisees about our cost control systems.
4. When investigating, ask the owner what the average weekly volumes, food costs and labor costs are for their area. From this point you
should ask the owner if he fall into this range. If someone is selling his store he will be more receptive to your review of his records.
5. Compare stores and employee interaction with the customers. Ask yourself: "If I owned this business, would I be satisfied with the store's
cleanliness? Do the employees appear professional? Are they greeting the customers cheerfully and practicing suggestive selling?" If you
put yourself in the picture, you will be able to analyze the business to our standards.