Information on a Subway Franchise
Buying into a franchise offers many benefits to those looking to start a business. Franchise owners buy a "kit" from a known corporate entity, which they use to start their business. The relationship between the franchise owner and the corporation persists until one party ends it, with the owner purchasing inventory and selling tools only through the corporation.
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The Subway Chain
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Subway is owned by Doctor's Associates, Inc. and as of May 2010 operates 32,907 restaurants around the globe. It is the second largest restaurant operator in the world and the largest single-branded chain. Subway successfully markets its sandwich-style fast food as a healthier alternative to traditional fast food, boasting several low calorie options for its customers. Subway continues to expand its business, and recently launched breakfast service.
Benefits of a Subway Franchise
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In January 2010, Subway was ranked #1 on Entrepreneur Magazine's 31st Annual Franchise 500 list, an honor it claimed in 2009, 2007 and 2006 as well (placing 2nd in 2008). Franchise owners take advantage of Subway's extensive national advertising and the good will that Subway has generated with the public over the last several years. Subway sandwiches are quick and easy to prepare, and a restaurant can be operated in a very small space, which saves on operating costs.
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Features of a Subway Franchise
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Subway provides its franchise owners with signage and promotional materials to display inside the store. Furthermore, they will provide training and support to help the new franchise get started. Subway requires a royalty fee of 8 percent from all franchise owners, plus a 4.5 percent advertising fee.
The Cost of Starting a Subway Franchise
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Subway offers a few different design plans for its restaurants including smaller setups for shopping malls, turnpike plazas or airport terminals. The traditional restaurant setup, with a street-side location, is by far the most common. The estimated cost of starting a subway franchise is between $114,000 and $258,300 for the first three months, depending on the chosen location and locality, which are determined by the franchise owner. The majority of the cost must be paid in various lump sums up front.
Considerations
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Subway is far from alone in the quick-service food industry and competitors are eager to get in on the non-traditional fast food market. This market, termed "fast casual," includes other fast-growing competitors as Chipotle (owned by McDonald's Corporation) that also offer health-conscious selections. Economic downturns often affect food service industries more than other businesses as consumers tend to eat-in more often, and this is a persistent threat to Subway's business. As with any business, a good location is essential to success, so it is up to the franchise owner to do his footwork too.
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