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Here’s How Much It Really Costs to Open a Subway Franchise
Opening a Subway franchise can be an exciting venture for entrepreneurs looking to break into the fast food industry. With more than 21,000 franchises operating in the United States, Subway offers the appeal of being your own boss, benefiting from a well-established brand, and receiving ongoing support from corporate headquarters. However, before jumping into this business opportunity, it is important to understand the costs associated with opening a Subway franchise.
The Affordability of a Subway Franchise
Subway has earned a reputation as one of the most affordable franchises in the fast food industry. This affordability factor has contributed to its extensive network of 41,600 stores worldwide as of 2019. According to Investopedia, the low cost of entry is one of the main reasons for the popularity of Subway franchises.
Calculate Total Cost
When considering the cost of opening a Subway franchise, it is important to factor in several expenses. Franchise Direct estimates that the total cost for the first three months of franchising a Subway can range from $100,550 to $342,400. Actual costs will vary depending on factors such as the location of the restaurant and whether it is a traditional stand-alone location or a non-traditional location in a gas station, airport, sports arena, national park, or other similar venue.
The Franchise Fee
One fixed cost associated with opening a Subway franchise is the franchise fee. This fee, currently set at $15,000, is an initial royalty paid to Subway. It grants the franchisee access to the Subway trademark, operating system and training. According to Franchise Direct, the franchise fee is due at the time the franchise agreement is signed.
Franchise fee exceptions
While the franchise fee is generally set at $15,000, there are exceptions to this rule. Veterans interested in opening a Subway franchise are eligible for a special franchise fee discount. In addition, qualifying school lunch sites and oil company retailers may have the franchise fee waived entirely, according to Franchise Direct.
Other Costs
In addition to the franchise fee, there are several other costs that prospective Subway franchisees must consider. Start-up costs include expenses related to real estate, construction and equipment leasing. These costs can vary widely, often running into the hundreds of thousands of dollars.
Another essential financial requirement is the need for liquid cash. Franchise Direct states that new franchisees should have at least $30,000 in an emergency fund. This reserve is critical to cover unexpected costs that may arise during the early stages of franchise development.
Expected sales and return on investment
Once a Subway franchise is up and running, it’s important to consider the potential return on investment. According to Insider, the average Subway franchise can expect to generate approximately $422,000 in annual sales. However, it’s important to note that individual franchise performance can vary depending on factors such as location, marketing efforts and local competition.
Bottom Line
Opening a Subway franchise offers entrepreneurs the opportunity to become part of a well-known brand with a proven business model. While the cost of opening a Subway franchise can vary depending on several factors, it is important to carefully evaluate the financial requirements and potential returns before making a decision. By considering all necessary expenses, including the franchise fee, start-up costs and cash requirements, prospective franchisees can make an informed decision and embark on a successful Subway franchise journey.
FAQS
What makes Subway franchises affordable compared to other fast food franchises?
Subway franchises are known for their affordability due to the relatively low cost of entry, making them an attractive option for entrepreneurs.
What is the franchise fee to open a Subway franchise?
The franchise fee to open a Subway franchise is currently set at $15,000, payable at the time of signing the franchise agreement.
Are there any exceptions or discounts to the franchise fee?
Yes, veterans are eligible for a special franchise fee discount, and qualifying school lunch sites and oil company retailers can have the franchise fee waived entirely.
What are the other costs associated with opening a Subway franchise?
In addition to the franchise fee, prospective Subway franchisees must consider start-up costs, which include expenses related to real estate, construction and equipment leasing. They should also have at least $30,000 set aside for emergencies.
How much can a Subway franchise expect to make in annual sales?
On average, a Subway franchise can expect to earn approximately $422,000 in annual sales. However, individual franchise performance may vary based on factors such as location and local competition.
What kind of support can franchisees expect from Subway corporate?
Subway franchisees benefit from built-in brand recognition, a fixed menu, and ongoing corporate support, including training and operational assistance.