Subway® franchises are everywhere. They’re also high on the list for people looking to be in business for themselves. So, if you want to learn how to buy a Subway franchise, along with the costs* involved, read this post in its entirety, so you can learn all you can about this wildly-popular fast food franchise.
*According to the Subway franchise website, “Subway restaurant franchises have some of the lowest start-up costs in the industry.”
I think you’ll like this step-by-step article on exactly how to buy one of the most popular food franchises in the world; Subway.
You never know; maybe owning a food franchise like Subway is in your future!
Important: This is a lengthy, detailed post.
With that in mind, if you’re serious about buying a Subway franchise, I encourage you to read it in its entirety. I’ve included a lot of useful tips you can use right away.
The Subway Restaurant Franchise Is Humongous
Do you know how big Subway is?
Check out the information Wikipedia has regarding the size of Subway:
“Subway is one of the fastest-growing franchises in the world, with 44,882 restaurants in 112 countries and territories as of December 27, 2016. The United States alone has 26,646 outlets. It is the largest single-brand restaurant chain and the largest restaurant operator in the world.”
Equally important is the The Subway brand – which is a powerful and recognizable. It comes in at #7 out of 25 for top restaurant brand value (2017) according to Brand Finance. It’s also huge.
As shown below, the Subway brand has a bigger footprint than that “other” well-known fast food franchise brand.
As you can see, a franchise brand (Subway) with almost 45,000 restaurants worldwide is a sight to behold.
Are you interested in possibly owning one? (Or several?)
The “Old” Subway Franchise Opportunity
Check out what I wrote about buying a Subway franchise a few years ago.
“It used to be ‘pretty easy’ to buy a Subway® franchise, but I’m not sure if it still is. I’m from the school of thought that franchisors should only sell franchises to the best of the best. I would actually like to see less franchises sold, but to higher-quality franchise candidates who could potentially make more profit. Franchisors generally like to see more franchises sold to more people.”
Important: When I got started in franchising, word on the franchise business street was that the Subway franchise development team would
award sell “practically anyone” a franchise. Even those with limited financial resources. Now, that may have been true back in the day-I don’t have any concrete facts to back it up, but I believe it. (But not in a conspiracy theory type of way)
For the purpose of this article on how to buy a Subway franchise, let’s assume that the team tasked with selling franchises at Subway corporate these days only awards franchises to people who have the financial resources required, along with the right skills and personal traits to be successful.
With those things in mind, let’s dig in.
Buying A Subway Franchise: The Process
The process of buying a Subway franchise is no different than buying any other franchise opportunity that’s currently being offered. The purchasing and research steps are exactly the same.
Wait: scratch that. There is one difference: Subway is a fast food franchise. And a lot of people who are interested in this huge brand have never worked in the food-service industry. Have you?
In other words, the food-service industry is a tough one. The hours are incredibly long, the human resource issues are super-frustrating, and most food franchisees find themselves working in the business, way more than they thought they would.
Again: The Food-Service Business Is Hard
I’m going to assume that you’re not afraid of hard work.
Having said that, it’s important to know that your vision of what your role is going to be as a food franchise owner may not mesh with what it will actually turn out to be. As a result, as much as you’d like to be the person who gets to schmooze your customers during peak traffic times, attend local daytime business networking events, and work on your local marketing efforts-you may not be able to do those things. Are you going to be alright if that happens? Or, will you be a person who wishes she’d never bought a Subway franchise?
“Joel, you are really scaring me. It’s almost like you are trying to talk me out of buying a Subway franchise…any food franchise.”
On the contrary-I’m not.
To clarify, I just want you to know what you’re getting yourself into if you choose to go down the food franchise ownership route. And since I worked in food service for years…
The bottom line: Wouldn’t you like to know as much as humanly possible about Subway-or any food franchise, before you invest $150,000+ into a business you can call your own?
How Much Is A Subway Franchise?
Before we get in too deep, I think it’s important for you to know how much money it will cost you to open a Subway in your hometown.
Here are the latest startup costs courtesy of the Subway franchise website:
The initial franchise fee is $15,000, and the total upfront investment ranges from $105,800-$393,600+.
The reason that there’s such a large cost spread: You have lots of different choices when it comes to the specific type of location you can open your restaurant in. Plus different parts of the country have different costs for real estate etc.
Subway Franchise Cost: How To Buy A Subway® Franchise
The first thing you need to do, if you want to do this right, is perform a self-check. This involves taking a hard look at yourself-and your past.
For example, how do you feel about rules?
A. Do you believe in them?
B. Have you followed them in the past?
C. Do you follow them now?
I reason I’m asking is because the franchise business model is a rule-based, highly-structured one. There’s not a lot of wiggle room in how you operate your business.
In the case of Subway, if the operating manual calls for 3 scoops of tuna salad on their famous 6-inch tuna sub, (using the official Subway scooper, of course) that’s how much tuna salad is put on the sandwich. Not 2 scoops. Not 4 scoops. Got it? Do you need another example?
I didn’t think so.
Next: Assuming you’ve determined that you’re a rule-follower, (either on your own, or by taking my free franchise quiz) you can move to the next part of the Subway franchise purchasing process.
Subway Franchise Update
One of things you need to do when you’re investigating a specific franchise opportunity is to stay up-to-date on any changes the brand is making. That includes costs.
For instance, did you know that Subway has been making a lot of changes in the way they present their products? Did you also know that the store design has been updated?
In fact a lot of things are changing at Subway.
To find out what they are, watch this Business Insider video. (Important!)
Your Business Experience
Have you ever worked in a restaurant?
The reason I’m asking is that if I was charged with awarding franchises for Subway, food-service experience is something I would prefer to see in my franchise candidates.
Notice I wrote the word, “prefer.”
On the whole, I feel it’s advantageous for people interested in owning a Subway franchise to have food-service experience. The reason: People who have worked in restaurants know how hectic things can get; they also know about (and have experienced) many of the things that can (and do) go wrong during a busy lunch or dinner hour. In the food-service business, a bad day is really a bad day.
On the other hand, if you’ve never worked in food-service, but you’ve managed people and things, I wouldn’t turn you away. That’s because Subway owners have to be good managers.
Are you a good manager? Are you highly organized?
If so, keep going.
If not…maybe you shouldn’t be looking into a Subway franchise-or any food franchise.
Request Information From Subway
This is where things get interesting. And exciting!
First off, go to the Subway franchise website- http://www.subway.com/en-us/ownafranchise
You’ll see a button that says “Register Your Interest.” Go ahead and click it.
This is what you’ll see.
As you can see, the information Subway wants is pretty basic. Their franchise information request form is pretty standard. Notice you’re not asked anything about your financial* capability. Yet. But you will be. Your Subway franchise representative will ask you for a net worth statement when you get asked to fill out the formal franchise application.
*If you haven’t calculated your net worth, now would be a great time to do so. Just use my free net worth calculator.
Are you with me so far?
FYI: This is the point of the franchise investigating/purchasing when most people start freaking out a bit.
“I’m really doing this?”
There’s something about physically filling out a “Request for information” form that tends to increase one’s blood pressure.
It’s like a “This sh*t is real” button has been pressed. Reality rears it’s ugly head.
Attend The Subway Franchise Video Seminar
While you’re waiting to hear back from a member of the Subway Franchise Development Team, set aside some time to go through the Subway Video Seminar. You’ll be glad you did.
The video seminar includes a good deal of information about the opportunity, and more. The seminar is located on the right-hand side of this webpage. Do it!
Bonus: The franchise development team at Subway may take you more seriously than someone who didn’t watch the video because watching it really prepares you for the Subway franchise purchasing process…the “how-to’s.”
International Franchise Opportunities
Subway franchise opportunities are available all over the globe.
So, if you’ve landed on this post from another part of the world-and you’re interested in how to buy a Subway® franchise in your neck of the woods, click one of the links below.
Global Subway Franchise Opportunity Links
Subway Franchise Opportunities Canada
Subway Franchise Opportunities Australia
Subway Franchise Opportunities U.K.
Subway Franchise Opportunities New Zealand
Subway Franchise Opportunities South Africa
Subway Franchise Opportunities Israel
Subway Franchise Opportunities Russia
Subway Franchise Opportunities Pakistan
A Quick Note
I feel that it’s important for you to know that I don’t work for Subway. I don’t do any paid marketing for them either.
With that in mind, the primary reason I wrote this post on how to buy a Subway franchise is because there’s always a lot of interest in food franchises like Subway from people who want to be their own boss. I’m providing information you can use right away if you want to buy a Subway franchise business. I’m not promoting Subway as the right franchise for you.
If you’re interested in buying a Subway franchise, use the step-by-step information I’ve provided here as a guide. Ultimately, you’re the person who has to make the yes or no decision on purchasing a Subway franchise business. (Or any business) You have to do the research. And you’re the one who has to determine your ability to finance the venture.
The first call you have with your local Subway franchise representative should be pretty informal. You’ll get to know one another a bit. Your rep will ask you a few questions. You’ll get to ask questions, too.
If you like what you hear on the call, (and the rep likes you-and feels you’re qualified for a franchise) you’ll be told what the next steps are and how long they’ll take to complete.
For instance, you may be asked to participate in pre-planned conference calls with existing franchisees.
In addition, you may be asked to get on a few calls with Subway staff members from operations, marketing, IT, customer service, and Real Estate. These calls are great because you get to know what their roles are within the company, along with how they’ll be able to help you now and in the future.
Generally speaking, you should plan on being on your phone a lot during the franchise purchasing process.
Subway Franchise: The Purchasing Steps
The next sentence is important.
Make sure you follow the franchise purchasing steps as they are laid out by Subway to the “T.” Here’s why.
Remember what I said about The Rules-and that the franchise business model is a rule-based one? In this case, The Rules are the specific steps that all prospective Subway franchise owners have to go through.
For example, if your franchise development person tells you to be on a group conference call with other prospective franchisees next Thursday at 7:00 PM, be there!
Or if your rep tells you to do a preliminary search for a location, and she expects you to have 3 choices ready to discuss in 2 weeks, you need to have them picked out and ready to discuss about.
What I’m getting at is this: Your rep will be watching you. She wants to make sure you can and will follow the steps as they’re laid out.
The way I see it is if you’re serious about the opportunity…serious as in you’re willing to write a check, and get a small business loan etc. (as long as you like what you see) you’ll happily do what’s being asked of you.
If you’re “kind of” interested in the franchise, you’ll do the minimum-or you’ll do things you’re own way.
Subway Franchise Restaurant Business Research
Researching the Subway franchise opportunity is all on you.
With that in mind, I have a question: Do you know how to do franchise research?
If so, go ahead and start your research!
If you don’t know how, I suggest that you go here for the best tips on researching franchises.
Great News About Researching Subway!
Subway is an easy franchise opportunity to research. That’s because there are so many Subway franchises around-so many franchisees* to talk with, including at least a few restaurants in your own local area.
*Talking to existing Subway franchisees is the best way to get the facts you need about the Subway franchise opportunity, how their businesses are run, and how much money they’re making.
A Word of Warning
Do not call and/or visit Subway franchises in your neighborhood early on in your research. The franchisees you approach may feel that you’re going to be
encroaching trespassing on their territory.
(You’re probably not going to encroach on their territory-but lots of franchisees get paranoid about too many franchises being sold in one area.)
Instead, when you do your research calls with franchisees, crack open your FDD* and contact franchisees randomly-from other parts of the country. And make sure you call at least a dozen of them.
After you talk to a lot of franchisees (who aren’t in your area) by phone, you can pay a visit to a franchisee in your (general) area. I suggest visiting one who owns a franchise at least 5 or more miles away from where you’re thinking of opening one.
You Want To Be Taken Seriously
The other reason I don’t suggest calling or visiting franchisees in your local area too early in the process is because you’ll sound like a total newbie. Your questions will be very basic-which may lead to franchisees not taking you very seriously-and not talking to you for very long.
But you will be taken seriously after you talk with a dozen or so franchisees from other areas of the county (before you visit your local Subway restaurant), because you’ll have a better understanding of the business-and with it, much better questions to ask. Make sense?
Next: The FDD
*The FDD, short for Franchise Disclosure Document, features hundreds of pages of sometimes complicated legalese, numbers-and more numbers, along with (here’s the good part) contact information for every living, breathing franchisee of the franchise opportunity you’re investigating. You can call as many franchisees as you want! The franchisees will give you lots of information. Lots of good information-if you know how to ask for it.
Existing Subway Franchises For Sale
As you’re looking into the Subway franchise opportunity, it’s almost guaranteed that you’ll hear about existing Subway franchises that are for sale-maybe even in your own neighborhood. If you do, they’re worth checking out.
The reason existing Subway franchises are worth checking out has to do with cash flow.
For example, a Subway that’s already up and running has existing customers and revenue. Buying an existing Subway means you’ll have cash flow from day one. You’ll have a business that’s already doing business. Good stuff!
In the event you’re interested in learning more about existing Subway franchises that are for sale, check out the Subway franchise website. There’s an entire section devoted to Subway franchises that are currently for sale. All you have to do is type in the area of the country you’re interested in. You can also go to a website like this and perform a search for Subway franchises for sale.
Buying A Subway: Your Next Step
If your research has gone well, and you’ve been able to find more happy, successful Subway franchisees than unhappy, struggling ones, here’s what you need to do next.
Write your business plan. (Yikes!)
But don’t worry if you’ve never written a formal business plan. You just need a template (included with most business planning software) along with easy-to-follow instructions.
Business Planning Software
And speaking of software, my friend, Tim Berry, co-created the top-selling business planning software in the world. Here’s what he says about the importance of writing a business plan.
The business plan, done right, breaks the uncertainty into manageable pieces.
- It sets the most important elements of strategy, including business offering, target market, and differentiators.
- It sets the most important tactics for execution, and matches them to strategic focus.
- It sets up and defines the important steps for the future.
- It defines the key assumptions and resulting projections for sales, direct costs, operating expenses, and cash flow.
Finally, it’s a great tool for moving forward, figuring out what’s important, managing the important flow of tasks responsibilities, and money, and then—on a regular basis—checking results with review and revision.
Why A Business Plan Is A Must
These days, business plans are a must. You’ll definitely need to have one when you apply for a small business plan. Notice I wrote “need.”
In other words, business plans are not “optional” these days.
Bonus: A business plan is not just a one-time thing. You can even use it after you’re in business. It will help you stay on top of your financial metrics. Big time.
Please take the time to put together a business plan for your franchise. You’ll come out a winner!
Your Small Business Loan
The next step in the Subway franchise purchasing process is the money step. In particular, obtaining financing for a Subway franchise. Your Subway franchise.
Important: In spite of the fact that I don’t have any evidence to back it up, my guy tells me that it won’t be too difficult to get a small business loan for a Subway franchise. Part of the reason, in my opinion, is because of the brand. The Subway brand.
To demonstrate what I mean, try to imagine a scenario in which a loan officer (who specializes in small business loans) has never heard of Subway. Can you do it? My point exactly. However…
With that in mind, there’s still no guarantee that your loan for a Subway franchise business will be approved. That’s because every situation…every loan-and every borrower is different.
For example, no one has the exact same credit score/credit ranking. And no one has the same net worth/liquid capital.
In addition, different parts of the country have different commercial space pricing, and different costs of living etc.
In summary, when it comes to franchise financing, there’s really not a one-size-fits-all solution. That’s why it’s important to work with an experienced, credible lender.
The U.S. Small Business Administration is a powerful ally of small business. They’re also an important economic driver because of the power they have as guarantors of some small business loans.
That’s right. As I explain in this post, the SBA doesn’t loan money; they guarantee loans that lenders make. (In some situations)
In other words, when someone suggests that you get a SBA loan, your loan isn’t coming directly from the SBA. Your loan is backed (up to a certain percentage) by the SBA.
For more information on SBA loans-and there are a few types, go to SBA.gov.
(Disclosure: I write monthly articles on franchising for the SBA blog-and have been for 7 years)
Once you’ve completed the steps I’ve laid out, it’s decision time.
But before you say yes or no to buying a Subway franchise, you need to hire an experienced franchise attorney.
A competent franchise attorney will protect your interests. She’ll also negotiate* on your behalf.
Contrary to what you may have heard about franchise agreements, there may be things in your agreement that are negotiable.
In addition, even if nothing can be negotiated on your behalf, you need to know that today’s franchise agreements are complex legal documents. It’s crucial you understand what yours states.
The first thing to remember is that your franchise agreement lays out exactly what your obligations are as a franchisee, and what your rights are.
Your agreement also states what the franchisors obligations are…how they’ll support you.
Another thing: In addition to going over your franchise agreement (and the FDD, of course), your attorney should be able to help you with your commercial lease once you secure a location. (Which is another complicated document!)
Facts Concerning Commercial Leases
Here are two important things (facts) you need to know about commercial leases, courtesy of Nolo.com.
- Many commercial leases are not based on a standard form or agreement; each commercial lease is customized to the landlord’s needs. As a result, you need to carefully examine every commercial lease agreement offered to you.
- You cannot easily break or change a commercial lease. It is a legally binding contract, and a good deal of money is usually at stake.
Hire an attorney. You’ll sleep better at night knowing you’re protected.
Signing The Subway Deal
If everything looks good, you’ll sign the franchise agreement, and send in your check for the franchise fee along with whatever else Subway requires upfront. Once that’s done, you are officially a Subway franchise! Congratulations!
Next, your training classes will be scheduled.
Then the location of your franchise business will be finalized. (Subway has a real estate department you’ll work with.)
You Are in Business
You’ve done it. You are now the proud owner of a Subway restaurant.
The entire process, from start to finish, took around 7 months. Hopefully it went fast.
In conclusion, you now know how to buy a Subway franchise. I laid out the steps on to buy this fast food franchise business one by one.
The bottom line: If you feel that owning a Subway restaurant is right for you, do
good great research, snag a high-traffic location, and go, go, go! (Obtain the services of business professionals, too!)
To that end, who knows: Maybe you’ll end up owning several Subway franchises.
Subway restaurant image by Andrevruas (Own work) [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia