Subway Struggles to Attract Multi-Unit Franchisees in the U.S., Announces Major Expansion in Another Country Subway has been attempting to sign new franchisees to multi-unit deals to improve its ownership model. However, the franchisees it's looking for aren't taking the bait.

By Madeline Garfinkle

Martin Good | Shutterstock
Subway announced it would be opening 4,000 new stores in China over the next 20 years. Meanwhile, in the U.S., over 500 stores closed in 2022.

Subway has closed nearly 1,600 stores in the U.S. over the past seven years and shuttered 571 in 2022 alone, according to the chain's latest franchise disclosure document obtained by Reuters.

Now, the sandwich franchise is attempting to revamp its ownership model by attracting more multi-unit franchisees rather than its current pool of owners, most of whom operate one or two units. However, the candidates Subway is attempting to attract aren't taking the bait.

Several prospective buyers analyzed the possibility of signing on with Subway but ultimately stepped away after realizing the franchise lacked profitability, two advisors for multi-unit franchisees told Reuters.

Subway has not disclosed its annual sales for U.S. stores, but industry experts told the outlet that the figure could be as low as $500,000 per unit — considerably less than other franchise competitors such as Jersey Mikes ($1.1 million) and Firehouse Subs ($900,000), per Reuters.

Related: Subway Is Considering Selling Its Sandwich Chain Business With $10 Billion Deal

Franchise attorney Justin Klein told Reuters that his firm analyzed multi-unit franchise deals for three clients and all three walked away due to the brand's low margins of profitability and the possibility of needing to renovate outdated stores.

Meanwhile, as Subway struggles to revamp its presence in the U.S., the brand is taking its business elsewhere. On Monday, Subway announced it will open about 4,000 new units in China over the next two decades.

"China is a key market with significant long-term growth opportunity, and we look forward to bringing the Subway experience to even more guests in the region," John Chidsey, Subway's global CEO, said in a statement.

Madeline Garfinkle

Entrepreneur Staff

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Editor's Pick

Related Topics

Business News

Opening a New McDonald's Franchise Will Be More Expensive in 2024

Starting January 1, franchise royalty fees will rise from 4% to 5% for new locations in the U.S. and Canada.

Leadership

Employers: The Burden of Going Back Into The Office Is Not as Bad as You Think — It's Worse.

Leaders falsely perceive employee wellbeing to be already high and believe the burden of going to the office will be not that bad in this broader context. This disconnect between perception and reality is what I call the "Wellbeing Paradox."

Money & Finance

Want to Become a Millionaire? Follow Warren Buffett's 4 Rules.

Too many entrepreneurs are counting too heavily on a company exit for their eventual 'win.' Do this instead.

Leadership

How to Master Decision-Making in a World Full of Options

Use these seven practical strategies to make more effective business choices.

Starting a Business

16 Accelerators Designed to Fast-Track Small Business Founder Success

If you want to start up, level up, or scale up, look into these accelerator programs being offered by the big businesses on our Champions of Small Business list.

Travel

Travel Smarter With a $40 Member-Exclusive Club

Travel for less with $59 off a one-year Travel Buyers Club membership.