- 2023 Franchise 500 Rank
N/R Not ranked last year
- Initial investment
$140K - $342K
- Units as of 2019
41,600 7% over 3 years
Start a Subway Franchise | Costs and Requirements
Subway is a franchised restaurant chain known for its delicious subs, catchy jingles, iconic brand colors, logo and, more recently, its star-studded commercials.
If you’ve ever dreamed of owning your own business and love to eat fresh, opening a Subway restaurant could be the perfect combination of business and interests. Read on to learn everything you need to know about becoming a Subway franchise owner.
What Is Subway’s Mission?
Subway prides itself on serving fresh, convenient and affordable food.
They are famous for their freshly baked bread, flexible menu options and customizable style. Subway values listening to its customers and updating its menu, services, and overall experience to ensure they offer top-of-the-line customer satisfaction.
What Is Subway’s History?
You may have thought that Subway started with sandwiches and passion. While this isn’t technically wrong, it doesn’t paint the whole picture.
Subway began with a teenager, a college dream, a loan, and a handshake.
In 1965, 17-year-old Fred DeLuca wanted to attend college but wasn’t sure how he would afford it. When DeLuca asked a family friend for advice, he gave DeLuca a $1,000 investment to open up a submarine sandwich shop in Bridgeport, Connecticut.
Because the first shop was a success, DeLuca and his investing business partner, Dr. Peter Buck, opened up sixteen more sandwich shops over the next ten years. The pair had a goal to double that number, so they began franchising their sandwich stores.
Today, Subway is one of the world’s most popular restaurant brands, with over 37,000 stores in more than 100 countries. And since Subway loves to franchise, you could be the one to open their newest location.
The corporation has 20,000 franchisees that contribute to its success. The restaurant chain continues to grow, integrating cutting-edge technology into its business models, such as in-app ordering and curbside pickup. Some locations even offer the age-old food service strategy of delivery.
Additionally, Subway has expanded to include non-traditional locations in gas stations and convenience stores.
What To Know About Owning Your Own Subway Franchise
Subway franchises typically require less equipment than other restaurants even though their menu has plenty of options. This is because their menu items are variations of each other and do not require extra equipment. And, with the small number of staff required to operate a sandwich counter and the modest location size requirements, the franchise is straightforward to manage.
Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.
Subway sandwich shops serve fresh, delicious, custom sub sandwiches. This is common knowledge.
But what else should you know before opening a Subway franchise? Whether you’re a first-time business owner or own many small businesses, starting a franchise location comes with unique perks and some potential drawbacks. Knowing the pros and cons of owning a business can help you decide if it’s right for you.
Five benefits of becoming a franchise owner include:
- Proven successful roadmap for business
- Brand name recognition
- High rate of success
- Broad purchasing benefits
- Profit margin potential
Five cons of becoming a franchise owner include:
- Building structure limits and restrictions
- Limited individual creativity s
- Startup costs
- Royalty fees
- Franchisors have access to your financial records
Why Is Subway a Good Franchise Choice?
There are many franchise opportunities, so many that choosing the right one can be time consuming. If you’re looking for solid reasons to choose a Subway restaurant franchise as your next business opportunity, read on to learn about some of Subway’s most attractive aspects.
Subway’s success started early. Still, even though the business grew rapidly, its founders wanted to stay true to their original mission.
Today, the Subway brand still follows the three principles that started it all:
- Always provide exceptional service to valued guests
- Offer high-quality, flavorful menu options at a great value
- Never stop evolving to improve the Subway brand
Subway is committed to minimizing its environmental impact, and sustainability is at the forefront of this commitment. If sustainable practices matter to you, then Subway is a franchisor that will support you in that effort.
The corporation tries to be as sustainable as possible by:
- Making efforts toward 100% recyclable, compostable, and/or biodegradable packaging
- Increasing use of recyclable paper and decreasing plastic content material
- Working with franchisees to increase container recycling rates
- Collaborating with animal welfare organizations to increase humane practices for ingredients
- Implementing energy-efficient equipment like ovens, refrigerators, and ice machines
Brand recognition and success can often seem like cause and effect. Brand recognition can make it a lot easier to grow your customer base, which may provide your new business with a considerable advantage.
When it comes to brand recognition, Subway is one of the best. With successful locations in worldwide markets, customers are likely to know what you have to offer as soon as you open.
Subway prides itself on giving back to the communities it serves. The Subway Cares Foundation aims to empower its franchisees to be active and positively impact various local communities surrounding its locations.
The organization focuses on three goals:
- Hunger relief
- Tuition assistance
- Mentoring tomorrow’s leaders
You’ll want to learn the menu inside and out as a franchisee. Fortunately for you, since Subway is so popular, you may already know some of their big-ticket items.
Popular Subway menu attractions include:
- Fresh Melts
- No Bready Bowls
And, of course, Subway is known for its six-inch and Footlong sandwich sizes.
Subway Franchise Requirements
If you’re ready to own a Subway franchise, we’re here to help. Before going over the step-by-step process, ensure you meet Subway’s initial requirements below.
Subway is looking for seasoned franchisees who have formerly or currently own a restaurant or a Subway franchise location.
Subway also likes owners looking to open multiple units. It helps if you have at least a basic understanding of how the process works, what the requirements are, and what you’ll need to develop a successful business plan.
Of course, experience isn’t strictly required; however, it is preferred.
Subway is looking for leaders with an entrepreneurial spirit, proven leadership success, and individuals that love mentoring teams. Subway is growth oriented and they want franchise owners that think the same way.
As a potential franchise owner, you’ll want to ensure the franchisor cares about what you care about. And while not strictly a requirement, Subway also looks for franchisees with shared values.
Subway looks for franchisees who are:
Subway takes pride in what it does, values its employees and wants to give back to its community. If that sounds like you, then your values are in sync with Subway.
Subway is a big name, and it comes with significant financial requirements. Before diving into the process, ensure you have the capital.
Initial Subway franchise costs generally include:
- Net Worth: $150,000
- Liquid Assets: $100,000 per location
- Initial Franchise Fee: $10,000 - $15,000 (depending on location)
However, it’s important to keep in mind how much easier it is to open a Subway location than starting your own small business from scratch. While it may seem like a hefty startup investment, everything that comes with purchase justifies the investment.
How To Become a Subway Franchise Owner
If you meet Subway’s initial investment requirements and are ready to move forward, take a look at the step-by-step process of becoming a Subway franchise owner.
1. Inquire and Research
Subway, like any franchisor, will research you as you research them. You will complete a questionnaire with essential information like your name, contact information, experience and why you want to open a Subway location.
Once Subway completes its initial check, it will provide you with its Franchise Disclosure Document (FDD) to help you with your research.
- Company’s description and history
- Current or previous litigations
- History of bankruptcy
- Investment costs and fees
- Products and services details
- Copyrights, patents, and proprietary information
- Financial statements
2. Connect and Apply
During this step, you will be partnered up with an experienced Subway franchising team member for interviews. While they’ll ask you questions, this is also a great opportunity to ask them anything you’re curious about regarding the application process or the daily operations of owning a Subway location.
Together, you will continue your research, learn more about Subway’s franchise process, and continue the vetting process as you build your final application.
3. Select Your Location
At this stage, you should research your ideal area to see if there is space, physically and competitively, for a Subway location.
What should you research in real estate? Ask yourself these eight essential questions:
- While competition is healthy, too many strong competitors in your area might slow your growth.
- What other sandwich shops are in that area?
- What other fast-food chains are in the area?
- Do your competitors offer a drive-thru option? If not, can your location offer one?
- What kind of traffic does the area get?
- Is the location easily accessible to customers?
- What are Subway’s guidelines for its locations?
- Will the space accommodate the setup, appliances, and amenities?
4. Sign the Paperwork
Once you have selected the perfect location, it’s time to make things official by signing the franchise agreement.
Make sure you take the time to celebrate your new business's success. This is just the beginning, but getting to this stage is already quite an accomplishment.
5. Build and Prepare Your Subway Location
Before opening, you’ll acquire, remodel, or build a store, depending on the location. Subway will provide you with design and construction teams to ensure the brand stays intact.
You will be assigned a training center and complete online learning based on your location and language preference. You and your management team will attend Subway’s online training program, the University of Subway, for three weeks.
The research is finished, the paperwork is signed and the building is set. Your training is complete. Now, it’s time to open a Subway store franchise.
Subway will supply you with an experienced operation team during your opening process to ensure everything goes smoothly and you feel supported as you open up your new franchise.
If you have the drive and financial means, Subway could be a rewarding new business venture.
Looking for more info on all things franchising? Explore Entrepreneur’s Franchise Center here for more resources.
|Franchising Since||1974 (49 years)|
|# of employees at HQ||975|
|# of Units||41,600 (as of 2019)|
Information for Franchisees
Here's what you need to know if you're interested in opening a Subway franchise.
Financial Requirements & Ongoing Fees
Here's what you can expect to spend to start the business and what ongoing fees the franchisor charges throughout the life of the business.
Initial Franchise Fee
Definition: The initial fee paid to a franchisor to join their system
What you need to know: Found in Item 5 of the FDD, this may be a flat fee, or may vary based on territory size, experience, or other factors.The franchise fee is an up-front (one-time) cost that a new franchisee pays to the franchisor. This fee is usually due at the signing of the franchise agreement and covers the right to use the franchisor's trademarks, name, and related business systems.
Definition: The total amount necessary to begin operation of the franchise
What you need to know: The initial investment includes the franchise fee, along with other startup expenses such as real estate, equipment, supplies, business licenses, and working capital. This is outlined in a chart in Item 7 of the FDD, showing a range of possible costs from low to high.
|$140,050 - $342,400|
Net Worth Requirement
Definition: The minimum net worth you must have in order to qualify to become a franchisee of this company
What you need to know: Net worth is the value of a person's assets minus liabilities. Assets include cash, stocks, retirement accounts, and real estate. Liabilities include items like mortgages, car payments, and credit card debt.
|$80,000 - $310,000|
Definition: The minimum liquid capital you must have available in order to qualify to become a franchisee of this company.
|$30,000 - $90,000|
Definition: A discount or other incentive offered to military veterans who buy a franchise with this company.
|Franchise fee waived if opening on a military/government location; 50% off franchise fee if opening on non-government location but receiving government financing|
Definition: A ongoing fee paid to the franchisor on a regular basis.
What you need to know: Most franchisors require franchisees to pay an ongoing royalty fee, which is detailed in Item 6 of the FDD. This fee is typically a percentage of weekly or monthly gross sales, but may also be a flat weekly, monthly, or annual fee.
Ad Royalty Fee
Definition: An going fee paid to the franchisor on a regular basis to support advertising or marketing efforts.
What you need to know: This may also be called advertising fee, marketing fee, brand fund fee, and more, but the basic purpose is the same-- to support promotion of the brand systemwide. As with the royalty fee, it is detailed in Item 6 of the FDD, and can be a percentage of weekly or monthly gross sales or a weekly, monthly, or annual fee.
Term of Agreement
Definition: The length of time your franchise agreement will last.
What you need to know: Franchise terms are typically anywhere from 5 to 20 years in length, but are sometimes instead dependent on factors such as the term of your lease. Once your term is up, you may have the option to renew your agreement, typically for a smaller fee than the original franchise fee.
|Is franchise term renewable?||Yes|
Some franchisors offer in-house financing, while others have relationships with third-party financing sources to which they refer qualified franchisees.
|In-House Financing||Subway offers in-house financing to cover the following: franchise fee, equipment|
|Third Party Financing||Subway has relationships with third-party sources which offer financing to cover the following: franchise fee, startup costs, equipment, inventory|
Training & Support Offered
Franchisors offer initial training programs and a variety of ongoing support options to help franchisees run their businesses.
|On-The-Job Training||20 hours|
|Classroom Training||80 hours|
Meetings & Conventions
Security & Safety Procedures
Franchisee Intranet Platform
Additional details about running this franchise.
|Is absentee ownership allowed?||Yes|
Can this franchise be run from home/mobile unit?
Definition: The business can be run from your home and/or a vehicle, and it is not necessary to have a retail facility, office space, or warehouse.
Can this franchise be run part time?
Definition: This business can be run by the owner on a part-time basis (less than 40 hours per week) and/or as a side business; it is not necessary for the business to be open/run full-time.
|# of employees required to run||8-12|
Are exclusive territories available?
Definition: An exclusive territory is a fixed area in which you are given the right to operate and in which no other units of the same franchise may be opened.
What you need to know: Territory size may be based on factors such as radius, population size, zip codes, and more. Details can be found in Item 12 of the FDD.
Interested in ownership opportunities like Subway? Request a free consultation with a Franchise Advisor now.
Franchise 500 Ranking History
Compare where Subway landed on this year's Franchise 500 Ranking versus previous years.
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