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How a 17-Year-Old With $1,000 Started Subway and Became a Billionaire Fred DeLuca started what would become a billion-dollar business to help pay for college.

By Matthew McCreary

entrepreneur daily
JONATHAN NACKSTRAND | AFP | Getty Images

Subway, one of the best-known restaurant brands in the world, makes billions of dollars in sales every year. It's the world's largest fast food chain, with more than 44,000 Subway franchises across the globe and more than 26,000 domestically. Both of those numbers outstrip the number-one entry on the 2018 Entrepreneur Franchise 500 list, McDonald's.

But like any other business, Subway started small, with a loan between family friends. If you are considering investing in a Subway franchise or starting your own business, this story can inspire you to build your own billion-dollar brand.

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 was founded by a 17-year-old.

In 1965, 17-year-old Fred DeLuca asked a family friend, Dr. Peter Buck, for a $1,000 loan. DeLuca used the money to create a sandwich shop in Bridgeport, Conn. At the time, he had hoped that starting the restaurant would help him pay for his college and medical school bills.

(This is why Subway's parent company is called Doctor's Associates Inc. Buck had a Ph.D. and DeLuca wanted to become a doctor.)

The company was named Pete's Super Submarines after Buck. However, on local radio advertisements, "Pete's Submarines" sounded like "Pizza Marines," which gave listeners a different impression of the business. As a result, DeLuca and his co-founder decided to rename the company "Pete's Subways," then just "Subway" in 1968.

DeLuca admitted in his 2012 book, Start Small Finish Big: Fifteen Lessons to Start -- and Run -- Your Own Successful Business, that he knew nothing about making sandwiches or the food industry when he got started.

Related: Why Is Subway Still on Top?

Despite his inexperience, his youth and his small loan, DeLuca saw success pretty quickly: He and Buck sold 312 sandwiches the first day -- each one costing about 49 to 69 cents, according to the Subway website. It's safe to say he eventually accomplished his goal of making enough money to put himself through school.

DeLuca served as president of Subway from 1965 until his death in 2015. He was succeeded by his sister, Suzanne Greco.

Subway started franchising in 1974.

DeLuca and Buck opened the first Subway franchise in Wallingford, Conn. Wallingford was convenient for the pair, because it's about 30 miles from Bridgeport, the site of the original Pete's Submarines. The company expanded over time, opening its first international franchise in 1984 in Bahrain.

After Bahrain came Canada in 1986, and the trend continued. Today, there are Subway restaurants in China, India, France, Brazil, Russia and many more countries.

There are more than 26,000 U.S. franchises, or more than 500 per state.

Related: Here Are 6 Things You Could Buy for the Price of One Subway Franchise

Subway was founded by a 17-year-old with no money or industry knowledge.

This is worth saying again. DeLuca had to take a $1,000 loan to start his business. He admitted that he didn't know about this industry. He just wanted a job to help pay for college, and he ended up building the largest fast-food franchise chain in the world.

His story teaches us that you shouldn't let anyone belittle your ideas if you believe in them. Even DeLuca didn't realize what he'd made when he got started, and it worked out for him.

Related: Just How Much Does It Cost to Own a Fast-Food Franchise?

Subway franchise info

  • CEO: Suzanne Greco
  • Business headquarters: Millford, Conn.
  • Franchising since: 1974
  • Initial investment: $147,050 to $320,700
  • Initial franchise fee: $15,000
  • New units in 2017: -222 units (-0.5 percent)
  • Training: 33 hours on the job, 62 hours in the classroom

Marketing support: Co-op advertising, ad templates, national media, regional advertising, social media, SEO, website development, email marketing, loyalty program/app

Related: 5 Affordable Restaurant Franchises You Can Start for 5 Figures

Matthew McCreary

Entrepreneur Staff

Associate Editor, Contributed Content

Matthew McCreary is the associate editor for contributed content at Entrepreneur.com.

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