SUBWAY®
Date of Incorporation: 1965
Franchising Since: 1974
Headquarters: Florida
Country: U.S.
Description: Subway offers franchisees the right to establish and operate a retail establishment preparing and selling foot-long and speciality sandwiches, salads and other food items.
Franchise Offer:
i). Traditional Locations – Franchisee owns and operates a traditional Subway Restaurant, from a single location, preparing and selling sandwiches, salads and other food items.
ii). Non-traditional locations – These franchises are based in convenience stores, gasoline service stations, hospitals, universities, airports, theme parks and other similar locations. These are full-service restaurants.
iii). Satellite locations – A satellite restaurant is not a full service restaurant, it operates only with the support of an existing full service Subway restaurant licensed to the same franchisee. Franchisees may only operate a satellite restaurant if they already operate a Base Restaurant near the proposed satellite location. Satellite restaurants may be temporary, seasonal, operate within limited hours, or be mobile. It has little or no seating, and is for carry out or delivery service.
iv). School Lunch program – Franchise is located in elementary, middle or high schools. The franchisee operates a Subway restaurant located in the school serving freshly prepared product.
v). School Lunch Delivery Program – This is offered to existing franchisees that have owned and operated a Subway restaurant for at least six months. The franchisee may enter into an agreement with a school within 20 minutes drive from the original retail location, to deliver freshly prepared sandwiches for resale in the school cafeteria.
vi). Subway Plus Program – This permits existing franchisees to offer additional menu items, under Subway marks, with the franchisor’s prior approval. Some of these offerings may be test programs.
Financial Assistance: Franchisor may offer to finance part of the fees of the franchise. Franchisor is not obligated to do so. If franchisee meets the credit standards, franchisor may finance a part of the initial franchise fee or part of the equipment package. For the equipment lease, the franchisor finances approximately $49,500 to $72,000 for a period of 60 months. The franchise fee will be financed up to an amount of $10,000 for a period of 42 months with interest at 12% per annum. The franchisor offers finance programs for leased space and construction programs through Subway affiliates, and finances other items in connection to the Subway restaurant.
Training and Assistance: All franchisees must attend and complete the Worldwide Training program at Subway headquarters in Milford, Connecticut. Classroom work accounts for 60 hours, and ‘on-the-job’ training accounts for 33 hours of training. The ‘on-the-job’ training will be located in a subway restaurant in close proximity to Subway headquarters. Franchisees must also complete a web-based training course prior to attending the training program in Milford, accounting for 11 hours of training. Training is provided to the franchisee at no additional cost.
Territory: An exclusive territory will not be granted to the franchisee, unless the franchisee is under the franchise agreement for an exclusive area development program.
Term of Agreement and Renewal: The length of the franchise term is 20 years, with the exception of the School Lunch program with a term of 5 years. The franchise will automatically renew for additional 20 year periods, unless either party chooses not to renew. The renewal term for the School Lunch programs is 5 years. The franchisor has the right to refuse renewal if the franchisee is not in full compliance.
Obligations and Restrictions: The franchisee is not obliged to personally supervise the subway restaurant, but they must attend and complete the training program. The restaurant must be under the direct, on-site supervision of a person who has successfully completed the training program. It is recommended that the franchisee devote a substantial amount of time to the franchised business.
Total Number of Units: 33,749 units.
Investment Tables:
Initial Investment:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $15,000 Satellite franchise - $5,000 |
$15,000 Satellite franchise - $5,000 |
| Real property | $2,000 | $12,000 |
| Leasehold Improvements | $59,500 | $134,500 |
| Equipment lease security deposit | $4,500 | $7,500 |
| Optional security system | $2,000 | $6,000 |
| Freight charges | $3,000 | $4,500 |
| Outside signage | $2,000 | $8,000 |
| Opening inventory | $4,000 | $5,500 |
| Insurance | $800 | $2,500 |
| Supplies | $500 | $1,300 |
| Training expenses | $2,000 | $4,000 |
| Legal and Accounting | $1,000 | $3,500 |
| Opening Advertising | $2,500 | $4,000 |
| Miscellaneous Expenses | $4,000 | $8,000 |
| Additional Funds – three months | $12,000 | $42,000 |
| Total | $114,800 | $258,300 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Royalty | 8% of Gross sales |
| Advertising | 4.5% of Gross sales |
| Additional Funds | Established by franchisees |
| Local Advertising | Established by franchisees |
| Grand Opening Advertising | $2,000 |
| Audit | Overdue amount, plus Audit costs and an Under-Reporting fee equal to 100% of the overdue amount |
| Late Payments | 10% Interest |
| Transfer | $7,500 plus $3,000 for any satellite |
| Location Rent | $1,000 -$5,000 ($1,000 - $6,000 for non-traditional) per month estimated |
| Equipment lease | $2.70 per month per $100 |
| Equipment purchase and Freight Charges | Cost of equipment and buffer to cover freight charges, taxes, and other costs |
| Insurance | $800 - $5,000 per year |
| Indemnification | All liability, damages, and costs, including lawyers’ fees, incurred |
| Incomplete violation | $15,000 for each competing store plus 8% of its gross sales |
| Confidentiality violation | Franchisors damages |
| Trademark violation | $250 per day |
| Operations Manual | $50, subject to change in the future |
| Dispute resolution |
Half of arbitration fee, except franchisee will pay the whole fee plus costs, including lawyers’ fees, management preparation time, and travel expenses if franchisee withholds money from franchisor or an affiliate. Probationary Case – management fee $500, probationary extension fee $250 |
| Non-Compliance with operations manual | Charge of an additional 2% of gross sales |
| Optional training – deposit or fee | $100 - $200 deposit |
| Co-Brand continuing fee | 0% - 8% of total gross sales of a co-brand concept |
| Fees charged by co-brand franchisor | Fees and rates set by third party co-brand franchisor |
| Optional store listing service | $100 for each 90 day period |
| Fees for software license, maintenance, and processing |
$520 initial license fee if franchisee purchase the POS system from Micros, Dell and Subtotal of $574 if the franchisee purchases the Sub Shop/2000TM generic install using a POS system from ParTech or another supplier A yearly $400 Sub Shop/2000TM maintenance fee payable to franchisor, plus $16.43 per year payable to a third party for DBMS software |
| Retail Technology | Varies as the franchisor implements various new technology initiatives. Usually paid to a third party. |
| Customer complaint resolution fee | $2 - $20 per incident |
| Taxes and other fees | Varies by state |
Date of FDD: 2009
The above information has been taken from the UFOC/FDD and online resources of Subway.
Franchise Direct's Disclaimer
You may be interested in the following franchises...
SUBWAY®
Become a part of the number one global franchise!
Minimum Cash Required: $100,000.
Pure Health
Offer a flavorful, healthy alternative to fast food with Pure Health, now expanding around the globe!
Minimum Cash Required: $60,000.
Your Request List