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Subway Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Costs to Open a Subway Franchise?
To open a Subway franchise, you can expect an initial investment ranging from $238,623 to $536,745. This includes a franchise fee of $15,000. Additionally, you should be prepared for ongoing costs, including an 8% royalty fee on gross sales and a 4.5% marketing fee. Having a net worth of $80,000 to $100,000 is also a requirement, along with sufficient cash reserves to cover the initial investment.
What Are the Average Revenues for a Subway Franchise?
Subway franchises can generate significant revenues, with an average annual revenue of approximately $971,919 per unit. The highest recorded annual revenue for a unit is $971,919, while the lowest stands at $198,000. These figures indicate the potential profitability of owning a Subway franchise, provided that the location is well-chosen and effectively managed.
What Is the Breakeven Time and Investment Payback for Subway Franchisees?
Subway franchisees can expect to reach their breakeven point in about 9 months. This relatively quick recovery period is attractive for many investors. Additionally, the investment payback period is estimated at 24 months, allowing franchisees to recoup their initial investment in a timely manner, assuming the business operates efficiently.
How Many Subway Units Are Currently Franchised?
As of 2023, there are 20,133 franchised Subway units in operation. This number reflects a slight decline from previous years, with 20,576 units in 2022 and 21,149 units in 2021. Despite the fluctuations, Subway remains one of the largest franchise chains in the world, indicating a strong brand presence and ongoing franchise opportunities for aspiring entrepreneurs.
Subway Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Subway Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 21149 | 20580 | 20135 |
| Net Change YoY | -569 | -445 | |
| Franchised Units | 21147 | 20576 | 20133 |
| Net Change YoY | -371 | -443 | |
| Corporate Units | 2 | 4 | 2 |
| Net Change YoY | 2 | -2 |
Initial Investment
The initial investment for a Subway franchise ranges from $238,623 to $536,745. This includes the franchise fee of $15,000 and various other startup costs, making it accessible for a range of aspiring entrepreneurs. Having a clear understanding of these costs is crucial for potential franchisees to ensure financial readiness before embarking on their Subway journey.
Franchise Fees
Subway franchisees are required to pay an 8% royalty fee on gross sales, along with a marketing fee of 4.5%. These fees contribute to ongoing support from the franchisor, including marketing initiatives and operational guidance, which can significantly impact the overall success of the franchise.
Financial Performance
On average, a Subway unit generates annual revenue of $971,919. The revenue figures can vary widely, with the lowest annual revenue recorded at $198,000 and the highest at $971,919. Understanding these metrics helps franchisees gauge potential profitability and set realistic financial goals.
Breakeven and Payback
Subway franchisees can expect to reach breakeven within approximately 9 months of operation. The investment payback period is projected at 24 months, making it a relatively quick turnaround for those looking to recoup their initial investment and start generating profit.
Franchise Growth
Subway has seen a steady decline in the number of franchised units, with 21,147 in 2021, 20,576 in 2022, and 20,133 in 2023. This trend indicates a need for potential franchisees to carefully consider market saturation and competition when selecting their locations.
Operational Expenses
The average annual running expenses for a Subway franchise range from $64,200 to $198,600, covering costs such as rent, utilities, insurance, and salaries. Being aware of these expenses is vital for franchisees to manage their cash flow effectively and ensure operational sustainability.
Frequently Asked Questions
The initial investment for a Subway franchise ranges from $238,623 to $536,745, which includes the franchise fee, equipment, and other startup costs.