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Description
Investment Icon

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.

Fees Icon

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.

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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.

Breakeven Icon

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.

Net Worth Required icon The minimum total assets (minus liabilities) you must possess.

i Net Worth Required:

$80,000 - $100,000
Investment Payback icon The estimated period to recoup your total investment.

i Investment Payback:

24 Months
Franchise Fee icon The initial fee paid to join the franchise system.

i Franchise Fee:

$15,000
Royalty Fee icon Ongoing percentage of revenue paid to the franchisor.

i Royalty Fee:

8%
Marketing Fee icon Regular contribution toward the franchise’s advertising fund.

i Marketing Fee:

4.5%
Breakeven Time icon The estimated timeframe to recover your initial costs.

i Breakeven Time:

9 Months
Initial Investment icon The total amount required to launch the franchise.

i Initial Investment:

$238,623 - $536,745
Cash Required icon The minimum liquid capital you must have on hand.

i Cash Required:

$238,623 - $536,745
Average Revenue icon The typical yearly revenue generated per franchise location.

i Average Revenue:

$971,919
Median Revenue icon The middle value of yearly revenue among franchise locations.

i Median Revenue:

$971,919
Highest Revenue icon The largest reported annual revenue among franchisees.

i Highest Revenue:

$971,919
Lowest Revenue icon The smallest reported annual revenue among franchisees.

i Lowest Revenue:

$198,000
Industry icon A broad sector defining similar types of franchise businesses.

i Industry:

Restaurant Franchises
Category icon A more specific division within the broader industry.

i Category:

Quick-Service Restaurants
Leadership icon The key individuals guiding the franchise’s strategy and growth.

i Leadership:

Trevor Haynes
Corporate Address icon The official business address of the franchisor’s headquarters.

i Corporate Address:

325 Sub Wy., Milford, Connecticut 06461
Funding Year icon Available financing options to help start the franchise.

i Funding Year:

1991
Parent Company icon The main organization that owns the franchise brand.

i Parent Company:

Doctor's Associates

Subway Franchise Unit Growth Summary

A breakdown of corporate, franchised, and total units, with yearly net changes.

The overall number of operating franchise locations.

Total Units i

20135
The number of locations owned by independent franchisees.

Franchised Units i

20133
The number of locations owned and run by the franchisor.

Corporate Units i

2
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
Investment About

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.

Potential About

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.

Metrics About

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.

Fees About

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.

Breakeven About

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.

Units About

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.