Subway
Subway offers foot-long sandwiches, salads, and other food items through franchised locations. Known for its sub sandwiches, the brand operates in the quick-service restaurant sector.
About Subway
Subway IP LLC, trading as Subway, is an American multinational fast food restaurant franchise that specializes in submarine sandwiches (subs) and wraps. It was founded by Fred DeLuca and financed by Peter Buck in 1965 as Pete's Super Submarine Sandwiches in Bridgeport, Connecticut. After several name changes, it was renamed Subway in 1972, and a franchise operation began in 1974 with a second restaurant in Wallingford, Connecticut.
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Subway franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment for setting up a new Subway® restaurant ranges from $238,625 to $536,745. This includes an estimated franchise fee of $15,000 and additional costs that can vary based on factors such as the size and type of location [p.1].
What is the initial franchise fee?
The initial franchise fee is $15,000 [p.53]. This amount can be lower for additional franchises or if you qualify for a reduced fee, such as a discount for qualified US Veterans or no fee for satellite locations under certain conditions [p.53, p.851].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is typically 7% of gross sales, with potential reductions for certain non-traditional locations or multi-unit franchisees [p.45]. Advertising fees are due weekly at the same time as royalty fees, also on a weekly basis [p.45].
How long is the initial franchise agreement, and can I renew it?
The initial term of the franchise agreement for a short-term satellite location is 1 year or less from the date of the Franchise Agreement Rider or until the termination or expiration of the Base Restaurant Franchise Agreement, whichever occurs sooner [p.31]. You may have the right to renew it for an additional 20 years if certain conditions are met, but this applies specifically to base restaurants and not necessarily to short-term satellite locations [p.119, p.347].
Can I sell or transfer my franchise, and what does that require?
The FDD allows the franchisor to refuse permission for a franchise transfer except for good cause [p.5]. Good cause includes but is not limited to unspecified factors. This isn't specified in the excerpts regarding the exact nature of these causes.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on any grounds available by law. However, if the termination is based on grounds that do not constitute "reasonable cause," such a provision may not be enforceable [p.953]. This isn't specified in the excerpts for the franchisor's specific grounds of termination; it only details the franchisee’s grounds and general conditions [p.949, p.950, p.954].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory. The franchise agreement explicitly states that there are no territorial or other exclusive rights granted to you [p.80, p.165, p.170, p.333]. Competitors, including other Subway locations and affiliated entities, can operate in your potential market area [p.80].
What training and ongoing support does the franchisor provide?
The franchisor provides menu updates and commercially reasonable remote support services for the software [p.189]. Additionally, there is an option for additional software support from Franchise World Headquarters, LLC at an extra cost [p.189]. For more details on this, you can refer to the FWH Technology Support Center on the Subway® intranet website.
How many franchised outlets are there, and how many have closed or been terminated?
As of December 28, 2024, there were 363 franchised Maaco centers in the United States [p.15]. The FDD does not provide specific numbers for closed or terminated outlets; however, it mentions that locations may be temporarily closed and then reopened when resold to a new franchisee [p.109], but no information is given about the total number of closed or terminated outlets.
Does the franchisor share any financial performance or earnings information?
The franchisor is permitted to provide actual or potential financial performance information if there is a reasonable basis for it and it is included in the Disclosure Document [p.94]. However, they do not make representations about future financial performance or past financial performance of company-owned or franchised outlets, nor authorize their employees to do so orally or in writing [p.94]. If any other financial performance information or projections are received, these should be reported to the franchisor's management [p.94].
What am I restricted to selling, and where must I buy supplies?
You are restricted from representing that products sold from your restaurant are approved or endorsed by any element of the United States government [p.308]. For supplies, you may have to buy or lease items from the franchisor or a limited group of suppliers designated by them, which might be more expensive than other options [p.3]. This isn't specified in the excerpts regarding what specific products you are restricted to selling beyond the mentioned government endorsement restriction.