How to Start a Subway Franchise

CatherinePro/iStock/Getty Images

Whether you simply have a passion for foot-long sandwiches or you are looking to become your own boss, a Subway franchise offers a lot of freedom without any of the headaches of starting your own restaurant from scratch. It’s one of the cheapest franchises to start, and the company will guide you through the launch process from start to finish.

Complete the Subway Franchise Application

The first step to owning a franchise is completing the Subway franchise application on the company’s website. You’ll be required to fill out financial information including your liabilities (loans, mortgages and debts) and your individual net worth.

They’ll also ask you about your income streams and your business and restaurant experience. You can fill out this form online.

Get the Investment

According to Subway, you’ll need an estimated investment of $116,000 to $263,000 to open a franchise in the United States and $102,000 to $232,000 to open a franchise in Canada. You’ll also need to pay a $15,000 franchise fee, and while this might seem like a lot, Subway is actually one of the cheapest franchises to start.

Franchises like McDonald’s charge a $45,000 franchise fee and have startup costs that soar into the multimillions. This is probably because Subway generates less average revenue, with annual sales clocking in at an average of $417,000. In comparison, McDonald’s makes an average of $2.7 million.

If you decide to go with a Subway franchise, you’ll need to get the initial investment. Pay a visit to the bank and explore your options for a business loan. Subway also works with companies that provide financing for new franchisees, so inquire about their finance programs.

Choose a Location

Choosing a location is a very important part of having a successful Subway franchise. You don’t want to set up shop around too many other Subways (and there are a lot out there).

Thankfully, you don’t have to sort this out by yourself. Subway has a site selection team that helps you determine the best location. They even have local development agents who specialize in each area.

Build Your Subway

You have two options: You can buy a plot of land and build your Subway, or you can lease one. Subway claims that its objective is to help you secure the best location at the best price with your landlord. Nonetheless, you’ll still have to make your Subway look like a Subway.

Subway’s design team will work with a local contractor that you hire to provide blueprints that meet your specifications and give Subway its classic look and feel.

Get the Food and Equipment

Unlike launching a new restaurant, Subway has procedures for ordering food and equipment. They offer equipment leasing options so you don’t have to buy what you need for your restaurant outright, which saves a lot of cash.

As for food, you’ll have to work with Subway’s independent purchasing cooperative, which helps source the lowest-cost food and services and the highest-possible quality. It sure beats finding your own wholesaler.

Complete the Two-Week Training

Franchisees don’t go into owning a Subway blind. They’re required to complete a two-week training course at one of Subway’s training centers before they can launch their restaurant. After that, franchisees have ongoing support from Subway’s local development offices. The company even offers online courses if you’re struggling in a certain area of business.

Is There a Subway License Test?

Subway license test or not, it’s important that you have certain basic business skills before opening a franchise. There’s no specific Subway license test you have to pass, but you will probably be required to take a Wonderlic Basic Skills Test on your path to serving up delicious footlongs.

This exam evaluates your general skills related to workplace employment and performance. You’ll need to have some basic English language and math skills, including things like reading comprehension and being able to solve one-variable algebra equations.

Remember the Royalties

Each week, franchisees are responsible for paying the company 12.5% of gross sales (minus the sales tax). Some of this goes toward franchise royalties, and the rest goes toward advertising, but this is a good thing. If Subway is already advertising on your behalf, you don’t need to spend cash to create your own marketing plan, though signing up for Yelp and Google My Business is certainly advisable.

Consider Buying an Already-Existing Subway

You can avoid all the headaches with launching a franchise from scratch by simply buying an already-existing Subway franchise. Subway has an online map of restaurants for sale in your area that can help you pick which restaurant would best suit your needs.