How to Start a Subway Franchise

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Adding yourself to the roll of 21,000-plus Subway franchisees allows you to own a business under a well-known food brand. The costs of starting your Subway eatery depend on its size and location, among other factors. With its training and development resources, Subway assists you in many of the steps needed to launch your restaurant.

Apply Online

Subway provides an online Application for Additional Franchise Information. You're asked to provide information such as:

  • history of employment and business ownership;
  • list of your banks;
  • value of assets, such as land, house, cars, cash and stocks;
  • liabilities, such as mortgages, other loans, credit cards;
  • sources of income; and
  • judgments, lawsuits and bankruptcies involving you or your spouse.

You must include the names and ownership interests of partners and whether they are active or silent.

Training and Testing

You and your co-owners must attend a two-week training course at Subway's headquarters in Milford, Connecticut, or one of Subway's training centers. The training is divided equally between classroom instruction and in-store instruction. Subway administers a Wonderlic Basic Skills Test with verbal (English) and math questions such as calculation of discounts, sales tax and quantity of sandwiches to be made from available ingredients. The English portion tests basic grammar and reading comprehension.

Seed Money

The initial franchise fee is $15,000. According to Subway, as of May 2013, you'll need an estimated $116,200 to $262,850 to open a traditional-location store, such as in a shopping center or on a street corner. For nontraditional sites, such as airports, bus stations, college campuses and truck stops, your initial investment can range from $84,300 to $200,100. As of August 2013, Subway lists Ascentium Capital LLC, JenCas Financial Inc. and IPC Financial Solutions as its approved lenders for franchisees. You'll need a credit score of at least 650, and Ascentium requires prior restaurant experience.

Finding Your Place

Choose your location from Subway's list of approved sites. You'll need Subway's permission to operate from a location you propose if it's not already on the list. The leasing department or development office helps you negotiate with the landlord. Subway becomes the tenant and you're Subway's subtenant. Subway's website lists existing restaurants for sale, but you must be approved as a franchisee.

From Space to Restaurant

As of May 2013, it will take an estimated $59,500 to $134,000 to create a Subway from your space. You hire the contractors, but Subway's store design team contributes the plans and blueprints. Subway requires you choose only from contractors licensed in your state.

Starting Equipment and Inventory

Through Subway's equipment leasing package, you front 10 percent of the equipment costs as a security deposit and make 60 monthly payments. When the lease ends, you can buy the equipment at 10 percent of the original value. If you lease, figure on $4,500 to $7,500 in upfront equipment costs. Otherwise, initial equipment outlays can run from $49,500 to $72,000. The food you sell comes from Subway-approved vendors. As of May 2013, Subway suggests you'll need between $4,400 and $6,050 for your initial inventory of food and drinks.



About the Author

Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. He earned his business administration and law degrees from the University of North Carolina at Chapel Hill. As a lawyer since August 1996, Raines has handled cases involving business, consumer and other areas of the law.

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