You are on page 1of 8

How To Become A SUBWAY Franchise Owner.

By Manu kaushik 12PGDMWM05

About SUBWAY
SUBWAY restaurants began in the summer of 1965 when 17 year old Fred DeLuca graduated high school with aspirations of becoming a doctor. While at a cookout that July, he asked a family friend, Dr. Peter Buck, for advice on how to pay for college hoping that Dr. Buck would just give him the money. Instead, Dr. Buck suggested that Fred open a submarine sandwich shop similar to the one Dr. Buck frequented as a child in Maine so that Fred could earn enough money to pay his tuition. Dr. Buck wrote Fred a check for $1,000 and they became business partners. This was the start of Doctors Associates Inc. A month later, on August 28, 1965, Fred and Dr. Buck opened Petes Super Submarines in Bridgeport, Connecticut. From the very beginning they established goal setting as an integral part of SUBWAY restaurants growth. With a clear vision, Fred and Dr. Buck implemented a strategic plan to open 32 restaurants within 10 years. In 1974 they found themselves behind schedule with only 16 open restaurants. Fred decided it was time to give franchising a try. Today, SUBWAY restaurants have more than 33,000 locations in approximately 90 countries. We have been rated the #1 franchise by Entrepreneur Magazine for 17 of the past 23 years.

STEPS to become a Franchise


Review the franchise program information on the Subway website and fill out the online form to request a brochure. Register for an online seminar to find out more information. Attend one in your area to receive the most pertinent information. Subway also offers trade shows with valuable information on how to become a franchise owner. Submit an online application to become a Subway franchisee. Required personal information on you, your spouse and partner (when applicable) include: education and business background, liquid and fixed assets and references. You also indicate a preferred geographical franchise area. Learn more about the next steps while your application is being processed. You can find an area that is open for development, contact the regional sales manager with further questions or look into getting a loan for your Subway franchise. Receive notification from the Subway development team that your franchise application is approved. A representative from Subway will help with the process once you have decided to become a franchise owner. Secure a loan for your Subway franchise store. Loan amounts vary based on the location and size of the restaurant. Subway offers loan programs and financial support for all of their franchise owners. Work with a Subway representative to purchase an existing Subway for sale or to find a location to build on.

Frequently Asked Questions


How do I become a franchisee? Complete an application online or request one from the development office. You will receive a Franchise Disclosure Document. It is your responsibility to read it. Next, pass a basic skills test. Then you will be ready to investigate our business opportunity with the help of the local development office. The development office and Doctors Associates Inc. will determine if you meet our qualifying standards. How much is the SUBWAY Franchise Fee? The initial franchise fee is $15,000. If qualified to purchase additional locations, the franchise fee is $7,500. What is the term of a SUBWAY franchise? The $15,000 franchise fee purchases a franchise honored for twenty years. This franchise is renewable for an additional twenty years with no other franchise fees. What are SUBWAY restaurants Capital Requirements? The total investment can range from $114,800 to $258,300 for traditional locations and $84,300 to $200,100 for non-traditional locations. This includes your franchise fee, construction and

equipment costs as well as operating capital. Figures do not include extensive exterior renovations. These amounts represent the net investment required if you are eligible for the company's equipment leasing program. If you do not select the equipment leasing program or it is not available, you should substitute the costs for Equipment Lease Security Deposit with $49,500 to $72,000. We suggest that franchisees have half of the amount in cash and finance the other half. We prefer that a franchisee does not carry a large debt service. Is lending available for the purchase of a SUBWAY restaurant? SUBWAY provides a list of lenders with experience lending to our franchisees. The development office will provide you with lender requirements to help evaluate these lenders. Additional sources for funding include personal savings and investment accounts, home equity loans/lines and financial assistance from family and friends. How do I secure SUBWAY equipment? You may purchase SUBWAY equipment outright with cash or with a secure loan. The SUBWAY franchise system also offers an equipment leasing package that requires a security deposit of 10% of the equipment costs, with a minimum of $1,000. The lease payments are for 60 months. At the end of the lease term you may purchase the equipment for 10% of the original value. The security deposit will be applied towards the purchase. The equipment may be purchased at any time during the lease period using the buyout calculation schedule. For additional information or to see a sample copy of the equipment lease, please refer to the Franchise Disclosure Document. What kind of training is available to new franchisees? Training is for two weeks, 50% in class and 50% in store training.

All franchisees named on each franchise agreement must satisfactorily complete training at SUBWAY World Headquarters before the store will be allowed to open. How much money can I expect to make and what is my return on investment? In our Franchise Disclosure Document, we further explain why we cannot provide an earnings claim. We do not furnish or authorize our employees, salespeople, or Development Agents to furnish any oral or written information concerning the actual or potential sales. Actual results vary from restaurant to restaurant and we cannot estimate the results of any particular franchise. We encourage you to call SUBWAY restaurant owners from the Franchise Disclosure Document to learn firsthand why they decided to acquire additional franchises. What is my financial obligation as a SUBWAY franchisee? Beyond the one time franchise fee of $15,000 you will be required to pay royalties to Doctors Associates Inc. of 8% on weekly gross sales. You will be required to pay an advertising fee to the Subway Franchise Advertising Fund Trust (SFAFT) of 4.5% on weekly gross sales. Are new sites available? New sites are available in Rhode Island and in Massachusetts. The Development Office maintains strong working relationships with many real estate professionals and local landlords. New London County, CT currently has existing locations for sale. How do I secure a new location? New locations approved for development by SUBWAY will be provided to you during the qualifying process. You may also submit a location that you find. We will investigate your location and provide you with analysis of its viability for development.

Who negotiates the lease? The Development Office initially negotiates the terms of a lease. Subway Real Estate, LLC (SRELLC) will finalize the lease with the landlord and sign the master lease. Do I sign the lease? You will sign a sub-lease with Subway Real Estate, LLC (SRELLC) under the same terms and conditions as the master lease. You will pay rent directly to the landlord each month. Can I use my contractor to build out my restaurant? Yes. Our construction coordinator can also recommend a contractor who is experienced with building SUBWAY restaurants. We suggest you secure several bids before signing a construction contract. Can I build out my own restaurant? Many builders will allow the franchisee to assist with the build out depending on your experience and credentials. SUBWAY requires a licensed contractor to secure permits and oversee the project. Where do I purchase food for my restaurant? All franchisees are required to order food from an approved vendor. Hallsmith-Sysco is the gold standard vendor in the Dixon/Turi Territory. Pricing, quality and transport are monitored by SUBWAY restaurants Independent Purchasing Council (IPC). Is operational support available? Yes. Each franchisee is assigned a field consultant to help you meet SUBWAY standards of operation. In addition, support is available from the development office, the corporate help line as well as online through our e-library network and University of SUBWAY courses.

Am I protected from over development? SUBWAY has a monitoring system in place called site review which evaluates new development in relation to existing locations to help mediate impact. How do I advertise my SUBWAY? Franchisees pay 4.5 % royalty to the Subway Franchise Advertising Fund Trust (SFAFT) each week. Those funds help pay for SUBWAY national advertising. Approximately one percent of those funds are returned to the local SFAFT market to support advertising in the Dixon/Turi Territory. Franchisees are also encouraged to advertise to their local customer base. Our in-house marketing coordinator will help you detail a store specific marketing plan. Can I sell my restaurant? Yes, you may sell your restaurant at any time after opening, provided the company approves the buyer.