Opening a new restaurant can be a difficult task, especially if you want to start a new brand of a restaurant business. That may cost you a lot of money. But if you are really into a restaurant business then you might want to consider franchising one. And the most popular type of restaurants that you can franchise is fast-food chains such as McDonalds or KFC. However, if you have a tight budget, you franchise a SUBWAY®. It is one of the cheapest, yet popular, fast-food restaurants that you can franchise. But the question is, how much does it cost to start a SUBWAY® franchise?
Average SUBWAY®Franchise Cost
Before you should know the cost to start a SUBWAY® franchise, you should first know what a SUBWAY® is. Well, a SUBWAY® is a fast-food restaurant that sells sandwiches (such as foot-long), salads, and a lot more food items. These food items are coming from a retail store. SUBWAY® has already been franchising since 1974 and their headquarters is located in Miami Springs, Florida.
According to the SUBWAY ® Company itself, the total cost to start a SUBWAY® franchise runs around $116,000 up to $262,800 or more. This includes the initial franchising fee and other costs such as construction, equipment leasing, and much more. There are a lot of factors that could affect the total startup cost. And here is the breakdown of the startup cost:
- The first factor that you should consider is the SUBWAY® Franchise Cost. And the cost of the franchising fee of SUBWAY® is $15,000.
- Next factor that you should consider is the real property. At the lower end, you will have to spend around $2,000. Midrange cost of real property runs around $5,000. On the other hand, around $12,000 will be spent for the high-end cost.
- Another factor, and probably the biggest one, is the improvements of the leasehold. Low-end improvements can cost you around $60,000. If you have a lot of money, high-end improvements can cost you around $130,000 or more.
- The next factor to consider is the equipment. At the lower end, expect to spend around $4,500. And around $7,500 or more for the higher end.
- Another important factor that you should not avoid is the security system. The high-end security system can cost you around $6,000 while a low-end one can cost you around $2,000.
- Good charges are another factor to consider. The cost of this factor greatly depends on one location to another. On the average, around $3,300 will be spent at the lower end and $5,500 for the higher end.
- Another factor is the signage. This can cost you around $2,000 for the lower end and $8,000 for the higher end.
- Of course, you can’t start your business without the initial inventory. At the lower end, expect to spend around $4,400. On the other hand, higher end startup inventory can cost you around $6,000.
- Insurance is also another factor that you will consider. This is to protect your business and your employees. The cost of insurance usually runs around $1,000 up to $5,000.
- Another factor is the supplies needed. This is probably the cheapest factor of them all. Lower end supplies can cost you around $500 and higher end supplies can cost you around $1,300.
- Expenses for the training of your employees are another factor. SUBWAY® already includes training and assistance in their franchising fee. However, the training will be done only at their headquarters. This means that if you are located far from SUBWAY®’s headquarters, then you will have to pay for the travel and lodging of your employees. This factor depends on how many employees you will have. The cost of this factor usually runs around $2,500 up to $4,500.
- Legal & Accounting is necessary for the success of your business. The cost for this factor can run around $1,000 at the lower end and $3,500 at the higher end.
- The next factor that you should consider is the opening advertisement. Although, this factor can be avoided if you want, but this can be very helpful to promote your newly opened business. Expect to spend around $2,500 up to $4,000 for this one.
If you are new to the business industry, it might be good that you follow some tips from fellow professional entrepreneurs. Fran Develop is a website that provides tips on how to make your SUBWAY® franchise a successful one.
Now that you know the total SUBWAY® franchise cost, you should know what is included in the franchising fee. Here are some:
- Right – After paying the franchising fee, you are given the right to begin and operate the business only for a single location.
- Financial Assistance – If you are located within the United States, then you are qualified to avail SUBWAY®’s equipment leasing program. People who already own an existing restaurant can not avail this program.
- Training and Assistance – As what we have mentioned above, the franchising fee of SUBWAY® includes training and assistance at their headquarters. The training usually lasts around 2 weeks and it includes 50 percent in-class training and another 50 percent on-the-job training. You are not allowed to open the SUBWAY® business if you don’t complete the training satisfactorily.
- Term – A SUBWAY® franchise term lasts only for 20 years. You can renew the franchise if the term expires without paying another franchising fee. However, SUBWAY ® Company might refuse your renewal if you are not in full obedience.
- Operational Support – Every SUBWAY® franchisee is given a consultant to help achieve the operational standards of SUBWAY®.
During the qualifying process, SUBWAY® will provide you an approved location. However, if you find a location, you will first submit it to the company. They will inspect the given location and give you their analysis about it.
Selling the Franchised Restaurant
You can sell your SUBWAY® restaurant any time after it has opened if you no longer want to continue the business. However, the company should approve the buyer first.