Subway franchise: Get your teeth into a great opportunity

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Subway Franchise

With over 2,500 locations in the UK and Ireland, and more than 44,000 stores in over 110 countries, this sandwich franchise has come a long way since its launch in 1965. Back then, college student Fred DeLuca borrowed some money from his friend Pete Bucks and opened his first store in Connecticut. The outlet, Petes Super Submarines was named after his friend, and sold the submarine sandwich that was all the rage at the time. As the business grew, the name changed a couple of times, until, in 1968, the Subway brand was born.

Today, its a multi-billion-pound business, selling wraps, salads, drinks and snacks, alongside its famous sub sandwiches. The brand is popular for its customisable food options that can cater for consumers who stick to vegetarian, vegan and gluten-free diets. Subway stores cater to a huge market in all kinds of locations. These include spots on the high street and in shopping centres; retail, industrial and business parks; hospitals; universities; transport terminals; sporting facilities; amusement parks; and even convenience stores and petrol stations.

It wouldnt have become one of the worlds most successful food businesses without developing a highly efficient and profitable business model. Over 70 percent of Subways new stores are launched by existing franchisees, which is testament to the brands franchise system. Clearly, franchisees have reaped the benefits and are keen to increase their stake in the business by opening an additional unit. This in itself should reassure prospective franchisees that the business represents a fantastic opportunity.

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So, if youre hungry for a bite of this success story, continue reading to find out about whats involved in buying a Subway franchise.

Whats required?

You dont need any formal qualifications to become a Subway franchisee. You dont even need to have experience of running your own business. Instead, the franchise is interested in whether you have the personality and skills to run a business. You should have passion and motivation in abundance, as well as significant market knowledge. When it comes to running a Subway business, youll need excellent time management and communication skills, as well as professionalism and the ability to take on any advice or guidance.

All the hard skills youll need to run your business will be taught during Subways comprehensive training programme thats offered to all franchisees. Youll have the chance to ask questions and learn what makes Subway such a successful franchise. An initial induction course imparts vital knowledge, but ongoing support is always available from experienced mentors, should franchisees need it.

Although youll be expected to work within the parameters of the Subway brands processes and procedures, franchisees with an entrepreneurial spirit are also welcomed. Youll have the opportunity to adapt and enhance certain processes and new ideas are encouraged. Subway recognises that hiring fresh talent helps the business keep up with the times, so franchisees will be listened to when it comes to suggesting improvements to operating processes.

A Subway franchise agreement lasts for 20 years, so the most important requirement is your dedication, loyalty and commitment to the brand.

The joining process

Before you consider purchasing a Subway franchise, its important that you do thorough research. Short list a few options and then compare them based on the same criteria. Check out our article on reaping the rewards of research with franchise due diligence for more information.

Once youre sure that Subway is the franchise for you, you can request a brochure and complete an application form. Filling out this form does not mean youll be forced into buying a Subway franchise, but it does signal your interest and its the first step in your franchising journey.

Once the application form has been received, Subway will send you a Franchise Disclosure Document, or FDD. This document will contain everything you need to know about running the franchise. It will also include details about the franchise fee as well as the profit that is achievable with the brand.

The FDD can be quite a lengthy and complex document, so its important that you review it with a specialist franchise solicitor or financial advisor. This is also a great time to start discussions with your bank to work out how the franchise will be funded.

At this stage, youre also encouraged to meet with as many existing Subway franchisees as possible. Only by speaking to other franchisees can you truly understand what its like to be part of the brand. Heres a case study of a successful Subway franchisee as an example of whats possible with this global franchise:

Case Study

Rajveer Sandhar is proof that university degrees and business experience are not necessary to become a successful franchisee. At just 21, hes one of the youngest Subway franchisees in the UK. After leaving school at 16, Rajveer helped his father run one of his two Subway stores. Although this was enough at first, he wanted more of a challenge, so he opened his own Subway store in Bromsgrove in November 2015.

Rajveer has his father to turn to if he has any questions about running the business, but what attracted him to starting his own business at such a young age was the support Subway offers. As well as access to an extensive face-to-face and online training programme, Rajveer also has the support of his Field Consultant and Development Agent, who are as determined to make his business a success as he is.

Its not easy to run a full-time business, especially at such a young age but for Rajveer, the pride and satisfaction that comes with being his own boss is worth it.

Financial information

After all this, I bet youre wondering how much a Subway franchise costs to buy. The good news is that although the total investment required could equal £200,000, it offers great value for money, as its one of the most affordable franchises to buy based on its size and reputation. The final amount you pay will depend upon several factors, including the location and size of the store.

Youll also pay Subway a regular royalty fee of 8 percent and a 4.5 percent advertising fee, based on gross sales minus tax. The initial Subway franchise fee starts at just £8,500, which is one of the lowest on the market when compared to the profit that can be achieved. Despite this, the total investment is still substantial and should only be committed to if youre happy that youll be able to comply to all Subway franchise requirements and obligations.

Before you approach Subway, its important to work out how you will finance the franchise. Many high street banks have specialist franchise departments that will be able to help you understand how funding works in the franchise sector. Some banks lend up to 70 percent of the investment amount, but, generally, 50 percent is funded through a bank loan and 50 percent will need to be financed by you.

Franchise resales

A more cost-effective way to join the brand is to buy an existing Subway franchise from a current franchisee. By purchasing a franchise thats already up and running, you can reduce the amount of money you spend on set-up costs, as the store and all its equipment are often included in the purchase price. The business workforce will probably all stay on too, so you wont need to dedicate time to recruitment or training.

You are taking over the business, so there will be a small amount of admin to do, but essentially you are taking on a ready-made business and picking up where the last franchisee left off. To buy a franchise in this way, you will still have to prove that you are a worthy candidate and that you have the soft skills needed to run a successful Subway unit. The franchisor will have the final say on whether you meet their strict criteria, so youll need to impress them as well as the seller.

Its worth noting that, when a franchise outlet goes up for sale, there may be more than one interested buyer. In fact, the existing franchisee may already have a potential franchisee in mind; perhaps a particularly capable employee within the business who is looking to move into entrepreneurship. Therefore, youll have to demonstrate that you have the drive and commitment to the brand to generate profitability and maintain a happy customer base.

Summary

So, if you have adequate funding and are passionate and committed to running the business for up to 20 years, youve probably got what it takes to be a successful Subway franchisee. Visit the franchises profile page on our website to find out more and approach the brand to get the ball rolling.

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