- Subway is one of the cheapest restaurants to franchise.
- The company charges a $US15,000 franchise fee, and startup costs range from $US116,000 to $US263,000.
- By comparison, McDonald’s charges a franchise fee of $US45,000, and startup expenses can cost up to $US2.2 million.
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Subway is one of the cheapest major fast-food restaurants to franchise.
Subway’s fee for becoming a franchisee is $US15,000, and startup costs, which include construction and equipment leasing expenses, range from $US116,000 to $US263,000, according to the company.
But Subway restaurants generate less revenue than McDonald’s units.
A Subway restaurant, on average, generates $US417,000 in sales annually, compared to $US2.7 million in average annual revenue for McDonald’s restaurants, according to QSR magazine.
Subway also charges its franchisees hefty ongoing fees.
The company charges franchisees a weekly fee of 12.5% of gross sales minus the sales tax. The company says 8% goes toward the franchise royalties and 4.5% goes towards advertising.
Here’s a breakdown of some of the costs for setting up a Subway restaurant and operating it for three months, according to the company:
- Initial franchise fee: $US15,000
- Real property costs: $US2,000 to $US24,000
- Leasehold improvements: $US12,000 to $US143,000
- Equipment: $US3,000 to $US65,000
- Security system (not including monitoring costs):$US1,000 to $US7,500
- Outside signs: $US1,200 to $US21,000
- Opening inventory: $US2,500 to $US10,000
- Insurance: $US400 to $US4,000
- Training expenses (including travel and lodging): $US2,000 to $US7,000
- Legal and accounting: $US400 to $US8,000
- Opening advertisement: $US1,000 to $US6,000
- Miscellaneous expenses: $US1,600 to $US20,000
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