Subway is one of the cheapest restaurant chains to open — here’s a breakdown of all the costs

Subway charges a $US15,000 franchise fee. Charles Krupa)/AP Images

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.

Opening a McDonald’s restaurant requires as much as $US2.2 million in startup costs alone, by comparison, and the company charges a $US45,000 franchise fee.

But Subway restaurants generate less revenue than McDonald’s units.

Read more:
What it costs to open 12 of the biggest fast-food chains in the US, including McDonald’s, Chick-fil-A, and Taco Bell

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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