Subway is one of the cheapest major fast-food restaurants to franchise.
To open one restaurant, the company requires that potential franchisees have liquid assets of at least $US30,000 and a net worth of $US80,000 to $US310,000, according to Entrepreneur.
By comparison, McDonald’s requires its franchisees to have at least $US750,000 in liquid assets.
Subway franchisees need less money because the sandwich chain’s restaurants are cheaper to open.
Subway’s startup costs, which include construction and equipment leasing expenses, range from $US116,200 to $US262,850, according to the company.
Opening a McDonald’s restaurant requires as much as $US2.3 million in startup costs alone, by comparison.
But Subway restaurants generate less revenue than McDonald’s units.
A Subway restaurant, on average, generates $US490,000 in sales annually, compared to $US2.5 million in average annual revenue for McDonald’s restaurants, according to QSR magazine.
Subway also charges its franchisees hefty fees.
The company charges an ongoing royalty fee equal to 8% of gross sales, as well as an advertising fee equal to 4.5% of gross sales. That means 12.5% of each restaurant’s revenues go to Subway corporate.
Here’s a breakdown of startup costs, from the company:
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