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How Much Does it Cost to Start a Subway Franchise?

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Subway is consistently ranked as one of the top franchises in America. With nearly 25,000 restaurants in more than 80 countries, the chain is a popular option for entrepreneurs looking to start a business.

The Subway chain has grown in popularity as Americans have become more health conscious. With a wide variety of low calorie and low fat sandwiches, Subway has emerged as a healthier alternative to the array of greasy fast food options.

Subway franchises are relatively inexpensive to start. The initial investment and operating costs are lower than many popular fast food chains - another factor that adds to the growing popularity of the sandwich chain.

Cost to Start a Subway Franchise

It usually takes anywhere from $115,000 to $220,000 to start a Subway franchise. Occasionally, with larger restaurants, the cost can run up to $250,000.

One of the first expenses is the initial franchise fee of $15,000. This fee covers the cost of using the Subway name and is generally non-refundable.

Beyond that, you’ll need to budget for start-up costs and operating expenses for the first three months. The Subway Corporation estimates those total costs to be about $100,000. That includes all property, equipment, training, advertising, signage, and inventory. However, keep in mind that because every restaurant is different, that amount can vary from one location to another.

Cost to Own a Subway Franchise

Initial startup costs are not the only expense involved with running a Subway franchise. In exchange for the rights to use the company’s name, as well as the company’s expertise, advice and guidance, you’ll be required to pay weekly royalties.

Subway’s royalties total 12.5 percent of your gross sales each week, not including tax. Eight percent of that is collected to cover franchise royalty fees while the remaining 4.5 percent covers advertising costs.

Starting a Subway Franchise

One of the first steps in starting a Subway franchise is filling out the company’s application. You will also be required to take a one-hour test to assess basic English and math skills.

Once you’ve been approved, Subway representatives will help you find a location. All leases are corporately held, so the company will negotiate a lease agreement on your behalf. You’ll be responsible for hiring a contractor to build the restaurant, but Subway will provide you with detailed blueprints. Before you officially open up shop, Subway will provide a two-week training program.

It’s difficult to estimate how much money you will make as a Subway franchise owner because every restaurant is different. But the company will put you in contact with multi-restaurant owners that can field questions about operations and profitability.

Author: Ashley Smith