Should I Buy a Subway Franchise?
Is Subway a Good or Bad Investment?
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Here at Franchise City We get hundreds of calls from people asking about buying a Subway Franchise. Is it a good investment?
Now as Franchise brokers and consultants we are in a unique position in that we have access to every Franchise Disclosure Document out there. We also speak regularly with existing Subway franchise owners selling their locations and we hear the reasons why they want to sell. One of our partners here at franchise.city was also a multi units Subway owner for a number of years before selling his stores.
So lets start with what I say when clients come to me asking "should I buy a Subway franchise?"
First question I ask is why. Why do you want to invest in a Subway. 99.9% of the time people say "Because it's busy" or "They make great subs" which might possibly be the worst reasons to invest a couple of hundred thousand. Some people say "Because they are the most successful franchise" Well what does that mean? It means they have thousands of locations - what does that mean to you? That you will likely have a competing store a few doors down. Is that a good thing?
Then I ask if they have any previous food service experience. Most don't. They have visions of traveling the world on luxury cruises while their Subway franchise back home earns them millions on auto pilot. Allow me to pop that bubble.
If you want your Subway store to do well you need to work on it. It's a business like any other and is not a magical ticket to wealth. In fact right on their website when asked how much can you make with a Subway franchise they suggest speaking with "multi unit owners" to see how much you can earn with a Subway. They don't really want you speaking with single store owners.
Lets sum it up.
- Relatively stable brand - low failure rate
- Relatively low investment
- Very Well known brand name
- Relatively predictable and stable income
- Massive market saturation (The problem in franchising is the brands that are most visible get the most people applying for a franchise. But it is that exact visibility that hurts you financially as a franchisee with so many locations vying for business.
- Low Margins
- A lot of grumblings about perceived unfair business practices by Subway (You guys have Google none of this is secret)
So lets look at this from another angle. Another franchise many people think they want to own is donuts. So I will say "I guess money isn't your driving factor" I hear silence on the phone. But don't these food franchises earn millions?
One of the other franchises we work with is Express personnel, a staffing franchise. Average mature offices earn 5.6 million dollars a year. Nobody ever thinks of an employment franchise. You would need to sell over 15,000 donuts a DAY to make the same as an Express Personnel franchise.
Molly Maid - another solid franchise with a lot of owners over 1 million annually. But nobody ever thinks of cleaning franchises. Stormguard franchise which is a growing disaster restoration company where you manage teams of repair people who help homeowners after a storm - their FDD shows $800,00 in NET income for mature offices. Pro Martial arts - a kids fitness and martial arts franchise - FDD shows 100K net and unlike food shops their model is for semi passive ownership you can keep your job and run this franchise. I could go on for hours about what is available it's sad really that most people make one phone call - buy a franchise, work like a dog and have no idea the franchise owner across the street is making 10 times more, literally, than what they are with less work.
And I am not saying Subway is necessarily bad. For some people it's the best choice. There are thousands of happy Subway owners. The real question is which franchise is best suited to your skills, business goals, exit strategy and background and a number of other factors? Look at the day to day operational requirements - is this something you want to do for the next 10 years or more? is it something you are good at? Is this taking you financially to where you want to be? And am I comfortable with the level of risk? Every franchise has it to varying degrees.
What I strongly suggest to people is that they look at all their options. Even outside of food. Compare multiple franchise brands, earnings, failure rates, franchisee satisfaction rates. Explore emerging franchise industries like senior care, or pet care. Research doesn't cost you anything and at the end of the day if you do decide to open a Subway at least you can say you did it with your eyes wide open.
Franchise.city works with over 600 National Franchise brands and we help clients identify, research and explore and buy their perfect franchise. Consultations are always at no charge. And all of us here at franchise.city are not only experienced consultants we are all also franchise and business owners ourselves. 1-800-432-1583 or contact us