Subway Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$238,625 - $536,745
Franchise Fee
$1,000
Total US Locations
19,502
Business Summary
Subway franchisees operate retail establishments that prepare and sell foot-long and other sandwiches, salads, wraps, and various food items. Customers can choose from a menu of signature sandwiches or customize their own with a variety of breads, cheeses, vegetables, seasonings, and condiments. Subway restaurants also offer a breakfast menu. The business operates under the Subway brand name and system.
Corporate History
Subway, operating as Doctor's Associates LLC, is a Delaware limited liability company. The company previously converted from a Florida corporation to a Florida LLC in October 2018, and then to a Delaware LLC in May 2024, maintaining its status as the same legal entity through these conversions. Subway has been offering franchises for its restaurants since 1974. It had a brief, unsuccessful venture offering plush toy franchises in the early 1980s. Since August 2021, Subway and its affiliates have also been selling master franchise businesses for international Subway restaurants. In April 2024, Doctor's Associates LLC was acquired by Underground Purchaser, LLC, which is controlled by investment funds managed by Roark Capital Management, LLC. As part of a secured financing transaction in June 2024, ownership of U.S. trademarks and certain intellectual property, including the SubwayPOS® software, was transferred to a new affiliate, Subway US IP Holder LLC, which then licensed these rights back to Doctor's Associates LLC. Franchise World Headquarters, LLC (FWH) was also appointed to manage and provide support services to Subway and its franchisees.
Financial Overview
Investment Range
$238,625 - $536,745
Franchise Fee (Low)
$1,000
Franchise Fee (High)
$15,000
Royalty %
8%
Marketing %
4.5%
Equipment Costs (Low)
$181,785
Equipment Costs (High)
$408,845
Working Capital
$27,000
Audited Financials
Yes
Offers Financing
Yes
Financing Details
Subway offers some direct financing to franchisees in connection with a Subway restaurant, with negotiable terms that require a promissory note and security agreement. Subway may also guarantee commercial loans from third-party lenders for franchisees, charging a one-time fee of 1% of the loan amount. Additionally, Subway facilitates an equipment leasing program for bread ovens and speed ovens through Huntington Technology Finance, Inc., its designated lessor. Subway also guarantees payments for POS system hardware obtained through its hardware-as-a-service program with HP, or other approved vendors, acting as a collection agent for these fees.
Performance Metrics
Total US Locations
19,502
Franchised Units
19,502
Corporate Units
0
Avg Square Footage
1,375
Franchising Since
1974
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
84
Litigation Summary
Subway discloses 84 litigation actions. This includes 50 general actions and 34 franchisor-initiated actions. Subway estimates that the franchisees involved in these franchisor-initiated actions constitute about 0.2% of its global franchisees. Further details of these actions are provided in Exhibit L.
Bankruptcy History
Subway has no bankruptcy history to disclose in this document.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To renew their franchise agreement, Subway franchisees must meet several conditions. They need to have fully complied with all important parts of their current Franchise Agreement throughout its term and must maintain possession of their restaurant premises. By the expiration date, the restaurant must be brought up to all current specifications and standards for new or renewing Subway restaurants. Franchisees must provide written notice of their intent to renew between 12 and 18 months before the current term expires. All financial obligations to Subway and its affiliates must have been paid on time. Upon renewal, franchisees will need to sign Subway's then-current Franchise Agreement, which may have different terms, including royalty and advertising fees, and pay a renewal fee equal to 25% of the standard initial franchise fee. They also need to meet current qualification and training requirements, sign a Renewal Addendum, and the franchisee and all owners must sign a general release of claims against Subway and its affiliates.
Training & Support Program
Franchisor Assistance
Subway provides franchisees with comprehensive assistance starting before their restaurant opens. This includes initial training at designated locations (which may include web-based courses), approving the restaurant location (though franchisees are responsible for finding a suitable site), and assisting with lease or sublicense negotiations through an affiliate. Subway also provides detailed standards and specifications for the restaurant's layout, design, appearance, and equipment through its Operations Manual. Franchisees can consult with a representative or Business Developer for advice. After opening, Subway continues to offer assistance through ongoing consultations with representatives or Business Developers and provides written materials with new developments. It also develops national and local advertising programs and administers the Advertising Fund (SFAFT), which collects 4.5% of gross sales from franchisees for these marketing efforts. For technology, Subway requires and supports an approved computer-based point-of-sale (POS) system, including software, and provides support for this system. Franchisees must also participate in the Subway MVP Rewards loyalty program, the Subway Gift Card Program, and the Remote Ordering Program.
Initial Training Hours
75
Training Location
Combined virtual training, University of Subway platform, and on-the-job training at nearby Subway restaurants.
Ongoing Support
After opening, Subway franchisees receive ongoing support through a dedicated representative or Business Developer, available for advice and guidance during normal business hours. Subway also provides written materials detailing new developments and techniques. Franchisees are required to participate in various sales, marketing, advertising, and promotional programs implemented by Subway. Technical support for the required SubwayPOS® software is provided by Subway's affiliate, FWH Technology Support Center, which also offers limited hardware troubleshooting. Franchisees are also required to participate in the Subway® MVP Rewards program, the Subway® Gift Card Program, and the Subway® Remote Ordering Program.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
non-exclusive
Territory Size Requirements
Subway franchisees do not receive an exclusive territory. Subway states that franchisees will not receive any territorial rights and there are no radius restrictions or minimum or maximum population requirements that limit where Subway can license or open another Subway restaurant, unless otherwise provided under applicable state law. Subway and its affiliates retain unlimited rights to compete with franchisees and to license others to compete with them. Subway franchisees do not have any right to exclude, control, or impose conditions on the location or development of any Subway restaurant, other restaurant, store, or other method of distribution.
Staffing Notes
Subway requires that each restaurant be under the direct, on-premises supervision of a trained and competent employee acting as a full-time manager. If the owner operates multiple franchises or does not work full-time in the business, they must appoint a Designated Manager who has completed the required training. Franchisees are solely responsible for hiring, training, compensating, managing, and overseeing all other restaurant personnel. The Designated Manager's duties include supervising employees, checking inventories, reviewing sales and food costs, bookkeeping, and ensuring smooth operations. All restaurant employees are required to complete certain online training courses. Restaurants must operate during hours specified in the Operations Manual, subject to local regulations and any approved variations.