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The SUBWAY® Franchise Concept: Low investment - low overhead - simple operation (no cooking involved) - alternative to what other quick service restaurants are offering.
Franchise Sales: Of the number of franchises awarded weekly, more than 70% are assigned to current owners. This ratio makes growth maintainable.
Franchise Fees: The initial fee is $15,000, if qualified for additional franchise $7,500. The Satellite fee is $5,000. The franchise agreement is for 20 years and is renewable for an additional 20 years without a fee. The franchisee can sell their store at anytime, provided the company approves of the buyer. The initial franchise fee can be applied towards the purchase of an existing location.
Training: Training is for two weeks, 50% in class and 50% in store training. All franchisees named on each franchise agreement must satisfactorily complete training at Doctor's Associates Inc.’s world headquarters before the store will be allowed to open. Area hotels and Automobile rental companies have been selected to provide a discount rate to the franchisees.
Site Selection Assistance: It is recommended that after training is completed the franchisee should begin the site location process. Sites range from 500 to 1,800 square feet, with the average site being 1,000 square feet. A location should have a nearby business community; outside of that a residential community. The franchisor, or a corporation it designates, will lease the site and sublease on the same terms and conditions as in the master lease. The Development Agent must approve all sites. The franchisee, with the assistance of the Field Representative and home office Leasing Department negotiates the economics of the lease with the landlord. The objective is to secure the best possible location for a reasonable rent. An ideal lease term would consist of one year followed by 19 consecutive one-year options. This would effectively secure the property for 20 years with maximum liability of one year.
Advantages of Subleasing: (1) it may be possible for the SUBWAY® franchise system to obtain more favorable terms during lease negotiations given its substantial presence in the real estate market. (2) If you decide to sell your store the transition will be easier and you will not need to renegotiate the lease.
Store Design: The company provides custom floor plans for the location free of charge. However, local laws may require you to have plans either redrawn or certified.
Menu and Operations: The basic menu offers 18 submarine sandwiches (11 cold, 7 hot), deli style sandwiches and salads. At their option, franchisees may add four sandwiches to the menu, two store selections and/or two market selections. The catering program offers party sandwiches in three or six feet party platters and a Kids' Pak® meals (deli sandwich, cookie and small drink). The franchisee determines the pricing of items in the store. Distributors are in place to supply food and paper products for any area in the US and Canada. The cold cuts will come in pre-sliced form. The advantages of pre-sliced meats are: (1) better yield - no ends to deal with, (2) ability to hire and keep younger employees, (3) consistency of slice size, and (4) saved labor costs. Owners may add two additional drinks (example; coffee) to the menu, aside from the four that are mandatory. Fresh baked cookies, (five required: chocolate chip, white chocolate macadamia nut, double chocolate, oatmeal raison and M & M and one market selection of either sugar, chocolate chunk and peanut butter). The store is required to have twelve varieties of salty snack’s, of which three are required flavors; Lays Classic, Baked Lays, and Doritos Nachos. SUBWAY® restaurants offer five types of foot long breads, Italian, Wheat, Honey Oat, and Parmesan Oregano. And one market choice of either; Country Wheat, Hearty Italian, Sourdough or Cheese. The bread is shipped frozen in pre-formed dough sticks and takes approximately one hour 18 minutes to prepare (one-hour proofing and 18 minutes to bake at approximately 350 degrees).
Please check www.subway.com for a full description of the Subway Menu.
Subway® now offers BREAKFAST! Keep in mind that a surprising offshoot of the breakfast program is the fact that customers, in many cases, are buying their lunch at the same time. These are sales you might not have otherwise made; all you have to do is fill your sandwich unit as usual! Since you are already in your store baking bread early in the morning, serving breakfast helps you to capture sales in an otherwise inactive sales period. In effect as of April 2010, the mandatory store breakfast hours are as follows: 7 AM Monday - Friday, 8 AM on Saturdays and 9 AM on Sunday. In addition, it is still recommended that all Subway Restaurants be open for business a minimum of 98 hours per week.
Ongoing Support: The area Development Agent or designated representative will be with the storeowner during the first week of opening and from then on will provide a monthly evaluation and inspection. Also, the company provides daily back-up support in the form of a coordinator, whom the storeowner can call toll-free from 9:00 a.m. to 5:00 p.m. EST for assistance. Ongoing education comes in the form of weekly newsletters to all franchise owners, providing useful operational, marketing and advertising information along with updates.
Royalties: Royalties are based on gross sales minus sales tax. The total is 12.5%:
8% to the company and 4.5% to the Subway Franchisee Advertising Fund Trust also known as SFAFT. Franchisees in some markets may vote to increase the advertising percentage for local advertising purposes.
SFAFT: a chain wide board of trustees currently governs SFAFT, which is comprised of 12 franchisees, including one non-voting Canadian representative. This board is elected by fellow franchisees to oversee the administration of the fund and give advertising direction to the franchise as a whole. The board formulates policy that determines how the 4.5% advertising fee is administered.
4.5% Breakdown
12.3% for the production and distribution of advertising materials including in-store campaign materials, TV, print and radio; this also includes all administrative and overhead expenses.
53.9% for national media and relative supportive research.
33.8% is returned directly to local markets for local advertising.
Percentages are determined annually by the SFAFT chainwide Board of Trustees.
Store Placement: The factors we consider in evaluating sites include the potential customer base, traffic patterns, proximity to strong Population back-ups, visibility, and parking. We also consider proximity of a proposed satellite restaurant. For further information refer to our Offering Circular Item 11 Franchisor’s Obligations under the Location Selection paragraph.
Earnings Claims: In our Offering Circular we further explain why we cannot provide an earnings claim. We do not furnish or authorize our employees, salespeople, or Development Agents to furnish any oral or written information concerning the actual or potential sales. Actual results vary from restaurant to restaurant and we cannot estimate the results of any particular franchise. We encourage you call SUBWAY ® Restaurant’s
large number of multi-unit owners from the circular to learn first hand why they decided to acquire additional franchises
Capital Requirements: The total investment can range from $91,800 to $220,300 US. These amounts represent the net investment required if you are eligible for the company's equipment leasing program. If the franchisee does not select the equipment-leasing program, they should substitute $34, 975 to $42,675 US.
We suggest that storeowners have half of the amount in cash and finance the other half. We do not want franchisees to carry a large debt service.
Equipment Leasing: The SUBWAY® franchise system offers an equipment leasing package that requires a $2,500 security deposit and the lease payments are for 60 months. At the end of the lease term you may purchase the equipment for 10% of the original value. The $2,500 security deposit will be applied towards the purchase. The equipment may be purchased at any time during the lease period using the buy out calculation
schedule.
Financing: Currently, there are three companies approved to provide financing for equipment and renovation. We recommend that you contact them for a financial package detailing their offering.
JenCas Financial Inc.
4 Country Club Circle, Suite 202
Maumelle, AR 72113
Phone: (877) 953-6227
Fax: (501) 851-1449
www.jencas.com
Pat Sullivan
Harbour Capital Corporation
121 Shattuck Way
Newington, NH 03801
Phone: (866) 262-3036
www.harbourcapital.com/subwaync.htm
Captive Capital Corporation
Phone: (800) 994-3415)
Direct Lease Franchise Group
Phone: (800) 999-9942 X9463
Advantages of Franchising
Strong Name Recognition
Groundwork is Already Done for You
Creates a Better Impact Than When Tried Alone
Provides a Training Program
Franchising Does Work: Franchising is considered one of the most dynamic and effective systems for distribution of goods and services known today. It combines the entrepreneurial drive and ambition of the small businessman with the expertise of a large company. The results are usually a rewarding partnership for both parties. When you purchase a franchise you are joining a team. The members of that team have mutual
goals. Together they work to build the company's sales and image, and reduce common expenses. You also gain expertise in site location, lease negotiations and store construction. In these areas, it takes years of experience to become proficient.
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