Top 4 Reasons to NOT Buy a Subway Franchise

Top 4 Reasons to NOT Buy a Subway Franchise


Here at Franchise city we help investors find
the right franchise, a lot of that has to do with educating people as we do in these
videos. One of the brands we are asked about most
often is the Subway Franchise. Now there is no question Subway as a corporation
is super successful, but does that bear any relevance to you as an individual unit franchise
owner? We all know the high points about Subway,
in this video we will look at some reasons you may not want to open one. 1. Massive Competition. If you live in any major city and have a desire
for a Sub you won’t drive more than a couple of blocks before seeing another Subway Franchise. Thatis convenient for you as a consumer but
for franchisees not so great. When you combine the fact that your store
is competing with many other Subways – with the very low margins seen on promotions
like the $5 sub – you have a recipe for working hard for little pay. Additionally Subway as a corporation despite
it’s massive success has seen revenue declines
the past few years which brings us to our next point – store closures: 2. Store Closures and Corporate Decline. Subway reportedly had 359 store closures in
2016.The first time ever. For the past 4 years we have been cautioning
Subway investors on what appeared to be a potentially over saturated and overheated
market.Despite all this information being publicly available you still see people lining
up to buy a Subway. And you see this type of irrational investor
behavior in real estate speculation as well as in stock market investing. Right before a crash, or a decline there is
a massive influx of investors who throw their money at this supposedly “incredible opportunity”. But the opportunity only looks incredible
because everyone is doing it. Once it hits bottom people learn their lesson. And you can’t blame investors as they see
all these franchises everywhere and assume that means guaranteed success. What that in fact means is intense competition. 3. Low Unit Sales. It’s funny when I take calls from clients
asking about buying a Subway I always ask “So I assume
money is not your primary focus then” and I would hear a silence on the other end of
the phone. Again we have people for no good reason other
than the big name want to throw money at a franchise despite having no idea about the
economics, operational model or anything for that matter. People – education is your friend and knowledge
is power. Well its easy to find out how much a Subway
franchise earns and the average sales per unit as noted in the QSR 50 for a Subway franchise
is approximately $424,000. Now it�s important to note that back in
2012 Subway AUV’s were $482,000 so we are seeing a decline in per unit revenues year
to date of about $60,000 per store. So stores only 5 years later are earning $60,000
less than they did in 2012. Now $424,000 in revenues may sound like a
lot of money to inexperienced business owners but remember Subway takes 12.5% right off
the top – an 8% royalty and 4.5% weekly ad fee. Then your rent, your employee salaries, your
insurance, your ingredients, your taxes all come out of that number – and don’t forget
your really low margins to begin with. What is left over for you as an owner is really
not that much. In fact on Subways own website when asked
how much can you earn they suggest you speak only with multi unit owners, not single store
owners! From a revenue perspective on the QSR 50 next
to Baskin Robbins which is typically a seasonal business Subway has the 2nd lowest unit revenues
of the entire QSR 50 list. 4. Disgruntled Owners. We hear it first hand from people who want
to sell their franchise. And if you Google its not hard to find owners
who are mad at Subway for many reasons including super low margins,
overly aggressive expansion policies, regional managers who create problems and
much more. Of course there are Subway
franchise owners who are happy as well but most of those got in long ago. Often those who get in early with emerging
brands will have success. As always make
sure you invest at the correct side of the growth curve – going up – not down. So there you have it 4 reasons to consider
not buying a Subway franchise. It’s up to the investor to decide whether
buying a Subway is a wise decision. Just be sure to perform your due diligence,
educate yourself and be realistic. Here at Franchise city we help people find
profitable franchises, we’ll tell you the good and the bad and we work with over 600
national franchise brands as brokers. We work with several food franchises that
we can show you to compare against Subway. If you would like to discuss your options
complete the form on this page or call us to set up a consultation with a broker. There is no charge for our service, just like
your real estate agent and your franchise will never cost you more by using a broker. http://www.franchise.city

100 thoughts on “Top 4 Reasons to NOT Buy a Subway Franchise

  1. good info

  2. You made my decision, no subway for me.

  3. Great video thank you so much for the info. What are your thoughts on Little Caesars please do a video review thank you will be appreciate it

  4. will work for subway sandwich.

    lol for real its probably a better bet than owning a subway and losing money

  5. Thanks for the info.
    What do you think of larry's giant subs franchise?

  6. Subs by nature go under !

  7. ALERT! THE GUY HOSTING THIS HAS LIZARD EYES…SLITS….LOOK! CREEPY

  8. I have a friend who owns a giant Maco body shop i sell motorhomes travel trailers and small 4×4 trucks maybe 11 at a time i make more money than him and i sell them when i feel like it they sell within hours on craigslist if priced right i shut down a $500 a day transport service after i discovered the rv business i work for myself when i feel like it i mostly play with my 8 hot rods all day or travel around in my 37ft motorhome life is good

  9. Single unit owners are tipicy new to the business. With Subway its easy to grow rather quickly. 10 stores in 10 years can be done 😉 so its basically irrelevant that he mentions that subway doesn't want you to talk to single unit owners.

  10. I worked at a Subway 20 years ago (as a teenager), and there were MANY days when the owner only made enough money to cover my wage ($5.15 an hour).

  11. I work @ subway atm, my owner owns like 5 locations here and Ive worked at 2 of em. One of them is rly slow but one of them is really busy during lunch and dinner hours. THe reason why one is really slow is because no one can find it. Literally across from a really busy plaza but its really hard to spot, went to the trader joes across the street and the cashier didnt even know there was a subway.

  12. what would you recommend to buy instead of subway?

  13. you to me:"so, money isn't an importance to you, is it?"
    me: "not really, there's enough laundromats and I kinda need a place to wash the cash… even if it's not profitable"
    click

  14. Can you talk about some of the franchises on franchise.city?

  15. I know someone that owns a Subway franchise and what you didn't mention is the "forced remodel" of your store using subway only contractors which charge inflated prices to do the remodel. This is to keep the store fresh and new looking. The owner told me he paid a 100K for a remodel and it has to be done every 7-10 years

  16. Subway has a problem, their sandwiches are horrible. Even when hungry I have to try really hard to drag myself to one…

  17. Never open a subway shop, if they cheated on their customers do u really think they care about the owners? Their 1 foot sub is only 11inches.

  18. What about Dunkin Donuts or other Coffee Shops. "The world runs on Dunkin".

  19. It depends on the location mostly with subway the one I work for does 20k+ a week in sales and it’s a one unit owner it’s also a 24 hour store inside a gas station so you just have to know what to buy I’ve worked for others that do like 4-7k a week those are the one you want to stay away from

  20. What about Popeye's? Those are few and far between around here.

  21. Thanks for the tip. I luv learning from experts and those who are in the loop.

  22. Jersey Mikes is so much better than Subway.

  23. Want to buy a job? Become a franchisee…

  24. I haven't heard a sub referred to as a submarine in like 20 years

  25. I find it helpful to play customer for a bit and really think about things. I am a subway customer, the prices are meh, you hardly get any meat whatsoever but the subs are very very tasty. In my area, not only are there a lot of subways but there's a ton of local italian pizza joints that make subs with homemade bread. I find they are close to slightly more in price but you get way way way more cheese and meats on the local shops. I can't stress enough how pathetic the small amount of cheese and meat you get on a subway even if you pay for double meat is. It's a sad sick joke.

  26. In Philadelphia Lee's, Primo, Wawa, Fresh Works, Slack's and the thousands of delis and pizza shops forced most of the Subways to close, I live in NE Philly and couldn't tell you where there was still a Subway.

  27. There's 9 subways in my county the same person owns them all there not room for any more for our population they got in it early they are set now becuase of the no room for anymore I think subway tried to sell a other one with in like half a km of one of there stores but the people actually tried suing subway dropped it after that I also think they probley couldn't sell one here if anybody had half a brain for the population that's here 9 is to many but since it's the same person that owns them it works out I guess they got a big house and all there kids have nice cars once they turn 16

  28. Nice topic coverd, can you tell us which type of business are good to do ?

  29. All Real Estate does is slow down business and promotes these tired old crappy business models. Town after town the same old Bland food. And overpriced land zoned for slowness.

  30. Definitely don't buy a Subway if your name is Jared!

  31. No subway for me.

  32. I would never own a franchise operation. A friend had a Furniture Medic franchise several years ago with a nice, generous "protected territory" that was over 50% parceled out to new franchisees within 2 years. F.M. had the contractual rights to do this and there was nothing she could do about it.

    Now you want to get into the food industry, here's how you do it right as a sole proprietor: find a Greek restaurant, work your tail off there. learn everything you can and I guarantee you success, nobody knows the "hot dog" industry better than a Greek and if you just use two eyes, two ears, and one mouth it's the best education you'll ever have- and you'll be getting paid for it too. ☺

  33. Subway needs to fix their guacamole. It tastes like it is impregnated with chemicals. I don't know how Subway owners make any money since the corporation is bleeding them dry and allowing too many too stores in certain areas.

  34. Yeah, but Subway has one of the most famous, err…infamous spokesperson…JARED!

  35. u right my friend

  36. Reason #1: You making money means I’m making less.

    Rich people won’t tell you how to become rich because that means they will be making less money.

  37. Jared Fogle screwed them 😂

  38. Your desire for a submarine

  39. A good friend of mine used to own a few subways. After all his over head. He pocketed maybe 25k a year

  40. Their halal meat stops me visiting subway!

  41. DOG FOOD…THE BREAD TASTES LIKE THE MEAT…NO FLAVOR…HIGH SODIUM TURKEY BASED CRAP

  42. Jared enjoys footlongs in jail.

  43. Why would anyone ever buy ANY franchise. Just take a lot less money find a great location and do your own thing. In the long run even if you have less sales you are paying whole lot less in franchise fees, HQ designs, advertising costs, forced improvements and on and on and on. Franchises are the ponzy scheme of the business world. Franchises are just there so the blood suckers at HQ milk you dry. They charge you double retail for everything including salt and pepper.

  44. I used to like Subway, but now I constantly get shitty service and shitty food. I now greatly prefer other sandwich shops such as Potbelly's.

  45. A Former Neighbor Was A Supervisor At Subway. I Told Him As A Supervisor You're Entitled To All The Free Meals You Want. He Replied "I've Worked There For 6 Years And No Once Have I Eaten There. They Use Low Grade Meat And Their Standards Are Very Low."

  46. top 5 reasons to not buy anything.

  47. you are 100% correct

  48. Jersey Mikes.

  49. Profits at most franchises are underwhelming.

  50. No mention of the poisoning of customers with their factory produced muck they sell as "food". All about the money. Drown in your greed, drugs and guns America, you chose this way, enjoy

  51. Top reasons not to buy anything

  52. Not one mention of Jared Fogle?

  53. is there ANY franchise that you should buy? According to your channel, NO! =)) haha

  54. Very sound advice from a business professional.

  55. Are there any upsides to owning a franchise? I've known a lot of people who did it, and none of them had any success. They were not experienced business people, but it seems like experience business people stay away from franchises. It always seemed to me like franchising is to owning a business as a mobile home is to owning a house: You have a lot of obligations and few freedoms, and you'll never sell it for what you paid for it. That's what I've seen anyway.

  56. I can't stand Subways business model. Why is the customer the one that's supposed to tell you what should be on the sandwich? Because subway doesn't know how to make good subs?

  57. Does point#1 apply to Starbucks as well?

  58. Great channel! I would like to see a video where you highlight an individual story of someone making a fortune on franchising and what we can learn from their story.

  59. LOVE your videos!

  60. 10 bucks for a foot long. what a joke i will never go there again. total rip off

  61. i understand the mindset of buying into a 'sure thing' with great 'brand recognition'… except that's based on a perception more than fact. especially for certain food, like pizza, i think a franchise is bought by a business person or one pretending to be a business person. of course, if you have an unique product you can avoid franchise fees, beholden to someone else's marketing and rules and buying a relatively low paying job. so, i dunno, it makes sense to me that if you're not a pizza-maker yourself, find someone who has a great recipe and do that. problem is a sub shop doesn't have the same appeal, so i think a no-name sub restaurant would be a hard business.

  62. When Subway first started they were great. Fresh ingredients on a freshly baked sub roll. Lately however their standards have dropped. I used to purchase subs from a location that had only one female worker. I asked her what she did when she had to go to the restroom. Could she lock the door. She said she wasn't allowed to that she had to hurry and return to the counter. Several weeks later that location was robbed and the female employee was replaced by a male worker. I returned to that same location only one time because after ordering two subs the sub rolls were stale. Once while at a Subway restaurant I saw an employee bringing meat and cheese from a local grocery store. That location is no longer in business they closed. Recently I went to a Walmart Subway and ordered a steak and cheese sub and the meat tasted like cardboard. Long story short it sounds like these franchise owners are cutting corners because they can't afford to provide the same fresh products that are advertised. Unless you think you can beat the odds don't buy a Subway restaurant.

  63. Excellent video. Really like the intermittent stats when laying out your reasoned expert advice.

  64. Besides forced remodel you have completely forced promotion's. When they do buy one get one free with drink the owner has to employ twice as many people and use twice as much food and for half the cost and nothing extra from Subway to the owner it's just another day to subway

  65. i live in a town with about 10,000 people. there is only 1 subway here and its always busy.

  66. Could it be that their products suck?

  67. Shitty food, Pedophile Spokesman, need I go on?

  68. I knew a guy who owned 2 or 3 Subways. I'll just say that he only made it by eating a lot of ssndwiches.

  69. It is nothing but like buying yourself a barely minimum wage job, struggling to sell my store

  70. Hello dear
    I want to ask could non residents buying a franchise by incorpora an offshore company?

  71. 0:49 they are "subs". NOT submarines.

  72. i have been offered to take over and subway in Stockholm sweden. The developer said that the currently owner has 3 franchises right now ( restaurants ) and want to sell all the three of them because he has kid and a lot of work to do and he going to get back to a 9 – 5 job. Is this a trap? why would someone sell all. the threee locations. should I take over 1 one of them. what should I look for? I don't want to get scammed I want to earn money. I don't want to end up with a lot of debts and loans. Give me some tips.

  73. Subway blows. First off, the sandwiches suck. It's all bread. Then, they give it away by offering it for $5.00. Do you ever notice that only foreigners buy them? No American is going to invest their money to become a subway slave. What they should do is sell real Italian subs , high quality food, and charge for it. People want quality, not cheap bread and gross cold cuts!

  74. Another great video from you Mr. Franchise City. You are awesome!! Thank you! Since you are very well Informed and knowledgeable. I have a question for you Is Burgerim company a good Investment!!

  75. Really just to reinforce the over saturation. I live is a small town in central AL of about 12,500 population. We have 3 subways, and that is not counting any of the towns and cities around us.

  76. 5 guys please.

  77. The sandwiches are not real food. I don't know anyone that can still stomach their food.

  78. qsr50- what? what was that graphic at 3:33?

  79. subway went to shit, paying $8.25 for a 10 inch sandwich with fake meat and soggy veggies

  80. dont buy a subway that serves alot of people from india they want everything on their sub and it will take 10 minutes to make it while other customers walk out the door

  81. Subway went wrong by expanding their menu too much. Look at In-n-Out, they only sell like 5 items on their menu.

  82. McDonalds are serving laboratory made meat I still cant believe it

  83. It really is great how concise these videos are. Straight facts and educated opinions, short and to the point

  84. Over saturation… The company started to go down hill right b4 Fred Daluca died… In the beginning Subway was operating at a lost but they opened new locations to give the appearance of success which attracted new owners… 15 years ago was Subways peak now the bubble has popped

  85. You are always closer to a sub shop that makes better subs than Subway.

  86. the joy of owning a franchise that others can ruin for you even if they are on the other side of the country from you.
    https://www.local10.com/news/national/subway-employee-caught-putting-feet-near-food-prep-area

  87. In another docu about Subway in France I heard a sentence. It said
    "Subway does not sell sandwiches, it sells franchise contracts"

  88. It's easy, you guys sell the franchises that are going to give you the greatest kickbacks.

  89. Great info. Why are the older franchises more profitable?

  90. subway franchise is a big trap and a scam. They are the financial predators and make your life hell. They have closed almost 1100 stores in USA alone in 2018 and is in deep trouble. Never own it, you will regret it

  91. great advice from this guy, on all types of businesses

  92. YOU FORGOT THE MOST IMPORTANT REASON!!!!

    finding workers who can dispence mustard, mayo and other sauces WITHOUT making the fart noise is REALLY difficult!!!!

    🤯

  93. Great advice! Thank you for the tips.

  94. Nice video. My personal research also shows that Subway is a dinosaur destined to the grave.

  95. There is a May 5th 2019 article in the New York Post about Subway about how they use minor infractions to shutter franchisees restaurants. Subway has a 700 page manual that is according to one lawyer "impossible to comply with." Once the store has been shut down for some infraction Subway then sells the store to the companys own development agents. The same people who direct the monthly inspections. The company took 955 actions against franchisees in 2017 and 2018. Most of the actions were done through arbitration so the reasons behind them were not disclosed. According to a restaurant consultant from Pacific Management Consulting Group who was cited in the article, Subway in 2017 brought 702 arbitration actions against franchisees in the U.S. That is compared to one arbitration action brought by McDonalds, two by Dunkin Donuts and zero by Pizza Hut, Burger King and Wendys in the same year.

  96. Subway Got Too Big. "Franchisees Paid" a Price : https://www.msn.com/en-us/money/smallbusiness/subway-got-too-big-franchisees-paid-a-price/ar-AADzfho?li=BBnbfcL

  97. Where Do You Find All Those STATISTICS??

  98. this is what subway has been doing to its franchisees, very nasty company. Worth reading
    https://www.nytimes.com/2019/06/28/business/subway-franchisees.html

  99. Its not just subway. Working conditions are deteriorating across the board in different professions and ranks. Its a sign of the entire system sinking like the titanic.

  100. It’s a garbage sub. i want a good Italian sub from a mom & pops store. How can u have a steak and cheese and u don’t even have a grill?!$& WTF

Leave a Reply

Your email address will not be published. Required fields are marked *