Is Subway a Good Franchise To Buy?

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Is a Subway Franchise a Good Investment?

It's one of the most popular questions for every experienced franchise author/speaker. Perhaps because it's the largest franchise in the world (in terms of units, not retail sales), people want to know if a Subway franchise is a good investment.

And because many of my readers and seminar attendees know that I wrote Start Small, Finish Big with Subway's co-founder, and I sold a major franchise business to him, they think I have special insights about Subway. Really, I don't.

"Is Subway a good franchise investment? . . . Can you help me get one?"

While those are important questions to ask about Subway, they are important questions to ask about any franchise that you think you might want to buy.

In answering the questions, here's what I tell people.

Subway must be a good franchise investment for some people because many of the franchisees have been with the company since almost its inception, and (now answering the second question) it seems impossible to "get one" in the USA.

Of course, neither answer is really what you want to know, but you're not asking the right person!

If you really want to know if Subway is a good investment, franchisees are the people to ask. They can also tell you how to "get one"!

You can easily find Subway franchisees either by looking into the company's disclosure document (where you'll find their contact information), or simply stopping at a Subway and talking to a franchisee.

Franchisees are usually willing to discuss their experiences with prospective franchisees, and if they have insights as to how to "get one" they'll tell you. However, it seems to me that few Subway franchisees own just one unit -- they own multiple units (it would be a good idea to ask them why) and so they may not be too eager to help someone buy a unit unless it's far from where they'd like to own another one.

For those of you (and there are many) who would like to skip the start-up phase of business and buy an established franchise, that may be easier to do with Subway, except that the existing franchisees get first dibs on available units. And that's because a franchisor would rather sell a unit to an experienced franchisee than to one who knows nothing about the business.

Meanwhile, you're asking the right questions, and keep in mind that there are at least 2,500 franchise concepts in North America alone looking for new franchisees . . . don't limit your questioning to Subway. Ask the same questions of other viable concepts such as those included in my most recent eBook: 12 Amazing Franchise Opportunities for 2015.

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So glad to have joined this conversation.

I get this question every day from around the world and having been involved with Subway for 27 years as a former multiunit franchisee and an International DA, I have great re-sale data, insights,cash flows, and such for all sorts of possible questions (from my vantage point), as well I am involved with current re-sales.

One specialized function I perform is "searching for that elusive Subway store". It takes time, patience, persistence and some fees to get the job done.

I know how. When you are on safari looking for that elusive Leopard in the wild , you need an expert "tracker" .........

In the last two weeks many of my Subway predictions appear to have started to come true. I see more stores available for sale in 2015. I see lower asking prices because of lower sales and profits.

There are many reasons, but too many stores in some areas is one reason.

The density of stores is not justified by the population surrounding them. In a rising sales situation, the problem is somewhat masked.

But now the reverse situation is at hand where sales have slipped by 5-10% in many areas and therefore the marginal store that was surviving has now become a headache for the owner and he is faced with closure, relocation or selling on the resale market for what he can get.

The economics may not justify its existence and the way it is run remotely by the owner.

Some of these stores make great opportunities for entry into the Subway franchise as an owner operator.

But buyer beware. Know your investment opportunity before you sign because the owner's headache may become your migraine.....

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This page contains a single entry by Dr. John Hayes published on January 11, 2015 5:48 PM.

What is Franchising, Really? was the previous entry in this blog.

Remember BKC's Failing Corporate Stores in 2011? is the next entry in this blog.

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