The expenses incurred of buying a resale franchise business tend to be noticeably lower than those of investing in an all-new store. But it is also significant to ensure that it will perform up to your standards. Low profit can be a reason for resale, but owners often sell due to changing career goals or relocating to a different area.
The subway franchise cost vary depending on whether you want a traditional or nontraditional and where the restaurant will be. If you are a veteran franchisee, opening a satellite location, or an existing franchisee, the start-up amount tends to be lower.
Fortunately, demand is usually not too hard to assess. Simply take a look at the number of existing subway stores in your area and compare it to the population. If there are already a lot of stores per capita, chances are that demand is pretty saturated and you might want to look elsewhere.
Despite recent news about stores closing and the company slashing costs the demand to become subway franchisees is quite high. This franchising business is such a huge name with relatively low start-up capital that many subway potential franchisees want to explore that option.
When it comes to purchasing a subway franchise, money is essential. Before making such a large investment, you should think about your net worth and liquid assets. After all, the last thing you want is to acquire a huge debt with no way to pay for it.
Entrepreneurs that decide to buy and run an existing franchise receive plenty of great business benefits including name recognition, training, and support. But just like businesses that decide to take their companies and turn them into franchises, there's still no guarantee that your franchise will be successful.
In part two of our series on how to start up a franchise; we're focusing on buying into an existing franchise, like Subway or McDonald's, and owning the franchise. The Federal Trade Commission states that owners are responsible for running all aspects of the business including costs, contractual obligations, and franchisor controls. After you've invested your initial franchise fee payment, selected your franchise, reviewed the Franchise Disclosure Document, and signed the Franchise Agreement, then it's time to pick a legal structure to incorporate your franchise business.
On occasion, there is the opportunity for those interested in buying a franchise to purchase an existing store from a current franchise owner, subject to successfully completing the training. This can often result in lower set-up costs, as the store and all its equipment are often included in the purchase price. To find out what resale opportunities there are in your area, contact your local Business Development Agent.
(upbeat music) - [Jim] Hi, this is Jim and I'm from Los Angeles, California. I'm a long time listener of the show. I'm looking for something that is proven and established. I'm wondering if I should consider opening a franchise store. There's a Subway sandwich shop on every corner, and a Cold Stone Creamery in every shopping center. This just feels safer than trying to start my own thing, but maybe I'm missing something. What are the advantages and disadvantages of going this route I look forward to hearing from you, and thank you for taking my question. - So here's a fun fact, when I was 17, one of my entrepreneurial dreams was to open a Mailboxes Et cetera franchise. I actually used my AOL email address to go out and survey the owners of Mailboxes Et cetera franchises that I had found online. In other words I had looked up contact info for several franchisees. So I wrote to them and I asked all kinds of cheeky questions like how much money do they make from their franchise Now it's funny how things come full circle because these days I'm doing all these case studies and talking to people about how much money they make from their business. But before I did that, I grew up and did other things, realizing first of all that I didn't have the capital, also known as money, to buy my own Mailbox Et cetera franchise, and then I also found something that was better. Still, just like Jim says there are franchises everywhere, might there be a good reason to buy into one Well sure there might be, and Jim points to the ubiquity of the name, everybody knows what these kinds of businesses are, you don't have to worry about branding and so on, but there are also some pretty good reasons not to. So let's look first at the costs, Subway is one of the cheapest major fast food restaurants to franchise. Their fee for just becoming a franchisee is $15,000. And a typical startup costs, which include construction and equipment leasing range from 105,000 to $393,000 according to the company. Now of course that's a big range, but still, 100,000 to almost $400,000 dollars, how about a Cold Stone Creamery franchise Well there again a big range, 53,000 to $468,000. McDonald's estimates that their average total startup investment for a franchisee ranges from one to two million dollars. Now the franchise fee is just one initial cost of many, you also have to pay ongoing fees, usually in the form of a percentage of sales to the franchise overlords. Then you're required to operate this business in a really specific way, typically with hundreds of pages of documentation that you're required to follow to remain in compliance. So there's a lot of negatives, it's a very systemized business, you're buying into someone else's system, you follow the system and the protocol very precisely, and you might get, you know, an average return from it. But it's definitely very different from starting your own thing. Also one thing I remember hearing way back when I did my unconventional AOL email survey of Mailboxes et cetera franchise owners is that you don't really start making money until you have multiple locations, which obviously require years of experience and of course more capital. That's why I think unless you have a really good reason why opening that Cold Stone Creamery or Subway is compelling to you, you can probably do better elsewhere. Lastly, sometimes people say well I'm not very creative, I don't have any ideas, so I would rather just kind of follow one of these existing models. My response is everyone is creative, first of all, and if nothing else there are more than 1,000 ideas in the side hustle school archives. In all of these case studies, these small business tips, everything else, you're more than welcome to steal one of those ideas and save your $40,000 franchise fee. (upbeat music)
As with any business venture, you should research and learn as much as possible before taking the first steps towards entrepreneurship. Franchising is no different. When opening a franchise, you can either open a new franchise location or you can purchase an existing franchise location.
Imagine you were considering buying a restaurant franchise that looked great on the surface only to discover the locals consider it to be a filthy place to eat or it's known to serve low-quality food with poor customer service. You wouldn't want to invest in a location that has a bad local reputation.
You can do this by checking with other franchisees to discuss how they feel about the franchisor and reading over the company's mission statement and vision. You can also look over customer reviews of the specific franchise you are considering and talk with existing employees.
To ensure a smooth transition, it is vital to understand which staff members will stay once you take over the franchise. Take some time to get to know the staff so you understand which staff members are invaluable to the franchise. Talk to the existing franchisee to get their opinions. This will also allow you to get additional input from the existing employees about how they feel about the franchise and the franchisee, as well as give you the opportunity to address any concerns the staff members might have regarding the transfer of the franchise.
Since its founding the SUBWAY franchise system has experienced phenomenal growth, and has become the #1 Quick Service Restaurant chain in the world. In most years, about 70% of new franchises are purchases by existing owners.
Another method to running a Subway franchise location is to purchase an existing restaurant. AKA Subway franchise for sale. This means that the franchise has already been opened and is up and running, you would simply take over as owner and run daily operations. In order to do this successfully, take a look at these important tips:
Buying an existing business is one way of getting your new venture up and running. Perhaps a business owner is getting ready to retire and wants to pass her shop to someone new, or you have a strong business plan that you think would reinvigorate an existing enterprise. There are many reasons why buying an existing business can be a good option, such as reduced start-up costs and time, an existing customer base, and pre-existing knowledge of how the business performs.
Instead of starting a new franchise from scratch, you also have the possibility of taking over an existing franchise. Although it will probably cost you considerably more, it certainly could save you from many possible startup headaches and give you instant stability.
By buying an existing franchise, you could have a proven successful business instantly in place with regular customers and a good cash flow. Because the business is already operating successfully, it will also be easier for you to get financing. You will also be able to look at the books and determine just exactly how profitable the business really is. Here are some tips on how to buy an existing franchise.
The advantages of owning or buying a franchise are many. They can be found in the good ROI, risk minimization, and marketing benefits One of the biggest advantages to franchisees is the knowledge of how to operate the business by the parent company. The parent company is able to pass on that knowledge through training sessions, manuals, literature, and support staff members. This allows franchisees to be confident in their abilities to run the business. The following benefit of owning a franchise includes: 59ce067264