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For example the subway near me in DTLA is doing 600-700k gross, but the average is 400-500k. This is part of your due diligence. u/hillsfar has the rest of the good advice for you. An existing subway should be valued based on the existing fixtures, goodwill, income, and market rates. Consider the cost of building out one from scratch (200-350k).
I am purchasing a existing Subway franchise and their annual sales are 280k and there are selling the restaurant for 110k.
It's a franchise system, so technically they're not, HQ only care about the money you have to give them. If opening a store across the street from you lose half your customers to it, but also there's a few more people who goes to subway because it's easier now (closer), then for them it's a win.
Subway #1 - $600k+ in income - Small town, part of C-Store at gas station (13k pop) Subway #2 - $700k+ in income - Slightly larger small town (<25k pop) as part of C-store at gas station Subway #3 - $450-$500k in income - Small town, same as #1 , located in wal-mart Subway #4 - ~$250k Cstore in gas station along major highway in extremely small ...
And Google everything. Pretty damning article a couple years ago regarding Subway forcing franchises to open additional locations pretty close to their current location--or Subway would invite in another franchise owner for that location. They were also accused of marketing down profitable stores so that Subway could force out the franchise owner.
Last I heard they were determining which locations would be able to accommodate these remodels the best and which won't. Also last I heard, any new Subway location opening (or transferring to a new location from an old location) must be to the new Fresh Forward layout, which will be much more expensive as opposed to buying an existing location.
The franchise owner paid for the store, the food, your salary, they pay for it all. Subway gets a percentage of the profits. Its also why striking hurts the owner the worst. He pays a % of gross sales meaning before taxes, payroll etc. Subway employees at corporate should bet he ones striking.
That's why sometimes you can see one Subway franchise located on one corner and then down the block, you have another Subway franchise. This is a big issue for franchisees because this leads to sales cannibalization, where one store negatively impacts the sales of another store.” John Oliver had a segment on Subway:
1. Award. Share. HoorayForEmptyness. • 9 yr. ago. I've known two people who have bought franchises (one being a subway) and basically they just bought themselves full time jobs. They're not doing badly but are by no means rich and have all the stress of a business. 1. Award.
My advice to anyone thinking about investing in Subway or buying an existing unit DON’T DO IT! Thank me later. As an independent Franchise Analyst (the World’s only) and an independent Franchise Consultant, I use my 13 years of behind the scenes, inside franchising to match clients with the right franchise.