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If you have enough money to buy a franchise, why not just buy a triple net property with a franchisee on it, and collect rent from them?
Why not go back in time, buy the whole township, and become fabulously wealthy as downtown BigCity gets built on it?
Buying existing/leased/profitable property is not in the same financial league as starting most franchises. Some, like McDs or (IIRC) Taco Bell are very expensive in fees and proven net worth; I believe the hurdle for one of those was $100k up front, not including any site or build costs, and net worth north of $1M - and this was ca. 1990.
Subway is one of the franchises with very low buy-in and build-out costs; they do not need to be fully-equipped standalone restaurants like most burger and 'cooked food' stores. They're nearly all cold/fresh food with a little bit of toasting and heating, and can be a slot in a strip mall. Someone with nowhere near the resources to buy commercial property can open a store with one of these low-end franchises.
A good franchise can be a gold mine. But a good franchise offers three things: Product/distribution, marketing strength, and operational knowhow. Subway is really iffy in two of these.
A good franchise can be a gold mine. But a good franchise offers three things: Product/distribution, marketing strength, and operational knowhow. Subway is really iffy in two of these.
What's the second? The low buy-in probably attracts some operators of questionable financial strength and suitability for the effort, and the apparent self-predation of the company is souring the game. But they have enormous brand rec and support, and the product is... okay for a chain sandwich.
I don't care for their stuff, but then, I had my expectations shaped by the North Cal chain Togo's, which is the gold standard for subs unless you really, really like the kind of sad northeastern take on grinders.
This forum is good for shooting down any and every business idea anyone brings up.
If you're looking for whoop-it-up MLM, franchising and entrepreneurship rallies, the net is full of them. Nearly all are happy to sell you something, from a book to a surefire-success video series to a turnkey franchise in Hoboken.
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How is it that there are so many Subway stores worldwide if they're such a horrible investment?
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Originally Posted by athena53
There used to be a lot of Burger Chefs. And Big Boys. And Baskin-Robbins. And Howard Johnson's. Need I continue?
It never hurts to warn people of the risks.
I don't see any real diss of Subway here except on two points: some of us don't much like their product, and it was recently revealed that the company used internal pit bulls to run franchises out of business on technical points, so that the company could take over profitable, going locations at essentially no cost. That could be considered an excessive risk by some potential players.
Other than that, pointing out that franchising is a tough, unforgiving road and that people who do it without enough (or sometimes any) experience in the trade, expecting the program and the brand to carry their inexpertise are going to have slim odds of success is not "shooting down" anything.
.......Subway is one of the franchises with very low buy-in and build-out costs; they do not need to be fully-equipped standalone restaurants like most burger and 'cooked food' stores. They're nearly all cold/fresh food with a little bit of toasting and heating, and can be a slot in a strip mall. Someone with nowhere near the resources to buy commercial property can open a store with one of these low-end franchises.
Most franchises can be copied and started without getting roped into franchise fees. A sub shop is one of them: cold fresh food, a couple of tables, a cold counter, can be opened in a strip mall, decorating is plain, number of employees is low.
With the savings on franchise fees, a sub shop could put a little more filling into the sandwiches and win their customers that way. A small oven and frozen take and bake hoagie rolls from the restaurant supply store and the sandwich could be made with extra fresh bread, which is the real difference maker in sandwiches... or contract with the local bakery to make fresh deliveries of rolls.
Very few franchises give enough advertising to really make a difference and they charge a huge start-up fee and huge franchise fees.; a percentage of the take, plus you must buy your supplies from them.
The cheapest franchise to open is a Chick-fil-A. Franchise cost is only $10,000 and they pay ALL startup costs: real estate, construction, equipment, everything. Then they lease it to you. So much higher on-going costs. Sound good? They get about 20,000 applications per year and select between 70-80.
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"I don't understand. But I don't care, so it works out."
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I personally LOVED the $5 footlong. You could host a gathering with really lovely sandwich trays - and they would hold the mayo, hold the condiments, cut the footlong into 4 pieces. And generally, it was very healthy and delicious food.
This forum is good for shooting down any and every business idea anyone brings up.
How is it that there are so many Subway stores worldwide if they're such a horrible investment?
They may not be the worst investment idea ever, but there are plenty of red flags here --- the company doesn't care how many stores they open up in an area as long as they are getting their franchise fees and share of the revenue. Which of course is bad news for the franchisee. I like Subway, and looked into buying one -- but did research and found that the owners work like dogs and take a lot of risk. Passed.
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