Subway Franchise...

ramenkid

Amit92 wrote: »

Thanks a lot for your useful posts. But the franchise offers look so attractive in the long-term when you can expand.

Yeah, it looked it. Subway targeted to open 2010 shops in UK by 2010. And how many have they got now? I think it's still far off from their expanding target.

I'm trying to give advice but it's you who need to do the calculations and risk-taking.

Business like this comes as a trend (Look at McDonalds now). In a couple of years time, Subway may not be as popular & there may be something new to take its place. You may not want a Subway store afterall. Who knows.

Good Luck.

Amit92

ramenkid wrote: »

Yeah, it looked it. Subway targeted to open 2010 shops in UK by 2010. And how many have they got now? I think it's still far off from their expanding target.

I'm trying to give advice but it's you who need to do the calculations and risk-taking.

Business like this comes as a trend (Look at McDonalds now). In a couple of years time, Subway may not be as popular & there may be something new to take its place. You may not want a Subway store afterall. Who knows.

Good Luck.

Well thanks to the advice from this thread..Im thinking of staying in Higher Education has a back-up option.

wuckfit

My business was a specialist music shop. It's been closed for a while. I put in 70 hour weeks, had no holidays for seven years, didn't take any wages for the first four years. I invested every penny back into the business. When it was successful, it was successful on paper only. due to having a lot of stock 'assets', the business was rich on paper, and for all the hard work, the taxman got a large chunk of any profits.

Amit92

wuckfit wrote: »

My business was a specialist music shop. It's been closed for a while. I put in 70 hour weeks, had no holidays for seven years, didn't take any wages for the first four years. I invested every penny back into the business. When it was successful, it was successful on paper only. due to having a lot of stock 'assets', the business was rich on paper, and for all the hard work, the taxman got a large chunk of any profits.

I see at the moment I have plans of setting something low-cost and successful like Coffee Shops & Sandwich Shops in City centre areas..but I don't know what to do..any advice?

wuckfit

yeah. don't go for a franchise.

I've just had a look at the figures. it costs a minimum of 70k to set up a small franchise. a large one is £175k.
that's before you start.
Subway take a royalty of 8% of every sub sold. plus a 4.5% advertising fee on the gross profit after VAT (if applicable)
if you turn over £4000 in a week, and your GP is 70% thats 2800. Of that 2800, 12.5% you have to give away as royalties and advertising fees. thats £350. or £18k a year.

Savvy_Sue

Amit92 wrote: »

I see at the moment I have plans of setting something low-cost and successful like Coffee Shops & Sandwich Shops in City centre areas..but I don't know what to do..any advice?

Yes, get a job in one. Any one will do, heck, a working in a Subway or MacDonalds will do, any of the chains, or in an independent sandwich shop. Make friends with the manager / owner, and see what they say about the profit to be made.

Also learn how to treat staff, or not, and the myriad regulations which go with food hygiene, employing staff, health & safety, and dealing with the Great British Public.

Then see if you're still so keen, and think there's a fortune waiting to be made.

Plus point: you can do the above at the same time as getting your degree.

Kilty_2

wuckfit wrote: »

yeah. don't go for a franchise.

I've just had a look at the figures. it costs a minimum of 70k to set up a small franchise. a large one is £175k.
that's before you start.
Subway take a royalty of 8% of every sub sold. plus a 4.5% advertising fee on the gross profit after VAT (if applicable)
if you turn over £4000 in a week, and your GP is 70% thats 2800. Of that 2800, 12.5% you have to give away as royalties and advertising fees. thats £350. or £18k a year.

So that's why they can charge the best part of £6 for a sandwich :rotfl:

OP - The biggest problem I see with Subway stores is that they don't seem to care where they're opened and will let 2 franchisees open dangerously close to each other.

pitkin2020

you have received some really good advice on this thread, like others have seen you need to dig into the figures yourself and see if it works dont take there word for it, look at the pros and cons.
I rember when i started my carpet cleaning business i looked deeply at the chemdry franchise, the figures they were quoting were amazing and i was sort of along the line of thinking you are, wow i'll be rich in a few years! Anyway i took the time to research it and spoke with others using specfic industry forums to see what others thought, i got 10 peoples views on the matter and out of those 10 only 2 were still in a franchise, the other 8 had sold up some after a year some after 6+ years, even the ones still in were saying the figures are overflated.
So i then broke down what the startup cost with them was and what i could do it for on my own, if i recall it was 12k to start with them that included training machinery, insurance and national advertising. When i realised i could start on my own for a third of that including my own advertising it was a no brainer. I also worked out what they wanted you to charge people, what they dedcucted in fees and how much work i would have to do to earn a thousand per week turnover, what would be left after that turnover from there fees and advertising costs, i soon realised i could work far less hours doing it myself i could also charge less.
With the subway your just paying a premium to use there name, which is fine but you also have to look at the area you intend to set this up, how close is another subway, also the type of people that use the intended area, (i.e high street, out of town shopping centre) if its a smallish town you will need central premises (higher rent) if your in a city you can look to move out and still get a good volume of people.
But you talk about expansion, you could easily expand a smaller local branded shop for far less, your startup costs overall are going to be far less, for 10k you could set up a very nice coffee/sandwhich shop and like others have said your costs are going to be lower, which in turn means you can work fewer hours for more profit

martin1018

Excellent advice on here, which you would be well advised to take heed of.
I am in the process of setting up a business with my daughter. We looked at the franchise route but we got the same results as 'Pitkin2020' above.
We would have had to do so many jobs before we even started to earn money for ourselves, just to pay the royalties and various fees. On top of that are the loan repayments which are going to be about the same for us going it alone as opposed to being part of the 'franchise umbrella'. We are setting up at the moment and may be in competition with some of the franchises but so-be-it. We won't be held back by extra costs, and as for the advice from the franchise owners about how to make the business a sucess (which they often push as a plus-point!), we have just booked a number of courses throughour local 'Business Link' for the grand sum of £0.00! There's no end of advice available out there, much of it for free - try to get as much as you can, it all helps.

Think long and hard before you make a decision. I am no fan of modern-day university education (dependant upon the degree taken) and would recommend real-life work education, but each to their own. You just have to do what you feel most comfortable with, and get as much out of whatever you do as possible.

Amit92

Hmmm..I guess if I did want to open a business like Subway. I could try and follow their Business Model and make my own store identical to their's but just under a different brand-name?

I like the thought of Education and job security to an extent with a degree..but its the fact..I could start small without much funds and work myself up in Business.