Subway Franchise...

2ronnies_2

Hi Subman, Thank you for your detailed reply. I have been looking into subway franchise opportunity for some time and I have few questions. I have tried to get answers to these questions from my local DA but I am not having much luck. I was wondering if you would be kind enough to help me out with my questions. Thanks Regards. P.S. Could I pm you with my questions as I do not want to hijack the thread.

Subman wrote: »

I'm a Subway franchisee, so I'll add my tuppence worth to the debate.

First and foremost though, I see the OP has already decided not to progress further with Subway and this is the right decision. A Subway franchise is an excellent opportunity, but for it to work you need a great location and to make the real money, you need multiple units. Joining the franchise at this stage, you WILL NOT be able to open in a location that will make you the big bucks, in addition you will never be able to expand your business as you might hope, there will simply be too many "bigger" franchisees around you with more sway and capital to open new stores.

Subway is also currently suffering at the hands of HMRC, after being forced to charge VAT on certain products that have historically been VAT free. This has had a huge impact on margins, and although it is being challenged, it has the potential to put a lot of people out of business.

The store you posted that's for sale is on the market for one clear reason, it doesn't make any money. Don't even look at a store that takes less than £5000 a week and don't kid yourself into thinking you can "turnaround" a store and increase the turnover. You can to an extent, but if it's taking £4000 a week now, you need a 100% increase in sales before you have a store that'll allow you to live well off the proceeds without having to put in some seriously hard work.

The brand attracts people, that is certain. If it was my name above the door and not Subway, I'd have half the customers I do no and our customers love what we do and many travel quite surprising distances to eat at our stores. Definitely look into franchising in more depth, as although there are many instances where it does not work, fast food is generally one example where it can be hugely beneficial.



There's a lot more to factor in than that. To fully kit out and open a Subway store will be well over 100k, I know some who have paid around the 200k mark to get up and running.

I know people who have opened up cafes and sandwich shops from scratch and the actual cost isn't as different as you might imagine. To set up a sandwich shop capable of making the same money as a Subway store you'd need an awful lot more than 3-4 grand and some second hand chillers! What about shopfitting, electrics, plumbing, alarm systems, signage, POS, stock, working capital, furniture, commercial catering equipment etc etc etc.



Actually, that is one hugely positive aspect to the Subway franchise. Unlike most in our industry, we do not buy our stock through the franchisor. We have a franchisee run co-op that sources products and services on our behalf, meaning we get a fantastic deal on most products and benefit from huge buying power. Far too often in franchising, the franchisor makes huge profits by controlling the supply chain, in Subway this is not the case.

Feel free to ask any further questions if you have them, but as I have said, my advise is to look elsewhere for business opportunities at this stage.

lincroft1710

Amit - I know a very easy way to end up with £1,000,000 from a takeaway or even restaurant business. Invest £2,000,000!!!

Seriously I admire your entrepreneurial ambition, but living in a town which seems overrun with takeaways/restaurants plus cafes/coffee shops (3 McDs, 2 KFC, Subway) and still new ones opening, I cannot see them all making a living, let alone a profit.

If you do eventually decide to go into catering you will have to research your preferred location very carefully, personally I would look for another type of business.

Amit92

Hey,

Well I'm interested in a local subway store which is priced at £125k, with about £370k turnover and £59k rent!

I've always thought of managing a subway resale for many years, but as I student I don't have anywhere near that amount!

I was wondering if anyone has any advice or help on how to raise such an amount?!

Thanks

Savvy_Sue

Amit92 wrote: »

Hey,

Well I'm interested in a local subway store which is priced at £125k, with about £370k turnover and £59k rent!

I've always thought of managing a subway resale for many years, but as I student I don't have anywhere near that amount!

I was wondering if anyone has any advice or help on how to raise such an amount?!

Thanks

I can't imagine that the advice has changed substantially since you asked 18 months ago ...

I haven't re-read the thread, but I would guess it went along the lines of

a) you won't be able to borrow that much money

b) the turnover needs very close examination

c) have you got any experience? if not, get some - learn on the job, make your mistakes while being paid for someone else.

There was probably more ...

paddyrg

Probably also some comments along the lines of 'get a job and save some money'.

Seriously, guy, nobody lends that much unsecured to business startups, time for a different dream -perhaps find something you can start small and grow, then open your franchise once you have some equity and track record.

welshmoneylover

There is no magic pot of money out there for new business start ups.
Have you thought about opening up your own small sandwich business and use your determination to make it a successful little business? Start small, you don't want to be saddled with loads of debt you cant pay off while still young.

cottager

4 Jan 2010:

Amit92 wrote: »

... Im glad ive got over this idea now than later in life

paddyrg

Ok, just read that other thread, my goodness you would normally pay a lot of money for advice that good. Be smart, heed it!

Amit92

Thanks for re-drilling this into my head! ...If only money grew on trees eh?

Acc72

Savvy_Sue wrote: »

I can't imagine that the advice has changed substantially since you asked 18 months ago ...

I haven't re-read the thread, but I would guess it went along the lines of

a) you won't be able to borrow that much money

b) the turnover needs very close examination

c) have you got any experience? if not, get some - learn on the job, make your mistakes while being paid for someone else.

There was probably more ...

Pretty much sums it up !

To the OP, have you gained any work experience in the last 18 months ?

As a student, I would recommend looking for a job in a McDonalds. You could then join them as graduate trainee and get paid to learn (and to make mistakes !).

People on the other thread mentioned the likes of Richard Branson etc. but unfortunately he did not get rich by going down the franchise route.

Also (and this may come across as being rude, but is not meant that way!), if you haven't bothered to get relevant work experience / skills and save some money in the last 18 months, then why would a bank be bothered to lend you £100k which will presumably be unsecured?