Investment in Franchise Costa/Starbucks or Shell

N1AK

marathonic wrote: »

The point of the made up figures is to say: why go the franchise route for a profit of £0.55 when you can go alone for a profit of £1 per sub?

Maybe I'm not representative but I like Subway and I value knowing what I'm getting so if I'm travelling then I'm much more likely to use Subway than a shop I haven't heard of, don't know the quality of etc.

I used to use a local chain exclusively because I knew the quality but when they shut I swapped to Subway and don't see a compelling reason to look for an alternative.

The reason I bring this up is that being a franchise does have advantages. The name brings custom from people who don't know you and clearly the Subway brand allows a price premium over independents.

Saying all that, I think that an independent shop that resonates with the local community and is well run could do very well

marathonic

N1AK wrote: »

The reason I bring this up is that being a franchise does have advantages. The name brings custom from people who don't know you and clearly the Subway brand allows a price premium over independents.

Saying all that, I think that an independent shop that resonates with the local community and is well run could do very well

You make a very good point and I'd say, again, it all boils down to location.

If you're living in a town where tourism is rife, the franchise name will bode well for your expected returns. Likewise, if you're in a big city.

However, if you're in a smaller town you're more likely better off going the independent route.

Basically, if most of your custom is expected to be random passers by, a franchise would expect higher sales - possibly enough of an increase to justify paying the fees (which I believe are somewhere between 10% and 15% of turnover for Subway).

However, if most of your custom (say 75%+) is expected to be from locals living in the area, then establishing a reputation for quality within that community would be the better route.

By going the independant route, Subway can't force the periodic rebranding they do down your throat and you don't need to buy the overpriced ingredients from their selected suppliers.

Get the recipe right and you have the option to bake your own bread, possibly selling loaves or rolls for takeaway on the side. You don't get this flexibility with a franchise.

As for quality in a local premises, I usually go by the number of customers eating there. If I walk into an unknown restaurant and see noone sitting in enjoying a meal, I start to worry