Subway Franchise - Don't Start One
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Subway Franchise - How Much Can I Make As a Franchisee?
Question: I'm trying to determine exactly how much money I can make with a Subway franchise company, but I'm having trouble getting Subway corporate to answer this question. Every time I bring it up, they avoid the topic and mention something about the FTC having rules against sharing this information. Can this be right? How am I supposed to get this information? What is a reasonable level of income to expect from a Subway franchise?
Answer: This is one of the real quandaries of investigating most franchises. You're not about to invest until you know how much you can earn; the franchisor probably has the best data to answer this question accurately, but they usually won't tell you a thing. I agree it doesn't make much sense when you look at it this way.
The early history of franchise sales in the United States contained many instances of abuse when unjustified or misleading earnings claims were used to sell franchises. In 1979, Congress passed legislation authorizing the FTC to regulate the franchise industry to try to stop any such bad practices.
The current FTC rules does not forbid Subway franchise from supplying information about the earnings that can be achieved in their business. They do, however, have stringent rules on how this information can be given to a prospective franchisee.
Basically, any franchise that wants to provide this information must put it in writing in their UFOC disclosure document. It is essential for the franchisor to make sure that the data provided is as accurate and representative as possible, and they need to clearly label any assumptions or qualifications on the data provided.
Assuming they meet these two requirements, they are free to provide whatever franchise earnings information they want to a prospective franchisee in terms of sales, expenses, cash flow and income. Since it's this easy, it begs the question of why more franchisors don't do it.
The answer is twofold. First, producing an earnings claim does involve effort and expense for the franchisor. Second, the results (given that they have to be accurate and not misleading) may not be attractive enough to assist in the recruiting of new franchisees. If that's the case, having the FTC to hide behind gives franchisors a ready excuse to keep this accurate data from prospective franchisees.
Whether a franchise provides earnings information or not, you'll want to confirm this data in conversations with existing franchisees of the system. Call them and ask. Make sure you select enough franchisees at random to get a clear idea of the averages and ranges for earnings in the system. In next month's article, I'll discuss tried and true techniques you can use to get this information from existing franchisees during these calls.
You also ask about a reasonable level of earnings for a franchise business. I think most experts would answer this ...
<< MORE >>Start a Franchise - Just Make Sure It's Not Subway
As you already know, for various reasons, I don't recommend owning a Subway Franchise. I'm working on my own issues and hopefully will be out of business soon. Yes, that's a good thing! However, many of you are trying to start your own franchise, whether it be Subway or another franchise business.
Did you realize that you can get a government grant? The website has all the tools necessary to get you started in the right direction to apply for and receive a government grant.
You can start your new franchise business with government money. Most people do not even realize that this exists. I wish I knew about it 2 years ago!
Check it out www.franchisegrant.com
How Do I Get Out Of My Subway Franchise
I have had enough. I want to throw in the towel. How do I get out of my Subway Franchise? I am not looking
to sell my restaurant. With the steady decline of income over the years, there is no way anyone will purchase it from me. I always thought that if I walked away, I would be giving up. At this point, it doesn't really matter anymore. Please tell me the necessary steps I need to take
HOW DO I GET OUT OF MY SUBWAY FRANCHISE?
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Subway Chain Used To Be A Good Opportunity
The Subway chain used be a good opportunity. Not since Subway headquarter became predatory against franchisees.
Read Fortune magazine archives on how this chain led by president Fred DeLuca (nicknamed BendoveritsFred) has caused a record number of unhappy franchisees, defrauded landlords and violated laws.
Discover why after a six year study, U.S. House of Representatives' Dean Sagar concluded: "Subway is the biggest problem in franchising and emerges as one of the key examples of every abuse you can
think of." Says Cliff Marshall, a franchise consultant for more than 30 years: 'If anyone in my family ever asked whether they should buy a Subway, I would say absolutely not, no way. A Subway
franchisee who asked to remain anonymous for fear of retaliation said the system "is a total mess."
Go here learn more: http://nextraterrestrial.com/pdf/FDeluca-Fortune%20March%2016%201998.htm
Learn how DeLuca violated Connecticut's Unfair Trade Practices Act by pressuring independent SFAF board members to block owners he didn't like from running for office. Apparently he has no respect
for legal statutes or fair play.
Go here to learn more: http://franchisepundit.com/index.php/2005/05/28/what-to-learn-from-this-subway-lawsuit/
Read how DeLuca's franchise agreement forces owners with a legitimate grievance to submit to arbitration where there is no jury, ...
Subway Franchise Business Loan
So you've read tons of threads on this blog and still insist that Subway is the best franchise for you and are really excited about its future and your new business. However, how are you going to pay for it? Many franchises require a significant investment and a large amount of liquid money that many individuals don't have. Fortunately, there are a lot of financing options available to help you finance your new Subway franchise (or another business if you are lucky enough to take a different route!).
Please keep in mind, however, that you should consider financing your franchise before you actually get your heart set on a particular franchise. The reason why is that financing can be a challenge and is the most important thing you should consider before actually opening a franchise. So, spend some time researching how to finance your business to get a better understanding of how the entire process works.
If you have an idea and a good business plan, you can start a new business successfully. You can implement your ideas and planning with the aid of a business start up loan.
Business start up loans are used for establishing a new business. Business start up loans can also be used for buying business equipment and other business resources to start up a new business of your own.
Get your start up business loan now. Implement your plans to get success in your business. And again, if you do indeed insist on continuing to research the Subway Franchise System, below you can find a simple form to determine if you could afford your "dream".
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Subway Temper Tantrum Commercial - How Ridiculous!
Here is the most recent subway commercial currently airing on television. I posted this video on the site because of a very angry Subwayscam forum member who decided to never eat at another Subway restaurant after watching this commercial. CLICK HERE TO VIEW HIS ORIGINAL COMPLAINT
It is the commercial where mom, dad and son are passing a Subway restaurant and dad has a temper tantrum because he wants to try the new Big Philly Cheesesteak sandwhich. Mom calmly explains that their son is late for soccer practice, and his son tells him to "grow up".
#1 Franchise Opportunity - Or Is It?
Someone has posted a comment on this blog that has prompted me to write and I am so sorry to hear about your nightmare with the wonderful world of Subway - "THE #1 FRANCHISE OPPORTUNITY". To read the full comment, CLICK HERE.
I myself am struggling at this very moment with my franchise. I am currently working 2 jobs not including the subway gig and I am still in the red! I have tried the "do this - do that - do this - do that crap that Head Quarters posts for us as franchisees to use as a “sales booster” and like you, nothing is working. I know many people will read our blogs and blame it on us as franchisees for our failure - but when it's just not there it's just not there. I honestly think that the DA's (development agents) are in it for the money. They could care less if you have 1000 or 10 cars passing your store. Everyday they are the first to tell you that the "location" is great! Yes, I do realize that we as franchise business owners can't solely depend on what someone that works for Head Quarters tells us. And we as franchisees have to pull ourselves up by our big girl/boy undies and get the job done. But what happens when nothing works... and we can no longer afford to buy undies! We lose it all and that is a scary thought. I guess with any business you win some and you lose some and frankly if Subway Corporation cared so much about "their franchisees", they would step up and help. They get the WISRs every Wednesday or Thursday. Do they actually look at them? Hell no, they look at one number and that number is used to calculate how much they can draft out of your account.
Think about what would actually happen if Subway Head Quarters would see that when you have a negative in earnings something is wrong - "RED FLAG, RED FLAG" put on the Subman costume and rush off to the rescue!! Okay, that a bit crazy but hey one can wish right? Subway Headquarters should step up send someone from the lovely DA's office and I am not talking about your Subway field rep to help you. I guess the point I am getting is that the #1 franchise opportunity may not be all it's cracked up to be - yes thousands are opened but how many of those thousands actually thrive.
Getting Out Of My Subway Franchise
Does anyone know the answer to this? Once you purchase a Subway Franchise how long are you obligated?
For those of you who have read this blog, you probably know why I'm asking. I have struggled to wits end trying to make things work. Here's my latest attempt:
Subway Corporate Marketing finally came to my help and sent someone out to my location to assist me. I initially had a negative feeling that whatever they did would not help. But, I figured I would go with it. After brainstorming ideas and convincing them that I have already done every kind of marketing known to mankind, Subway Corporate decided to send out mailers (sigh). This occurred a little over a month ago. So far, 10 people have brought their Subway coupons to my restaurant for discount sandwiches. 10 people. YES, 10 PEOPLE!!! But the best part about it is that those 10 people are my REPEAT CUSTOMERS. So in actuality I'm losing more money than I would be making. It cost about $500 for the mailers and I did not gain one new customer. My biggest issue is new customers to my rural store - not repeat customers.
With all the rules and regulations of the Subway Franchise business I feel that I can increase my earnings by running my own restaurant. I can choose my own hours, set my own prices, etc. So, does anyone know how I can get out of the subway franchise?
Subway Franchise Start Up Costs
Everyone is asking "How much does it cost to start a Subway Franchise?" There are so many variables involved. First and foremost, what is the initial subway franchise fee, upon signing the franchise agreements? How about the leasehold improvements during constructions? Do you realize you need to order equipment, supplies, and outside signage? What about the training costs (travel & lodging)?
Listed below is a link from Subway Corporate - "Subway Franchise Capital Requirements". I hope this information is helpful.
SUBWAY FRANCHISE CAPITAL REQUIREMENTS
Subway Restaurant Hours
I appreciate everyone's comments and love the fact that we can bounce ideas off eachother regarding our own Subway Franchise experiences. I am sorry I haven't blogged in a while - things have been quite hectic. I have made quite a few changes within my restaurant, but its too soon to tell how valuable these changes are or will be.
I found out that a group of my employees have been stealing money behind my back. I never quite found out how much they stole, but am aware that it could be a fair amount of money since they have been working for me for years! So a couple of weeks ago, i decided to "clean house" and fire all but the three people I trust. We managed to arrange the schedule so that all open shifts of the former Subway staff were accounted for. The day after firing I notice that sales were up $200. Enough said.
I also started closing my Subway Franchise on Sundays. FINALLY SUBWAY HQ APPROVED SOMETHING TO MY BENEFIT. If you could believe it, because of the rural location of my subway - and some of you probably know this already from keeping up with this blog - I have had quite a few Sunday Subway earnings less than $30! And yes, that is for the entire day. So I begged and pleaded and explained that it didn't make sense to pay 2 employees and be open for the entire day (incurring operational costs) for a measely $30. How could this not have been approved months ago when it was requested?
So, I will continue to manage my Subway Franchise to the best of my abilities. Once again, any comments or experience sharing is much appreciated.
Subway Franchise Agreement
Does anyone really understand what they are signing when they enter into a Subway Franchise?
From what I have read, most Subway franchise buyers complain about the lengthy franchise agreements and disclosure documents. Of course there are two reasons for this;
1.) There is over regulation in the Franchising Industry, which requires this and;
2.) There is so much litigation, over lawyering and case law that a franchisor must protect themselves. Nevertheless nearly all Subway franchise buyers say; “These Lengthy Franchise Agreements and Disclosure Documents; Why?
Yes well they are too long and most Subway franchise agreements do go too extreme in the terms of length, however, consider that if they remain vague then the franchisee loses more. Contracts which refer everything back to the confidential operations manual, which many times the franchisee hasn’t yet seen at the time of the agreement are extremely vague! Since the franchise agreements are barely in plain English, do we as Subway franchisees really have any clue what we are signing?
In my opinion the Subway Franchise Disclosure Documents should be a 3-page form that you hand to the franchise buyer with the actual franchise agreement, that would reduce the number of pages of the disclosure documents by way over two-thirds.
Modern Day Franchising can be an excellent way to extend your brand name rapidly, but there are many draw backs to franchising. One of the most serious considerations is the incredible litigation between Subway franchisees and franchisors.
Many of Subway franchise agreement are over 180 to 200 pages of mandatory disclosure documents. I find it interesting that there is a section titled “Questions Concerning This Franchise Agreement” and the basic jist of it all was to make sure that the franchisee could not get out of the contract claiming he never read it or did not understand a specific part of it, which indeed could easily happen in 200 pages of legal jargon!
Perhaps your agreement may have read something like this:
Franchisee understands the intent of each paragraph of the franchise agreement and Franchisee has asked all questions of anything they did not understand and have consulted competent advisors to help them determine the exact meaning of everything in this Franchise Agreement. Franchisee further considers them selves mentally competent and that nothing written in this Franchise Agreement still seems ambiguous to Franchisee. There is nothing in this Franchise Agreement, which Franchisee did not understand at the time Franchisee signed this Franchise Agreement. Franchisee has shown this Franchise Agreement to consultants and/or advisors who they feel comfortable with and Franchisee’s advisors and Franchisor have gone over this Franchise Agreement and related and attached agreements with Franchisee. Franchisee have written down questions and personally checked them off when Franchisee felt they were answered adequately both by Franchisor and Franchisee’s advisors.
Now on the surface you might think no big deal right? Well without such clauses you could actually be sued and someone who failed to fulfill their side of the agreement could cheat you out of money. It seems with all the over regulation and litigation that it is truly amazing after 200 pages of a legal document you have to have such a clause in the agreement.
Subway Franchise Owners In Germany Are Unhappy
Someone was kind enough to bring to my attention an article regarding Subway franchises in Germany and the fact that these Subway franchisees are not very happy with the Subway system. This article is taken directly from Spiegel Online International http://www.spiegel.de/international/spiegel/0,1518,471496,00.html. Here is the article in its entirety. Comments are always appreciated.
SUBWAY FRANCHISE OWNERS UNHAPPY
Sinking Subs in Germany
The US sandwich chain Subway has ambitious plans for expansion in Germany. But its German franchise owners are unhappy with their side of the bargain. Many are struggling to keep their businesses afloat.
The Subway fast food chain is leaving its many franchisees in Germany frustrated, angry and broke.
Birkel and Mauk thought they could use their know-how to start their own business -- as franchisees for Subway, the US sandwich chain. Full of hope, they scraped together their savings, took out a loan for €184,000 ($243,000) and opened a new fast food outlet in the town of Michelfeld in the German state of Baden-Württemberg.
In the beginning, everything went better than they could possibly have hoped. The Subway system, which allows customers to select their own bread and fillings for their sandwich, was a big hit with customers. The two new entrepreneurs made as much as €16,000 a week.
But after three months, turnover began to decline, eventually averaging out at about €6,000 a week. What with the costs of rent, electricity, personnel, interest and advertising, combined with high prices for tuna, chicken and bread and the fees charged by Subway, in the end nothing was left over for Birkel and Mauk.
"We didn't earn a single cent even though we ourselves often stood behind the counter for as long as 12 hours a day," Birkel complains.
After 15 months, bankruptcy was unavoidable -- and the restaurant in Michelfeld was sold for just €20,000. "We lost everything we had spent years working for," Birkel concludes bleakly.
<< MORE >>Subway Profit Building - Is It Lucrative or Bad Practices
Thank you all for helping me with my franchise business. I like to utilize this blog as an outlet for my frustration. Again, I appreciate any of your comments on how to enhance the profitability and the income of my Subway restaurants.
“Food for thought” - Subway HQ wants me to use the “fresh fit” logo, promoting a healthier alternative to the “burger - fry option” which is great. It is Subway HQ's marketing scheme to sell "healthy". BUT, why is it that every single time I am inspected my field rep puts on my evaluation "NEED TO UPSELL, NEED TO ASK THEM WOULD THEY LIKE DOUBLE MEAT, EXTRA BACON, OR EXTRA CHEESE." I completely understand this as a way to increase profit but where is the lets keep it healthy idea? Anyway, I just thought I would vent on that for a moment.
My small business franchise is still sinking and the cost of running my restaurant is outrageous, therefore my income rarely exceeds operational costs. I have made a ton of cuts; I have continued to work endlessly in hopes that I could save on labor costs. Where is the profit? I read all the genius “profit building” information posted on the Subway partners website but it is still not helping. I take this as my failure. Isn't it time that Subway HQ, the DA office, or my field rep should step up to the plate when called upon? Once again - this is certainly not the best business investment of franchise opportunity available out there!
Let Me Complain About My Foolish Business Decision
I realize that some of you think I’m whining about my Subway franchise. I have researched all avenues and have done everything I can within my power to run this restaurant to the best of my abilities. I have asked for help via my DA’s office and have been completely ignored. So yes, it’s my problem and this to I shall fix. I have done the advertisement in the local “paper”. Yes local meaning 1 paper that comes out once a week. I have tried to meet with local schools to see if we can arrange a partnership. There are no little league programs, no girl or boy scouts clubs, and there is but 1 church in the community. I have requested waiver upon waiver trying to get permission to cut back on the 98 hours that are “required”, but this again was shot down.
I know I made a foolish decision purchasing into this franchise business in this particular area. Everyone is asking why I opened the business in a rural location. I don’t have much answer for that except that is where I live! However, what is done is done, and at this point I just have to make it work! It was also foolish letting the “Subway team from my DA’s” office hype me up telling me this restaurant would be a huge success. When my Subway first opened 2 years ago, I spent 16 hours per day, 7 days per week managing and overseeing all operations. This lasted for a few months until I realized I was unable to pay my personal bills, so I went back to my regular job full time.
As far as the comments made on letting my employees see I get upset over frivolous things I am written up for via Field Rep is completely inaccurate. I take the criticism, good or bad, set a plan in motion and follow through. My team understands the importance of what is being said. I have not failed my inspections - in fact every health inspection I have passed with flying colors. So, I don’t think my gripe is the fact that my restaurant is failing inspection but it’s that fact that I’m not being heard when I’m asking for help!
My Subway Franchise is Never Good Enough For Corporate
I came across an interesting article today about the ease of operating a Subway Franchise. Are you kidding me? They actually call this a business opportunity? Sure it’s easy if you work your employees like animals to keep up with what they deem as “Subway Standards”. My most recent experience with “operation” was when my field rep stopped in for her monthly inspection. She did her thing - reviewing everything on her little check list and proceeded to write her evaluation. Without speaking to the manager or calling me, she wrote me up for some ridiculous things. For example, dust on top of a double stack microwave, dust on the return a/c vent and someone misdating onions and tomatoes (accidentally put 3rd month instead of 4th) which was done by the same person the night before. The dust issues were bad enough, since there really was none (we dust a few times a day!) but with her writing us up for accidentally putting wrong month on those two items got me a very sweet letter from Subway HQ, stating that I was in violation of “food safety” issues or something like that, and it required immediate attention. This was my first LEGAL letter and if I received any more it would result in some mumbo jumbo crap. I have been in many restaurants (subway) where it looks like someone had a food fight in the cold unit. I take pride in keeping my place in tip top shape where cleanliness and food safety are a main priority. No matter what you do its never good enough!
Think Twice Before Investing In "The #1 Franchise Opportunity"
In the summer of 2004, I decided to research franchise opportunities and came across a list of the top 10 franchises. To my amazement, the Subway Franchise was listed #1! The start up cost for this franchise was reasonable. But talk about a bad business decision - I definitely made one! I started out with a $70,000 investment that ultimately turned out to be an investment of almost $300,000 before it was all said and done. Subway barely gives any direction as to helping run the business. They provide you with a Field Rep who inspects the restaurant on a monthly basis. Any "compliance issues" are usually not addressed directly, but are instead sent to Subway HQ. This results in a legal document sent by HQ warning you that if a compliance issue is not resolved in a timely manner and occurs again, the result could be losing your franchise. They tell you who, what, when, where and never tell you why! It's quite the cult operation. They require you to attend a two week training session in Connecticut (1500 miles away from home) when you first purchase the franchise business. I had to pay to stay in a hotel for two weeks, which is owned by Subway! Once the training is completed you are pretty much on your own. I have been struggling since day one with this business, which Subway calls an "opportunity"? My earnings are never enough to pay operational costs. When I approached Subway about completing a waiver for Sunday closure of my restaurant, they more or less laughed in my face! My earnings were less than $100.00 in 12 hours. This is totally due to the location of my franchise, which happens to be in a rural town. Subway even states in it's operations manual that they can make adjustments for rural location Subway Franchises. But they don't! FAILURE, FAILURE, FAILURE is where I am headed at this point!
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