Owning a Subway: what actually happens
Low entry ($239K-$537K) makes Subway the classic 'affordable first franchise,' but on an estimated ~$490K in sales the 12.5% franchisor take (8% royalty + 4.5% ad) is brutal against a thin sandwich-shop margin. Year one on a new unit is often a grind toward breakeven with real risk of loss — the brand has closed ~7,000+ U.S. units since 2015. The math only works if you work the counter yourself or already own the real estate.
Illustrative split for a typical unit (industry estimate). The green slice is store cash flow before your loan payment and before paying yourself a salary — not profit.
Easy to list, hard to sell for a good price: the resale market is flooded with owners trying to exit, so units frequently sell for the value of equipment/leasehold — sometimes tens of thousands, occasionally at a loss. Item 17 transfer needs franchisor consent and a ~$7,500 transfer fee (cheap), but the buyer pool is skeptical given brand contraction. The constraint is market demand, not approval; walk-away cost is mostly lease liability and unrecovered buildout.
A hands-on owner-operator who will personally staff the shop, controls a low-rent location, and treats it as a self-employed job.
Anyone buying it as an 'easy passive brand' or expecting resale to return their investment — it usually won't.
The disclosure it's built on
The verdict above is our read of the numbers Subway files with regulators — here they are, cited.
Subway carries the heaviest ongoing fee load in mainstream QSR — 8% royalty PLUS 4.5% ad fund = 12.5% of gross sales off the top, versus ~8% at McDonald's and ~10.9% at Dunkin' — while sitting on the lowest average unit volume of the three (~$490K estimated). And it publishes no Item 19, so you're paying the highest percentage-of-sales fees on a store whose earnings the franchisor won't put in writing. On a ~$490K store, that 12.5% is ~$61K/yr to Subway before rent, food, and labor — a big reason Subway's US closures have run high.
Seriously considering Subway?
Pressure-test the affordability, then read the full FDD and validate Item 19 (or its absence) with existing franchisees. When we add vetted franchise-consultant and financing partners, they'll be clearly disclosed here and never change our analysis.
Run a rough affordability check →