| One major franchise that requires a low investment | | | | experience. Subway franchise buyers attend the |
| and offers a range of possible locations to franchisees | | | | Franchise Training Program at headquarters at their |
| is Subway, owned by Doctor's Associates, a Florida | | | | own expense. Some 2,000 franchisees each year |
| corporation with headquarters in Milford, Connecticut. | | | | attend the two-week course covering management, |
| Started in 1965, Subway has more than 25,278 units in | | | | accounting and bookkeeping, personnel management, |
| 83 countries and annual sales exceeding $3.9 billion. | | | | and marketing. On-the-job training in nearby Subway |
| Franchisee responsibilities include: | | | | restaurants is scheduled as well, totaling 34 in-store |
| 1- Paying a franchise fee | | | | hours. |
| 2- Improving the leasehold | | | | Three to four trainees are assigned to a training |
| 3- Leasing or purchasing equipment | | | | restaurant. The buyer pays a weekly franchise fee of |
| 4- Hiring employees and operating the store | | | | 8 percent and a 3.5 percent advertising fee based on |
| 5- Paying 8 percent royalty to company (weekly) | | | | sales. The buyer has the option of life insurance; health |
| 6- Paying 2.5 to 3.5 percent advertising fee (weekly) | | | | insurance is another purchase option. Each franchise |
| 7- Paying additional advertising fees if the local market | | | | buyer gets a copy of a confidential operations manual |
| elects to participate in the program. | | | | containing about 580 pages. Menu Selection Subway's |
| In return, the company promises to provide these | | | | flexibility in offering service in various types of locations |
| benefits: | | | | is also seen in the kinds of food offered: submarine |
| 1- Access to product formulas and operational | | | | sandwiches, salads, cookies, a low-fat menu featuring |
| systems | | | | sandwiches with less than 6 grams of fat, and a |
| 2- Site evaluation | | | | low-carb option featuring wraps. |
| 3- Training program at headquarters | | | | Subway features bread items that are prepared from |
| 4- Operations manual | | | | frozen dough and served fresh from the oven. The |
| 5- Representative on site during opening | | | | frozen dough is thawed in a retarder unit in a |
| 6- Periodic evaluations and ongoing support | | | | refrigerator. The bread rises in a proofer and is then |
| 7- Informative publications | | | | baked in a convection oven, in which a fan speeds the |
| 8- Marketing and advertising support | | | | baking process. Bread formulas are specified at |
| Subway publishes a franchise-offering circular for | | | | company headquarters and uniformly followed |
| prospective franchisers that includes the names, | | | | worldwide. Fresh-baked goods include white and |
| addresses, and phone numbers of active franchise | | | | wheat scored bread, deli-style rolls, wraps, breakfast |
| holders, listed by state. Subway encourages the | | | | selections (at some stores), cookies, and specialty |
| prospective franchise buyer to visit and observe the | | | | items such as apple pie. |
| restaurant in which they are training. The initial fee is | | | | Subway History The Subway story began when Fred |
| $15,000 for first-time franchise buyers. This fee is | | | | DeLuca, its cofounder, was 17 years old. He and a |
| reduced to $4,000 for qualified owners purchasing | | | | family friend, Dr. Peter Buck, worked together on a |
| additional franchises. Total initial investment by the | | | | business plan for a submarine sandwich shop. It took |
| franchisee ranges from $94,300 to $222,800, | | | | them four hours to produce and was implemented |
| depending on location and equipment needs. | | | | with a loan of $1,000 from Dr. Buck. The first |
| Nontraditional locations may require considerably less | | | | restaurant was opened in Bridgeport, Connecticut, in |
| capital. | | | | 1965. |
| Subway units are located in a wide range of sites that | | | | It did well in its first summer with the help of advertising |
| include schools, colleges, offices, hospitals, airports, | | | | slogans like ''Put a foot in your mouth,'' emphasizing the |
| military bases, grocery stores, and truck stops-even | | | | foot-long sandwich, and ''When you're hungry,make |
| casinos. Most remarkable is the company's statement | | | | tracks for Subway.'' When summer ended, so did |
| that less than 1 percent of the units fail, which is partly | | | | most of its sales. Dr. Buck suggested opening a |
| accounted for by franchise holders' options to sell their | | | | second restaurant. ''That way people will see us |
| unit or resell it to the company. Depending on company | | | | expanding and think that we're successful.'' It was not |
| approval, the location, hours of operation, and additional | | | | until they had five stores and better locations that the |
| food items offered are flexible. The standard Subway | | | | stores began making money. DeLuca has changed the |
| menu, however, cannot be omitted. | | | | company's system of franchise development several |
| No one should purchase a Subway franchise-or any | | | | times over the years and has kept the concept simple |
| other restaurant-without backup learning and | | | | and relatively inexpensive for franchise buyers. |