Subway Franchise Costs and How to Get Started
Subway Franchise To Buy .Investing in a Subway franchise generally requires between $150,000 and $300,000, offering a more cost-effective entry point compared to many other restaurant franchise options. Before moving forward, it’s essential to analyze the profitability of similar establishments in your target area. Key factors to assess include local demand, competitive presence, and customer traffic. With these insights in hand, you're better equipped to make a sound investment decision. Once you've completed your research, the next step is to connect with the Subway franchising team to explore the application process.
If you've ever dreamed of owning your own Subway restaurant, understanding the financial requirements is a crucial first step. Subway’s initial franchise fee starts at $15,000, which grants you the license to operate under the brand. Beyond this fee, you’ll also need to secure a commercial location—either through lease or purchase—and invest in equipment, furnishings, and inventory.
Compared to major competitors like McDonald’s, Subway offers a more affordable entry point, though costs can still be significant. The total investment depends heavily on store design and location. Opening in a high-traffic strip mall, for example, will likely require a higher investment than a location in a standard shopping center.
In addition to the startup costs, franchisees must contribute to ongoing marketing expenses, which typically range from 8% to 10% of gross sales. For instance, a location generating $50,000 per month in sales could expect to spend around $4,000–$5,000 annually on marketing. Operating costs also include regular purchases of fresh food and supplies.
If you're planning to open multiple Subway locations, it’s important to build a scalable budget that accounts for staffing, operations, and recurring expenses. Initially, many franchisees work long hours to reach profitability, but with steady growth and strong sales, you can eventually hire a manager and enjoy a more passive income stream.
One of Subway’s advantages is its relatively low franchise fee—sometimes reported as low as $1,400—making it one of the most accessible options in the fast-food industry. On top of that, Subway’s daily-baked bread and fresh vegetables continue to be a draw for health-conscious customers.
Before moving forward, carefully consider your location, startup capital, and long-term goals. A Subway franchise can be a rewarding investment, but like any business venture, success depends on thorough planning and smart execution.
When starting a Subway franchise, one of the first financial obligations is the initial licensing fee, paid upon signing the franchise agreement. This fee grants franchisees access to the Subway brand, proprietary operating system, and comprehensive training programs. Military veterans may qualify for a discounted rate, while approved school lunch programs and oil company retailers may be exempt from this fee. Still, these costs can accumulate quickly.
Subway charges 8% of gross sales as a royalty fee, which is relatively high compared to other sub sandwich franchises that typically charge between 5% and 6.5%. On average, this royalty adds up to approximately $45,625 annually. Additionally, Subway franchisees must contribute 3.5% of profits to advertising, which helps support the brand’s national marketing campaigns.
Subway locations vary and can be opened in traditional retail spaces—usually within shopping centers or street-facing storefronts—or in non-traditional settings such as gas stations, airports, universities, hospitals, malls, parks, and sports arenas. Subway provides cost estimates tailored to each type of location.
Beyond rent and staff wages, franchisees are responsible for ongoing marketing costs, typically 8% to 10% of gross sales. For instance, a store generating $50,000 in monthly revenue may allocate around $4,000 to $5,000 per month to marketing alone. These figures do not include costs for food, inventory, insurance, or other operational expenses, all of which can consume a significant share of overall profits.
Operating a Subway franchise requires a detailed understanding of both upfront and recurring costs. Prospective owners should carefully consider location type, fee structure, and ongoing financial obligations to determine the long-term viability of the investment.

While the Subway franchise cost for non-traditional locations is generally lower than that of traditional locations, it does not come cheap. As a franchisee, you will need to spend some money each month to promote your business. For non-traditional locations, the initial start-up cost for a franchised Subway is about $100,550. You should also be prepared to pay for the food and supplies used in your restaurant
There are a few different ways to finance the start-up costs of a non-traditional location. First, you should consider the financial situation of the franchisee. The amount of funding needed for startup and operating expenses is dependent on the overall business plan and long-term goals. Also, be sure that you understand the terms and conditions of the franchise agreement. You should also carefully review the franchise agreement and FAQs.
Second, you should consider the location of your Subway. There are several types of non-traditional locations. Depending on the type of building, you can find a location that is suitable for a Subway franchise. If you plan to operate a food truck in an abandoned factory, you may need to spend more money than other types of stores. Choosing a non-traditional location is more challenging than opening a traditional franchise. The estimated cost of a non-traditional location can vary from $182,550 to $373,900.
In addition to non-traditional locations, Subway franchisees also have the option to open traditional locations. Non-traditional locations are usually housed in buildings where other businesses operate, such as a department store or a gas station. They may also open a Subway store inside a park, university, or sports complex. If you plan on opening a non-traditional location, the Subway franchise cost for non-traditional locations is still lower than traditional locations.
The Royalties on a Subway franchise are paid by the company to the franchisee, who in turn uses the name of the company for their marketing efforts. There are no exclusivity territories for Subway franchises, and there are no minimum or maximum population requirements. A Subway franchise is available in any state and is very easy to start. However, the franchise agreement does not include financial performance representation. The following information will give you an idea of what the royalty payments will look like.
A Subway franchise requires applicants to have at least $80,000 in Net Worth and Liquid Assets. In addition to the $15,000 Initial Fee, franchisees must also pay ongoing Royalties of 12.5% of gross sales. These fees are not discounted from other costs, and must be paid weekly. If you decide to open a Subway franchise, be prepared to pay these ongoing royalties. It's best to find out how much this royalty fee will cost before signing up.
The Subway franchising system has had a history of issues with franchisees. Franchisees have long complained that they cannot make money from the five-dollar footlong promotion. Franchisees are also criticizing Subway for pushing cheese melts and other changes that they consider unsafe. Franchisees have called on the company to reduce the royalties to 4.5%, and this request has been turned down by the company.
The royalty percentages vary, but most are between four to six percent of gross sales. These royalties are usually paid out in conjunction with the franchise fees. Franchise fees cover franchisor costs, while royalties make up the majority of the revenue stream. Franchisees pay Subway franchise royalty fees in conjunction with their monthly franchise fees. Franchisees can expect to pay between four and 12% of their revenue, depending on the size and type of store.

Although the Subway franchise has a low startup cost, the company has a high royalty fee. Subway franchisees pay 8% of their gross sales, nearly double the amount paid by rival sub chains. But those fees can add up to thousands of dollars for a small business. Subway also requires franchisees to pay an ad fund fee of 4.5% of sales, which goes to Subway Corporate advertising.
Among other things, the suit asks for the cancellation of all franchisee agreements and a replacement agreement that doesn't give DAI any control over the amount of advertising money franchisees receive. In addition, it demands that DAI account for all advertising revenue collected under the 2006 agreement and place it into a "constructive trust" for franchisees. Despite its high demands, the lawsuit does not seek monetary damages. Instead, the NAASF seeks to stop the Subway advertising funds from being deducted from the franchisees.
Franchisees have been asking for help for some time. Last year, the Subway Corporation provided a break for franchisees, but franchisees still have to pay their royalties. Fortunately, the company did come to an agreement. The new plan requires the franchisor to stop matching franchisees' local marketing contribution and requires them to make up the difference for two years. And it has also promised to support franchisees with rent reductions and rent deferral.
As of April 1, Subway's franchisees are now required to pay the company 4.5% of their weekly sales to the franchisee Advertising Fund Trust. Franchisees would only be responsible for depositing this money into the trust if they met certain conditions. If they fail to meet the conditions, DAI could divert the money to other uses. The agreement is "threatening" to franchisees' control over their advertising funds.