Top 5 Reasons Why Not to Buy Subway Sandwich Franchise

1. Subway isn’t the fastest growing franchise

It’s not just the Subway franchise that’s growing but the whole sandwich industry as well. There are over 20,000 Subway restaurants worldwide. To put that into perspective, McDonald’s has over 36,000 locations in 120 countries. The sandwich industry is huge and growing.Yet the VC firms that are funding this growth are betting on the speed of delivery that the Subway franchise model offers. As a result, these companies will need to open multiple restaurants overseas in order to take advantage of cross-selling opportunities when the time comes for them to open a new location in the US. We are certain that the high startup costs (will be mutual for both) will allow the Subway corporation to continue to grow despite such high competition. The problem I have with this argument is two-fold: Subway has been around for over 30 years so they know how to integrate transactions. In fact, every single transaction on Subway menu items is already completed between the time the order is placed and the time the food is brought to your table. There is no need to do much more with your order from the time it gets to your table until it is placed back on the menu. On the other hand, I have seen countless transactions on the internet between the time the product is purchased and the time it is placed back on the website. Like the Subway corporation, you will see transactions wherever you look, and the momentum that you see will continue to compound. When you consider the cross-selling opportunity that is available between the online and offline tandem, the sandwich company has plenty of room to compete even if they aim to export operations overseas. In the past 30 years, the internet has developed massively, automatically converting organic search traffic into valuable online customers, often in fulfillment centers that are far removed from the original point of purchase. These examples show that you don't need to worry about sluggish Internet growth in order to grow your pie.

2. Subway is a pretty big investment

If you happen to be a Subway franchisee, you’re looking at a pretty big investment. According to the company’s website, the initial franchise fee is $15,000, and you’ll need to come up with $75,000 to cover your equipment, real estate, and construction costs.You’ll need to make sure your plan Profits Aren’t Negative, but Subway has done a few things right to keep VCs interested. Its low overhead (only 5% of revenue) keeps expenses down and investors happy. Subway was also wise to start its own advertising network which still drives a lot of traffic to the site. If anything, franchising would be easier to gain a majority share of, but it isn’t a given. The real stumbling block for the 7-Eleven Menu of Death? Their prices are ridiculously high. A Whopper (which has a suggested retail value of $4) costs $7.99. A liter of Coke costs over a dollar at the local grocery store! Okay, no one’s going to LOSE their lunch here, but there are some lessons to be learned if any local franchisee wants to expand. First off, when possible, choose a local location that isn’t as close to population centers. (I know I’m talking a lot about 7-Eleven, but I’ll be the first to admit that Great Slope does have its merits. How would California feel about McDonalds opening up there? Better yet, let’s just all go to California and eat at Krispy Kreme Donuts.) Secondly, don’t limit yourself to just one brand. Switching over to a competitor that’s not priced out of the market can make sense. Thirdly, try to come up with a less expensive menu; for example, offering half the hours. People LOVE convenience, so that would be a big hit! In contrast, 7-Eleven was smart to make its menu item, the Egg Sandwich, available on the SLICE (Soft Sheen Cut-In-Half) menu ($1.25), providing everyone with a value-packed sandwich to round out their free-standing order.

3. Subway has been sued a lot lately

In the recent years, Subway is being sued a lot because of the unhealthy ingredients it uses in its sandwiches. The chain has been accused of using an amino acid that is not approved by the Food and Drug Administration (FDA), azodiacarbonamide, in its bread.Why would Subway in these situations choose to invade a court system to fight the lawsuits? Because Subway knows if it loses these cases, the reputation of its entire business will forever be marred. People will say that Subway is like a slumlord or a drug lord. Instead of pepperoni pizza, they will order an apple at a 7-11 instead. Subway knows that Wikipedia will have a positive article about its name being related to the word “cheese.” Subway knows that the greed associated with these cases will make the branding and image of the innocent company stick out like a sore thumb to the public. As a business (and since it was founded by a business person), it has to protect this reputation in every possible way. This is why it has taken massive strides to become codesigned and go beyond the requirements of the FDA, to provide healthier, less unhealthy fare to its consumers. For those of you wondering how buying organic has benefited the Subway brand, check out this quote from Chow leader Gary Vaynerchuk, "If you expand your idea of what healthy looks like, you take your customers' minds off of processed crap." If even Gary V is no longer able to get the uninformed masses to accept organic foods, then why should you? What steps has Subway taken to become a healthier food provider? What was the result of those actions? Below I have listed a few strategies the Subway Brand took to fight low-quality food that it puts on its menus. Franchisees/Partners: Subway creates plants across the country that have standardized recipes. When a bank or finance company sees that a warehouse of items sold by Subway is always stocked with healthy items and top dollar,