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