Forums: Discussions for entrepreneurs and small business.

As one who has spent over 23 years in this brand category, I have some insight to this hot topic.

1. It seems Subway prefers to work with franchisees they know rather than new entrants of unknown caliber and work ethics

2. The mandated Math and English tests seem to provide excellent gate control judging by the number of people who fail the test(s)

3. Financing requirements in today's market are tougher and requiring upwards of 40% down to have clear shot at the money

4. Some Subway DA areas(field offices) actually require about $250,000 cash in the bank(provable seasoned funds) with a net worth of about $500,000, thereby excluding some aspiring entrepreneurs by raising the bar so high

5.The resale opportunities in the open market are few and far between, and some of those that are available have questionable cash flow viability for new buyers

6. Few of the best opportunities ever come up on the open market-they are gobbled up by existing franchisees to add to their growing portfolios

7. Many areas do not accept new franchisees to build new stores-that right is reserved for existing owners

Will the skies ever open up opportunties for new buyers? I wonder

Fayaz Karim, mrfranchiseman.com, 949-253-4610

I looked at franchising before and found out the $250,000 in the bank and $500,000 net worth requirement is not intended to keep people out of the franchise game.  But, to make sure they have enough money to open a store (the $250,000).  Then, the new franchiser will have to have enough money to keep his store going for about a year.  This is the length of time it takes on the average to develop a customer base that can support the store.  Hence, the $500,000 net worth requirement.  I should also note that these financial requirements are common with a lot of franchise opportunities, not just Subway.

Also, the partner has mentioned recording the conversations with the first meetups. I don't feel this is unusual however would love to get your input on this issue.

Dear Fayaz,

I am 34 years old am am thinking of opeing one in the Netherlands. Do you have any ideas of the ave. start up costs here/ I have around 35k in Euros, can get up to  € 20k  from family and think of having a loan of between 25 and 45K.

I believe an initial start up capital of between € 80 and 100k enough?

Much appreciated1

regards,

gokhan

I suggest you contact Subway for their franchise information. Last time I read anything about Subway start up cost, Subway wanted new owners to have $250,000 (US) up front and $500,000 to run the new store for approximately a year. This is the average length of time it takes for a new store to generate a self sustaining customer base.