Any Subway Franchisees Here?

Originally Posted by FidelCashflow

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There's a Tim Horton's by my house for the last 10 years which has always been busy, and another one opened about 100 feet away across the street and they even put up a giant sign outside saying "NO LINEUPS"

If you want to make some money in Canada, do this. I was in a university town of 4-6 thousand people (depending on time of the year). It had 3 Tim Hortons, and there was talk of opening up 1-2 more. There wouldve been at least another one on campus if Starbucks didn't have the contract.


I've seen several Timmy-Ho's open up on the same street, and all do a lot of business. It's ridiculous.

If you're going to be a franchisee, buy all the potential locations in your single area. This may sound crazy, but trust me: you're going to be cannibalized by more locations of the same franchise anyway, so you might as well be doing it yourself. You want to make damned sure that you own your territory. Ideally it's a great territory that can actualy bear the burden of multiple locations. Plus you enjoy some moderately decent economies of scale with multiple shops in one place.

doesnt buying a single franchise entitle you to the economies of scale benefits of the entire franchise? isnt that the main point of franchises?

other than getting staff from shop A to fill in at shop B i cant really figure out any additional benefits.

also, as some of you know stuff about franchises, are there any which suit being more of a second income stream. subway seems ideal for this because you rarely find adults working in them.

Originally Posted by Mr Herbert

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also, as some of you know stuff about franchises, are there any which suit being more of a second income stream. subway seems ideal for this because you rarely find adults working in them.
I've heard stories about how Subway are looking for franchisees who would view their shops as their "babies" instead of investments. Looking at it from their perspective, I can see their point. You'll take better care of their franchise if you treat it like your very own "baby" instead of just an investment.

Originally Posted by Mr Herbert

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also, as some of you know stuff about franchises, are there any which suit being more of a second income stream. subway seems ideal for this because you rarely find adults working in them.
There was a time when I seriously considered buying a few franchises as a supplemental cash flow investment. I did a moderate amount of homework on the topic before realizing that it's a shitload of work. It's not uncommon for a franchise owner to physically manage the operation, and possibly even work in the store, for 70+ hours a week. I decided against the idea unless/until I am big time enough to buy a few locations and hire managers plus a group/regional manager. Contrary to popular belief, franchises are full-time investments that need active care and feeding. The "baby" analogy seems apt.

Originally Posted by Biggskip

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From what I've read Subway is one of the worst franchises one can buy into. The cost to open is relatively small, but the ongoing costs are very high compared with other similar establishments. There are stories out there of people who own a Subway franchise and only get paid the minimum wage they pay themselves as they work 80 hr weeks.

On top of this Subway is supposed to be one of the worst companies from the standpoint of protecting their franchisees from cannibalized sales. In other words, if you open store they have no qualms about letting somebody else open a store across the street from you.

+1.

My family used to own a Subway franchise in the mid 90s. Yes, low-cost to buy into but they make you buy new things from them all the time. They have "inspectors" who visit stores and tell you you need this and that and this and that. Of course, everything has to be bought from Subway. That's where they make their money.

Yes, they have no problem opening another store very close to you. Last I heard, there was no territory protection.

It's good to get some experience in though.

Originally Posted by Mr Herbert

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doesnt buying a single franchise entitle you to the economies of scale benefits of the entire franchise? isnt that the main point of franchises?


In theory.

Originally Posted by FidelCashflow

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But of course you're talking about someone opening another Subway across the street which is different - I just find it odd how they would allow one and be so protective of the other.

That's because another regular store selling subways very close to them creates competition for them, whereas another Subway store selling subways creates royalties for them.

All franchisors are going to make you buy their **** and pay a fee, though. It sucks, but that is the nature of the game. Franchising is basically legalized racketeering. There is not a tremendous philosophical gulf between what a franchisor does and what the mafia does.

That said, I have heard that Subway is particularly onerous in its treatment of franchisees. Things like no territorial protection or guarantees, or even active attempts to run franchisees out of business to keep flipping locations to new owners. Because Subway makes a nice chunk of change every time a new franchisee buys a license to start up, Subway makes a boatload by churning them in and out. It is notorious for doing this in bad business areas, wherein its franchise makes pretty much no money, but in which Subway basically runs an extortion racket.

Originally Posted by mkarim

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That's because another regular store selling subways very close to them creates competition for them, whereas another Subway store selling subways creates royalties for them.

Bingo.

The goals of the parent company and the goals of the franchisee are only nominally related on the dimension of selling food. On all other dimensions, you're almost in direct opposition to the goals and incentives of the parent company.

I talked about something similar with my friend's dad about 10 years ago. He was considering starting a Krispy Kreme franchise because they were pretty good about making store to store competition a non-issue. However, at the time in St. Louis, KKD wanted the stores to be harder to access to keep their cachet (read not in the 'burbs where we lived). He ultimately decided against it because at the time it would've cost him about $3M to open the doors and he would've had to have it in a location that was a decent drive from his house. He said that he would never consider one of the other (far cheaper) franchises like McDonald's, Subway, etc. because of their ubiquity and lack of franchise protection. After looking into all tiers of franchises, he said he really thought operating a franchise was not the best way to secure a steady income stream. A revenue stream, sure, but not an income stream.

I have seriously thought of buying some franchises in the past. There are various forums and informational sites, just do some Google-fu and find some. What my due diligence showed was that the entire action is in the UFA, universal franchise agreement. This will determine exactly how you must run your business and the relationship between you and the corporate office. In the US, franchising is under the jurisdiction of the FTC and the FTC requires an FDD, franchise disclosure document. It used to be called something else but I forget and it doesn't matter anyway, it's the FDD now. The FDD is the starting point of your contact and negotiation with corporate.

So go to some franchise shows, talk to current owners, etc. Find something that fits your interests, lifestyle, and the amount of cash you have to invest, then contact the company for it's FDD.

Originally Posted by Don Carlos

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There was a time when I seriously considered buying a few franchises as a supplemental cash flow investment. I did a moderate amount of homework on the topic before realizing that it's a shitload of work. It's not uncommon for a franchise owner to physically manage the operation, and possibly even work in the store, for 70+ hours a week.

I decided against the idea unless/until I am big time enough to buy a few locations and hire managers plus a group/regional manager. Contrary to popular belief, franchises are full-time investments that need active care and feeding. The "baby" analogy seems apt.

I own a Cold Stone Franchise. I seriously work there about 77 hours a week, not including Saturdays and Fridays.

Originally Posted by RjSF7

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I own a Cold Stone Franchise. I seriously work there about 77 hours a week, not including Saturdays and Fridays.
How much do you enjoy the lifestyle?