Franchising Subway

Powerful Essays
Franchising Subway

Franchising has attracted some 34,000 people in the UK to invest in their future in self employment. Here are 15 reasons why franchises offer an attractive business opportunity.

1. Established brand value.

Prior to launching a franchise, the franchisor has developed and established attractive and meaningful branding for the operation, and as the network of franchisees expands the national recognition of this brand grows. When a franchisee enters into a mature franchisee network, they will benefit from the national name recognition the brand has built when it comes to their own marketing initiatives, while even new launch franchises have invested in professionally designed and intellectually protected branding to benefit its franchisees.

2. Accessing a proven system.

Most franchises are launched based on an initial head office or pilot operation that has been trading for at least one year. This is essential in enabling the franchisor to solve the teething problems any new business faces. The franchisee will benefit from lessons learned by the franchisor during this period through ongoing advice and support.

3. Offering a product or service in demand.

The pilot operation not only developed the operating systems and procedures of the business - importantly it also established a proven demand for the product or service.

4. A low risk route into self employment.

Franchising has traditionally a lower associated risk than starting up your own business independently. The proven nature of the business concept, combined with the training and support provided by the franchisor, lead to a lower level of failure. The 2007 NatWest/British Franchise Association UK Franchise Survey reveals that 93 per cent o...

... middle of paper ... be attributed to its uncommon business model. Unlike most franchisers, the parent company does not operate any restaurants. Local franchisees operate the stores, and in most markets Subway enters into a contract with a franchisee to be its Development Agent for that market. The Development Agent is then responsible for developing new locations, evaluating stores on at least a monthly basis, and assisting franchisees with whatever needs they may have. Doctor's Associates, Inc. takes an 8% royalty on all gross sales from each store, while between 3 and 5.5% (depending on market) of gross sales go into a fund, the Subway Franchisee Advertising Fund Trust, also known as SFAFT which is operated by a board of directors voted on by Subway Franchisees. Contrary to other major franchisers, Subway's parent company does not make any contribution towards advertising the chain.
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