Ben Miles, regional marketing and profitability manager talks about what’s involved in becoming a Subway franchisee.
How would you define your brand?
Subway Restaurants are a quick service restaurant (QSR) chain specialising in freshly made-to-order sandwiches and salads. With five kinds of breads, 10 different sauces and countless salad combinations, we pride ourselves on offering customers variety, including healthier options, without compromising on taste.
How old is the company and when did you start franchising?
The Subway chain was established in 1965 in Connecticut, US. By 1974 founders Fred DeLuca and Peter Buck had expanded the business to 16 restaurants throughout the state and the first franchise opened in Wallingford, Connecticut the same year.
Subway Systems Australia (SSA) is the franchisor for Australia, opening its first store in Perth in 1988.
How many franchises do you have?
Subway Systems Australia has more than 1200 franchises across Australia, and also provides regional support for over 200 restaurants in New Zealand. The Subway chain has more than 32,000 restaurants in 91 countries globally.
How many are multi-unit franchisees?
There are about 251 multi unit franchisees in Australia and 42 in New Zealand.
Where do you expect the business to be in 2010?
Our goal is to have at least 1500 restaurants across Australia and New Zealand by the end of 2010. We aim to grow our business through delighting our customers by delivering excellence in customer service and an exceptional experience, as well as maintaining our position on value for money amongst our competitors.
What are the start-up costs for a franchisee and what working capital should they have?
The initial investment ranges generally from $204,050 to $352,550 (exclusive of GST and other taxes and costs) for a traditional location (i.e. on the high street).
However, if purchasing a franchise in a non-traditional location, such as a food court, then the investment may vary and capital costs could be substantially lower.
What is the length of agreement?
Twenty years.
What are the royalty fee and marketing levy?
Royalties and advertising fees are based on gross sales exclusive of GST and other taxes. Royalties are eight per cent and there is a 4.5 per cent advertising fee.
What skills does the franchisee need?
There are no formal qualifications required to become a Subway franchisee, although all prospective applicants need to pass a basic literacy and numeracy test. When considering a potential franchisee, we’re looking for someone who is approachable, determined, with a hunger for success and strong leadership skills.
What will you teach them?
Each franchisee candidate is required to attend a two-week training course at SSA headquarters, Brisbane. The training course teaches business concepts, methods of operation and basic management skills.
The time is spent in the classroom and on-site at local Subway restaurants for hands-on experience. At the end of the course, each attendee must pass a comprehensive exam in order to become a Subway franchisee.
There are also courses for managers, and multi-unit owners.
What is the most common mistake made by new franchisees?
It is critical to look after staff and in particular customers. While the age old saying ‘the customer is always right’ may be a cliche, the simplicity of this cannot be underestimated. The Subway brand brings customers in; it’s the franchisee that brings them back.