| Revenue (Gross Sales) | $467,000 | 100% |
| COGS (Food & Paper) | –$163,450 | 35% |
| Labor (Including Owner Draw if Working) | –$149,440 | 32% |
| Occupancy / Rent | –$65,380 | 14% |
| Royalty Fee | –$37,360 | 8% |
| Advertising / Marketing Fund Contribution | –$15,638 | 3.35% |
| Other Operating Expenses (Utilities, Insurance, Supplies, Tech/POS, Credit Card Fees, Misc.) | –$32,690 | 7% |
| Operating Profit (EBITDA before Debt Service and Owner Pay) | $3,042 | 0.65% |
| Debt Service (SBA 10-yr Loan, 10.5%, on 70% of $263,500 midpoint) | –$30,100 | 6.44% |
| OWNER NET (after debt service, before owner salary/draw) | –$27,058 | -5.79% |
Assumptions: CRITICAL: Item 19 is intentionally blank—Subway discloses zero financial performance data. ALL revenue figures are analyst estimates from public sources (Euromonitor, QSR Magazine, Technomic 2023–2024 Subway system reports). Buyer must independently validate local unit economics by calling franchisees in Item 20 Exhibit B.; Item 7 midpoint investment of ~$263,500 is estimated from Subway's publicly filed 2024/2025 FDD total investment range of $116,600–$410,400 for a traditional location; actual investment varies significantly by market, build-out condition, and whether equipment is leased vs. purchased.; Labor at 32% assumes owner works 50+ hours/week. If owner hires a manager, add $40,000–$55,000/yr, pushing ALL scenarios deeper negative. California, New York, and other high-minimum-wage states should model labor at 36%–40%, which makes the bottom-quartile and median scenarios catastrophically negative.
| Initial Franchise Fee Standard Subway franchise fee; not fully disclosed in provided Item 5 excerpts (only AB 1228 carve-out disclosed). Confirm exact amount in complete FDD Item 5. | $10,000–$15,000 (estimated; verify in full Item 5) |
| Royalty Fee Paid weekly via pre-authorized bank debit (Item 6 / Exhibit F). No volume break or reduced rate for low-performing units—full rate applies from dollar one. | 8% of gross weekly sales |
| Advertising / Marketing Fund Franchisee has no vote on how national ad fund is spent. Subway controls media mix and agency relationships. Local co-op obligations vary by market. | ~4.5% of gross sales total (national + local co-op) |
| Transfer Fee Item 17 / CA Addendum Section V. Plus buyer must sign new franchise agreement at then-current terms, which may include materially different financial terms than seller's agreement. | $7,500 (or $3,750 spouse/child transfer) |
| Technology / SubwayPOS® Fee Exhibit A-3 (SubwayPOS® EULA). Franchisee must use franchisor-mandated POS; fees are charged separately and subject to change. Estimate $200–$400/month based on industry comparables. | Ongoing; amount not disclosed in provided excerpts |
| Total Investment (Item 7 Range) Wide range reflects location type, market, and build-out condition. MCCS/military locations may involve additional costs (security clearances, Buy American Act compliance per Item 7 addendum). Leasehold improvements alone can be $50K–$175K. | $116,600–$410,400 (traditional; new build) |
Item 20 Table 1 reveals a system that lost 1,645 U.S. franchised units net over 36 months (2022–2024): -571 in 2022, -443 in 2023, -631 in 2024—acceleration in 2024 is alarming. Table 3 shows the primary exit mechanism is 'Ceased Operations – Other Reasons' (Column 8), not formal terminations—meaning thousands of franchisees simply closed voluntarily, likely from financial distress. Table 2 shows 4,685 ownership transfers 2022–2024, suggesting many 'sales' are distressed operators seeking exit at any price. Combined attrition rate (closures + reacquisitions) implies roughly 3–4% of the system exits involuntarily per year.
Item 3 discloses 50 pending actions plus 34 franchisor-initiated actions (Exhibit L), representing ~0.2% of global franchisees sued. The 34 franchisor-initiated suits signal active royalty/fee enforcement and brand-standard enforcement posture. Volume and mix of suits is not abnormal for a 20,000-unit system but confirms franchisor is not passive when franchisees default financially.
| Brand | Grade | Fees | Invest from |
|---|---|---|---|
| Firehouse Subs | F | 11% | $405,350 |
A single Subway unit at median AUV (~$467K) produces negative owner net after debt service and before owner salary—the math only works if you own it outright, work it yourself full-time, and/or achieve top-quartile sales ($650K+). The system is contracting sharply (-1,645 units in 3 years), Item 19 is blank (zero financial disclosure), territory is unprotected, and the franchise agreement is heavily franchisor-favored. This is a viable business ONLY for an owner-operator with strong local demographics, low rent, and multi-unit ambitions. Do not proceed without validating actual P&Ls from at least 5–8 local franchisees.
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