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Buying A Fast Food Franchise: Subway vs Quiznos


Buying A Fast Food Franchise

Buying a fast food franchise no longer means you are considering a McDonald's.  Today there are a lot of big competitors in the fast food franchise for sale market and one of the largest is Subway.  Both Subway and Quiznos have entered a highly competitive industry and made a place from themselves by offering menu items that differ from traditional fast food items like burgers and fries.

So in the battle of fast food franchises, Subway vs. Quiznos, who would win?  Let's explore the pros and cons of each and see how they stack up.

Subway

Subway has carved a place for itself among industry giants as a healthy alternative to traditional fast food.  Subway has grown rapidly and today has almost 39,000 locations in 101 countries.  In addition to being popular with its customers, Subway has also been successful at keeping the costs of opening a franchise relatively reasonable.

Pros

Brand -- Subway has built an extremely strong brand name through advertising campaigns.  As a franchise owner, you won't have to do much more other than put a Subway sign up for potential customers to recognize your business.  As a franchisee you would be required to contribute to their marketing expenses paying 4.5% of your gross sales each week back to the franchisor for advertising.  This could definitely be seen as a con as well but without advertising their brand probably wouldn't be as big as it.

Cost -- Subway franchisees are required to pay a $15,000 franchise fee to get started.  From there, it typically costs anywhere from $100,000 - $250,000 to get your Subway franchise open and ready to serve customers.  These costs are lower than many other fast food franchises but still higher than Quiznos, which is another reasons Subway has been a popular choice for many Entrepeneaurs.

Success Rate -- Subway franchises rarely fail. According to CNNMoney, Subway franchises have a higher success rate than Quiznos franchises. Additionally, according to the U.S. Small Business Administration less than 8 percent of Subway loans backed by them end up in default.

Cons

Fees -- As I mentioned above, Subway requires their franchisees to make weekly royalty payments totaling 12.5% of weekly gross sales.  8% goes toward the franchise royalties and 4.5% goes towards advertising.

Competition -- Because there are so many Subway locations, you may find that your Subway location is in competition with another franchisee that is in close proximity.

Quiznos

Quiznos has also done well in the fast food franchise business by offering a sandwich alternative to traditional fast food.  Quiznos is however much smaller than Subway and not as widely known.   Several years ago, the franchise actually ran into some financial trouble and had to restructure in order to stay in business. Today, Quiznos has about 4,400 locations around the world.

Pros

Cost -- The costs to open a Quiznos franchise are typically less than that of opening a Subway franchise.  The total cost to open ranges from $155,547 to $233,726.  It covers all costs, including the franchise fee, architects, even your initial food order.

Competition -- There are less Quiznos locations so you will most not be competing with other Quiznos franchisees for business.

Fees -- Quiznos royalty payments are lower than Subway's.  With Quiznos you will pay 7% of your weekly gross sales to them after discounts such as coupons.  4% of that goes toward advertising.

Cons

Brand -- The brand is not as highly recognized.  While the company has had some good advertising campaigns in the past, the Quiznos brand is not as strong as Subway.

Company History -- As I mentioned earlier, several years ago the company had to do some restructuring in order to stay in business.  While they seem to have things in order now, as a Quiznos franchisee you will pay 7% of your gross sales to them so you want to be sure you are working with a solid company.

The Conclusion

In my opinion, it is a toss-up!  On one hand you have Subway, which is a highly recognized fast food franchise throughout the world.  They have a solid franchise system in place and the company is growing but they cost more to open and operate.

Quiznos on the other hand is not as widely recognized but is also working to grow and investing resources to do so.  The cost to open and operate a Quiznos franchise is less than Subway and you will have less competition with other franchisees in your market.

Taking all this information into consideration, I'd say when buying a fast food franchise and deciding between a Subway vs. a Quiznos I would recommend looking at your own market.  Is there a Subway on every corner?  If so considering a Quiznos may be your best bet, but if you're in a market that hasn't been flooded by Subway locations, I think Subway is good choice based on their brand recognition and strong company history.

Peter Siegel, MBAAbout This Contributor: Peter Siegel, MBA is the Founder & Senior Advisor (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ CA businesses for sale, 500 new & refreshed postings/posts daily) working with buyers, business owners/sellers, business brokers, agents, investors, and advisors). Reach him direct at 925-785-3118 to discuss strategies regarding buying, selling, (or financing a puchase of) California businesses.


Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business


Comments Regarding This Blog Post


I know at one point (and they may still do) Subway had a 'Wonderlic Basic Skills Test' (WBST) for potential franchisees. This test gave the franchisor an assessment of a potential franchisee's proficiency in math and English skills. I work with many clients who were not born in the United States and so this test has been challenging for some of them. I only say this because this might be something a buyer should investigate if they struggle with English and Math skills, I have heard from native English speakers that even they find it challenging.


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