How to Open a Subway Franchise

Subway has long been one of the most accessible franchise opportunities in quick-service restaurants. The initial investment is lower than most major brands. The footprint is flexible (you can open in strip malls, gas stations, airports, or standalone locations). The barrier to entry has historically been low.

But Subway is no longer the same company it was five years ago. The 2024 acquisition by Roark Capital has brought new ownership, new strategic direction, and changes to the franchise development process.

If you're considering a Subway franchise in 2026, here's what you need to know about costs, requirements, and what's changed under new ownership.

Current Investment Requirements#

Subway remains one of the lower-cost franchise opportunities among national QSR brands.

The franchise fee is $15,000. Total initial investment ranges from $116,000 to $263,000 depending on location format, size, and whether you're converting an existing space or building out a new site.

Breaking down the investment:

• Franchise fee: $15,000
• Leasehold improvements: $30,000 - $90,000 (varies significantly by location type)
• Equipment: $25,000 - $50,000
• Signage: $5,000 - $15,000
• Inventory: $5,000 - $10,000
• Working capital: $10,000 - $20,000 (recommended to have on hand for initial operating period)
• Miscellaneous (legal, training, etc.): $5,000 - $15,000

Subway requires franchisees to have at least $80,000 in liquid capital and a net worth of $150,000. These are low compared to other national brands (McDonald's requires $750,000 liquid; Taco Bell requires $1.5 million net worth).

Ongoing Fees#

Subway franchisees pay:

• Royalty fee: 8% of gross sales
• Advertising fund: 4.5% of gross sales

Combined, ongoing fees total 12.5% of gross sales, which is on the higher end for QSR franchises (most range from 8-12%). The royalty structure has been a point of contention among some franchisees, particularly as same-store sales have declined in recent years.

What Changed Under Roark Capital#

Roark Capital, a private equity firm specializing in restaurant and franchise brands, acquired Subway in 2024 for an estimated $9.6 billion. Roark's portfolio includes Arby's, Buffalo Wild Wings, Sonic, Jimmy John's, Dunkin', Baskin-Robbins, and Inspire Brands.

Post-acquisition changes include:

Menu Innovation: Roark has pushed for more aggressive menu development, including new proteins, bread options, and limited-time offers. Subway launched a menu refresh in late 2024 that included new sandwiches, upgraded ingredients, and faster prep processes.

Technology Investment: Subway has accelerated rollout of digital ordering, mobile app enhancements, and delivery integration. Franchisees are expected to adopt new POS systems and digital menu boards as part of the modernization push.

Real Estate Strategy: Subway is shifting from aggressive unit growth (the brand peaked at over 27,000 U.S. locations) to quality over quantity. Expect tighter site selection criteria, closures of underperforming locations, and incentives for relocations or remodels.

Franchisee Support: Roark has committed to improving field support, training programs, and franchisee profitability. This includes enhanced marketing support, supply chain optimization, and operational consulting.

The new ownership is betting that fewer, better-performing locations will drive stronger unit economics and brand perception than the previous strategy of maximum geographic saturation.

Site Selection and Formats#

Subway's flexible footprint is one of its competitive advantages. The brand operates in:

• Strip malls and shopping centers
• Standalone locations
• Gas stations and convenience stores
• Airports, train stations, and travel centers
• Hospitals, universities, and military bases
• Non-traditional locations (inside Walmart, grocery stores, etc.)

Site requirements are minimal compared to other QSR brands. You don't need a drive-thru. You don't need a large parking lot. You need 800-1,500 square feet of retail space in a location with foot traffic or visibility.

Subway provides site selection assistance and evaluates proposed locations for viability. Under Roark ownership, expect more rigorous site approval criteria focused on traffic patterns, demographics, and competitive density.

Training and Support#

New Subway franchisees complete a two-week training program that covers:

• Food preparation and quality standards
• Health and safety protocols
• Inventory and supply chain management
• Labor scheduling and management
• POS and technology systems
• Customer service and sales techniques
• Marketing and local promotions

Training is conducted at Subway University (the company's training facility) and includes both classroom instruction and hands-on restaurant experience.

Post-opening, Subway provides ongoing support through field consultants, online resources, and franchisee advisory councils. The level of support varies by region and franchise development agent (Subway works with third-party development agents in many markets).

Pros of the Subway Franchise Model#

Low initial investment: Subway remains one of the most accessible national QSR franchises for first-time franchisees or operators with limited capital.

Flexible footprint: You can open in a wider variety of locations than brands that require drive-thrus or standalone buildings.

Simpler operations: No fryers, no grills, no complex kitchen equipment. Subway's prep-to-order model is easier to staff and manage than full-kitchen QSR concepts.

National brand recognition: Subway is one of the most recognized QSR brands globally, with strong awareness and an established customer base.

Potential for multi-unit growth: Low initial investment makes it easier to open multiple locations and build a portfolio.

Cons and Challenges#

Declining same-store sales: Subway has faced declining same-store sales in recent years as consumer preferences shift and competition intensifies. Unit-level economics are under pressure.

High ongoing fees: At 12.5% of gross sales, Subway's royalty + advertising fees are higher than many competitors.

Brand perception challenges: Subway has struggled with brand positioning (is it health-focused? value-focused? convenience-focused?) and competition from fast-casual concepts like Jersey Mike's and Firehouse Subs.

Franchisee relations: Subway has had public disputes with franchisees over fees, mandatory remodels, and corporate strategy. Roark's ownership may improve this, but the relationship has been strained in recent years.

Market saturation: With over 20,000 U.S. locations, many markets are saturated. Intra-brand competition (Subway vs. Subway) can cannibalize sales.

The Franchise Agreement#

Subway franchise agreements are typically 20 years with renewal options. The agreement includes:

• Territory rights (non-exclusive; Subway can open additional locations near yours)
• Operational standards and compliance requirements
• Mandatory participation in marketing funds and promotions
• Remodel and upgrade requirements (typically every 5-10 years)
• Transfer and resale provisions (Subway has first right of refusal on any sale)

The agreement gives Subway significant control over operations, marketing, and real estate decisions. Franchisees operate within tightly defined guidelines.

Who Should Consider Subway#

Subway is best suited for:

• First-time franchisees or operators with limited capital ($80,000 - $150,000 liquid)
• Operators interested in flexible, non-traditional locations (gas stations, travel centers, etc.)
• Multi-unit developers who can open several locations to achieve economies of scale
• Operators comfortable with a streamlined, prep-based operational model

Subway is not ideal for:

• Operators expecting rapid same-store sales growth or premium unit economics
• Franchisees seeking low ongoing fees or high net margins
• Operators in highly saturated markets where intra-brand competition is intense

The Roark Factor#

Roark Capital's track record with restaurant turnarounds is mixed. The firm successfully grew Arby's and integrated Buffalo Wild Wings, but has faced challenges with other portfolio brands.

For Subway franchisees, Roark's ownership brings potential benefits (better marketing, improved operations, technology investment) and potential risks (mandatory upgrades, increased fees, pressure to remodel or relocate).

The next 2-3 years will reveal whether Roark's strategy (fewer, better locations with stronger unit economics) pays off. Early signs are cautiously positive, with improved marketing campaigns and menu innovation gaining traction.

Final Considerations#

Subway offers one of the lowest-cost entries into a national QSR brand. The $15,000 franchise fee and sub-$150,000 total investment make it accessible to a broad pool of potential franchisees.

But accessibility doesn't guarantee profitability. Subway's challenges (declining same-store sales, high fees, saturated markets) require operators to execute at a high level to achieve strong unit-level returns.

If you're willing to work in a competitive, evolving brand environment and have the operational discipline to manage costs and drive sales, Subway can be a viable entry point into QSR franchising.

Just know that the low barrier to entry comes with real operational and financial challenges. Do your due diligence, review Franchise Disclosure Documents carefully, and talk to existing franchisees before signing.