Financial Assistance for Minorities
international success story, Subway
has launched nearly 20,000 restaurants
in 73 countries since opening their first
franchise in 1974. This success has not
gone unnoticed in the industry. Entrepreneur
Magazine rated Subway the #1 franchise
opportunity for 11 of the past 15 years.
actively seeks to attract minority franchise
owners by advertising in magazines such
as Black Enterprise.
restaurants in Brazil, Canada, China,
Croatia, Egypt, Pakistan, Poland, Saudi
Arabia, Spain, Sweden, Taiwan, Zambia
and many other nations, diversity is clearly
important to Subway. And as an incentive
for minority franchisees, the company
offers franchise fee financing.
qualified minority franchisees, Subway
will finance $10,000 of the initial franchise
fee ($12,500 in U.S. dollars) for a traditional
Winograd with Subway Public Relations
says, "Franchisees find out about the
program from the franchise disclosure
documents in the offering circular. The
franchisee fills out a promissory note
and pays a downpayment at the time the
franchise is purchased, and the company
provides the financing."
minority franchisee would therefore pay
$2,500 down and Subway would finance the
franchisee then sends regular payments
to Subway through direct transfer
from a pre-authorized account.
term of the loan is 42 months," Les says,
"and there is no interest or payment required
for the first six months."
addition Subway will work with
any franchisee who needs help securing
funds for other startup expenses such
as leasehold improvements, outside signs,
opening inventory and training expenses.
for this financing program is determined
by the definition of minority as used
by the United States Small Business Administration
for business development programs. You
do not need to be a U.S. citizen since
the company, based in Connecticut, has
franchises all over the world. You will
need, however, to meet the investment
and company philosophy qualifications.
Through a series of interviews, you and
the company will determine if a Subway
franchise is right for you.
Michael Lea, Subway Franchise Owner
June 2003, Michael Lea has been running
his own Subway restaurant in the
urban Metcalfe Park section of Milwaukee,
Wisconsin. Business is good, marked by
who is African-American, participated
in Subway's minority incentive
program. Formerly in marketing with the
Harley-Davidson Motor Company, he was
drawn to Subway for several reasons.
used to run a concession stand at one
of the arenas in Milwaukee, selling submarine
sandwiches," he says. "I decided I wanted
a permanent location, a storefront outside
of the special events venue. I looked
at a couple of other franchises but, comparing
the initial costs and investment requirements,
Subway seemed to be the best fit
at the time. I also liked their focus
on healthy eating."
very satisfied with the support and training
Subway provided. Michael says the
initial two-week training in Milford,
Connecticut, was "pretty intense." On
a typical training day he attended classes
during the day and worked at an actual
Subway restaurant in the evening.
This was a real, working operation, not
just a simulated store.
Michael opened his restaurant, company
representatives were there. "Field consultants
came in to help me open the restaurant
and support operations those first two
or three weeks, making sure things ran
smoothly," he says.
appreciates the 6-month deferred payment
terms of the franchise fee loan. "It allows
you time to make a profit, to have your
restaurant up and running for a while
before payments begin," he notes.
he cautions that the initial cost of opening
a store is much greater than the franchise
fee alone. A franchisee still needs additional
financing to cover many other costs.
feels it's very important to research
a franchise thoroughly before jumping
in. "Really do your homework," he advises.
"Look at the initial investment required
and weigh it against potential return.
Compare different franchises that interest
you before choosing one. Carefully read
the material you receive and talk with
as many current franchise owners as you