Subway Sandwich Restaurants
Financial Assistance for Minorities

An 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.

Subway actively seeks to attract minority franchise owners by advertising in magazines such as Black Enterprise.  

With 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.

For qualified minority franchisees, Subway will finance $10,000 of the initial franchise fee ($12,500 in U.S. dollars) for a traditional unit.

Les 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."

A minority franchisee would therefore pay $2,500 down and Subway would finance the remaining $10,000.

The franchisee then sends regular payments to Subway through direct transfer from a pre-authorized account.

"The term of the loan is 42 months," Les says, "and there is no interest or payment required for the first six months."

In 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.

Eligibility 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.

Meet Michael Lea, Subway Franchise Owner

Since 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 steady growth.

Michael, 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.

"I 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."

He's 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.

When 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.

Michael 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.

But 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.

Michael 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 can."

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