Subway development

For a brand with more stores worldwide than McDonald’s, Subway has an unusual franchising model. Franchisees are selected and trained by Europe-based Subway International BV through development agents who are also franchisees in the country where they operate.

The franchise fee, however, is paid directly to the Subway headquarters in the United States. For the Philippines, the franchise fee is $10,000, which is lower than the $12,000 charged US-based franchisees

"My job is to screen potential franchisees, approve sites, and help train the staff of potential franchisees," said Tiffany del Rosario, one of two Subway International development agents in the country and a franchisee of four outlets.

The initial investment ranges from P3 million for a take-out model with a floor area of 10 to 15 square meters to P5 million for an 80 sqm. satellite store. Estimated payback is within the third year of the standard 10-year franchise agreement.

Right now, 12 franchisees operate 25 stores nationwide, 20 of which are located in Metro Manila. Worldwide, Subway operates 20,400 stores in 74 countries.

Location

"We have positioned our brand as a nutritional alternative to fast food. This carries advantages for our franchisees. For one, anyone can be a franchisee. There is no need for a background in restaurant operations. For another, money is not wasted on non-recoverable fixed assets. Because there is no cooking involved, we can go to areas no other franchise has gone before," said Del Rosario.

A priority location are gasoline stations, where motorists can fill their tank and buy food to take along for the trip.

"We are looking at putting outlets in more Petron stations . I am also talking with operators of Shell and Caltex stations as future sites of our franchisees," said Del Rosario.

Other preferred locations are convenience stores, cinema areas, universities and hospitals.

"Aside from site selection, we are careful in screening potential franchisees. Our partner must be a team player, a risk taker and a persistent problem solver," said Del Rosario.

All franchisees undergo a two-week training at the Subway’s headquarters in Bridgeport, Connecticut. The first week of training is devoted to classroom work and the second week covers operations.