Franchise Update

Sandwich Shop Dream Evolves into One of the Country's Top Franchises

If you have visions of being your own boss and owning your own fast food franchise, you may want to take a lesson or two from Subway® Restaurants co-founder, Fred DeLuca. His nearly 37-year-old empire of more than 16,000 Subway restaurant franchises in 50 states and more than 25 countries started back in 1965 in the small town of Bridgeport, Connecticut.

Fresh out of high school at the tender age of 17, DeLuca barely had enough money to send himself to college with his $1.25-an-hour job at the local hardware store. But a simple twist of fate brought back family friend Peter Buck, who, during his visit, gave DeLuca the idea to start his own submarine sandwich shop business. A month later on August 28, 1965, with $1,000 from Buck as his initial investment, the first Subway restaurant opened in Bridgeport, Conn.

By 1974, the duo had opened 16 Subway sandwich shops throughout the state of Connecticut, but their goal was to have 32 units open in 10 years, so they needed some outside help. They discussed the benefits of franchising, and decided to get people to invest money in the company by buying units and using DeLuca and Buck's management system. Brian Dixon was the first Subway restaurant franchisee in 1974 with his store in Wallingford, Conn., and by 1976, the team had hit their goal.

They continued to achieve all of their goals by opening 1,000 units in 1987, 5,000 units by 1991, 10,000 units by 1995, and more than 16,000 today. The chain's "Eat Fresh" campaign won the Brandweek Marketers of the Year Award in 2001, and this year, Subway was named the number one fast food restaurant franchise in every category by Entrepreneur Magazine-the 10th time the chain won this honor in 14 years.

Subway's great-tasting and nutritious food, freshly baked gourmet breads, and multiple locations help make it the number two fast food franchise in the world, second only to McDonald's. But Subway is not only popular with the consumers. Its affordable equipment and décor packages, easy-to-run operation, location flexibility and low cost for initial investment make it a favorite among potential restaurant franchisees, as well. In 2000, more than two thirds of Subway's new fast food franchises were purchased by existing franchisees.

Subway's sales exceed $3 billion, and none of the units are company owned, but that doesn't mean DeLuca has given up his control. On the contrary, DeLuca teaches new owners to use his methods both because his they have been proven successful and because it allows him to retain some control over the operation.

Fellow entrepreneurs can open a Subway sandwich shop business with a franchise fee of only $10,000 and capital requirements ranging from $65,000 to $183,700. Franchisees receive two weeks of training with classroom and hands-on support and learning. If you are a proven minority, the company will finance $9,000 of the franchise fee and will do the same for franchisees in parts of the country where there are fewer Subway restaurants already open.

Fred DeLuca definitely knows what he is doing, and he continues his success by giving something back to fellow entrepreneurs with the founding of MILE, the Micro Investment Lending Enterprise. MILE is a non-profit organization that provides franchise opportunities with small, low-interest loans for people without the traditional means of obtaining credit. He also established the MILE Hall of Fame for entrepreneurs starting businesses with $10,000 or less with full-time staffs or $1 million in assets. He offers future entrepreneurs advice in Start Small, Finish Big. In this book, DeLuca answers your questions on how to come up with a great idea, how you can increase profitability, the importance of constantly improving a business and why it's important to be persistent.

Despite the amount of success DeLuca has achieved since 1965, he has not let it go to his head. He understands the need for constant improvement in order to keep a business thriving. Subway continues to introduce new items to its menu, such as the variety of new breads and sauces, which totally took off. Subway has introduced a new look to its Milford, Conn., shop that will eventually make its way to Subway sandwich shops throughout the country. DeLuca went back to his heritage when he created the new Tuscany décor with warm colors from the countryside on the interior and the use of native brick and clay on the exterior.

DeLuca's goals are more ambitious than they were 37 years ago. He now strives to be the number one fast food restaurant franchise in location count and customer satisfaction in every market. The submarine sandwich shop giant does have more units than any other competitor in its class in Canada, Iceland, the Bahamas, El Salvador and Guam. The next step is to gain that status in the U.S. by adding 5,000 units to the more than 13,000 units in the next four to five years.

So what will it take for Subway to be number one in the world? Learn more about Subway franchise opportunities at www.FranchiseForSale.com.

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