Q&A: Words of Wisdom from a Coachella Valley Subway Franchise Owner

Read the thoughts of owning a franchise from someone who owns multiple Subway franchises in the Coachella Valley.

What is your background? This is for context so the students can understand who you are.

I immigrated to the US in my early 20s after growing up in India. My dad was a small business owner there, he had his own construction company. When I first came here to the US, I worked several different jobs before buying my first store. I was a car salesman, a mechanic, and a truck driver. I bought my first store in the early 2000s. 

Why did you decide to purchase a franchise over starting your own company? Please be detailed if possible. Many of my students want to start a business, but some are not sure in what. This helps them understand the thought process of deciding on a franchise versus something else.

I had a close friend that had a Subway store. He had owned it for a few years so I was able to find out a lot of information from him that I would not have had access to otherwise. I was married and had a child at this point so taking big risks wasn’t in the cards for me. I needed something that would help me support my family in the long run. Starting your own company can pay off eventually, but franchises usually provide more income faster than starting an entire business from the ground up. I also didn’t have any experience in marketing nor did I speak very good English at this point so starting my own business would have been a much bigger challenge for me. 

Personally, I would say that anyone wanting to start their own business or even join a franchise they aren’t familiar with should try to speak to someone already in that business. There can be a lot of hidden costs and hurdles that even the best Google search results won’t show you. 

Why did you select Subway over other franchises? Do you own more than one? Is this the only franchise you have owned?

Yes, Subway is the only franchise I have ever owned. I selected Subway because of the information I was able to get from my friend. He gave me an honest overview of the costs, pitfalls, and benefits of joining Subway. Over the years, I’ve actually bought and sold a number of Subway stores. Because I didn’t have a lot of money back then to buy a better store, I started with a store that was lower in sales and required me to work more hours and eventually worked my way up to where I am now. I have 3 stores that are all high sales and are run by managers. I’m at the point where I can work as much or as little as I want. When I started, I was doing 7 days a week, 12+ hours a day. I did this for 6 years so I can honestly say it took a lot of hard work to get to where I am now, but my family kept me motivated. 

Approximately, what is the start-up cost for this franchise? What financing did you use? Was it difficult to get this financing?

There is a one-time franchise fee of $7500. Other than that, it just depends on the price of the store you’re buying. Some stores with lower sales can sell for less than 100k. Other stores with better sales can get up to over 500k. You also have to apply, pass their franchisee test and, if accepted, do the new franchisee training, which is about 2 weeks long. 

Subway doesn’t finance at all so your options are to get a third-party loan, such as from a bank, or to convince the seller to finance you. Bank loans are difficult to get in my experience, even with great credit and experience. Usually, seller financing is the easiest option, but that’s going to depend on the person. I’ve had the seller finance 50% of the cost in the past and of course, that’s included in the escrow paperwork. However, normally the seller will agree only when they’re having a hard time finding a buyer and they either know you themselves or you have a mutual friend in common. Sometimes the deals are all-cash if it's a low amount or if the specific store being sold is in high demand. 

What benefits have you seen of having your franchise?

The biggest benefit is that they provide you with a steady income and a comfortable lifestyle. The majority of Subway franchisees that I know personally aren’t rolling in money, but they have a solid upper-middle-class life. Another benefit would be that I get to take time off as I please. I decide what days I work and when I go on vacation. I don't know if I would say I'm passionate about sandwiches, but I am grateful that Subway has allowed me to provide for my family. 

What are some of the challenges you have discovered?

One of the biggest challenges has been the lack of control you have over your own business. It’s hard to spend so much time working in a store and then have someone in corporate tell you how to better run your store. There have been times when Subway has forced me to implement things in my store that I knew would be a drain and cause me to lose money. Unfortunately, I can’t do anything about it because they get the final say. However, they do analyze the data they get from each store so if something isn’t working for a lot of stores then they will make it optional. 

Another challenge that other franchisees have agreed with me on is that Subway opened way too many stores overall. There are stores in some areas that are almost next door to each other, but the demand doesn’t require that. It’s something the company is trying to rectify now by strongly encouraging multi-unit ownership so that an entire region is owned by the same person instead of having multiple franchisees in close proximity competing with each other.