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March 14, 2006 3:28 PM quote 
troyhouse is offline troyhouse
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 Franchise advice - Subway/Walmart
Hey guys,

I am not in the franchise business, but have done a lot of research and almost decided to buy an existing Subway store in Walmart.

Subway has recently started partnering with Walmart and Subway has become the food court in Walmart. Apart from Subway sandwiches, store is authorized to sell Pretzels, Popcorn, Candy, as it is in Walmart. This particular has been opened only since June 05 and doing an avg of 4800+ sales per week. Store I am looking is in very busy neighboorhood, flanked by Mall, Home Depot, Office Depot, Circuit City, Best Buy and many other stores. With proper marketing, sales could be easily increased to upwards of 6000+/week. Store will be operated by family members, so the payroll also comes in house along with the profit.

I am very much aware that being a first time in food business, this is very tough task, long hours and who knows what. But, one has to take a decision some time and just do it.

But having said that, I wanted to get the opinions of everyone on this forum. If you have any experience with Subway in Walmart or Subway in general, please provide your thoughts/feedback/advise (negative or positive, I will appreciate all).

What should I look for in a franchise (assuming anything :) )?

Thanks,
Troy
Sponsorship
March 15, 2006 1:16 PM quote 
troyhouse is offline troyhouse
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 Please help....!!
Hello Everyone... I am a newbie here, but I will really appreciate some insights to my question posted. Please Help...!!! Thanks in advance.
March 15, 2006 2:46 PM quote 
CoffeePeddler is offline CoffeePeddler
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Hi Troy.

I'm relatively new myself, and don't have any direct experience with the Subway franchise. However, I am opening a coffeehouse and have done some research on franchises, in general. I think it boils down to what you are looking for in a business and your personality. If you want or need a lot of direct guidance on menu offerings, purchasing, food prep, marketing, etc., a franchise may be the way for you to go. If you have a more independent and/or creative personality, you will probably want to do something on your own, so you have the flexibility to serve what you want to serve, decorate how you want to, and buy from whom you choose.

As franchises go, I would think Subway would be a safe bet, given their name recognition and length of time as a franchisor.

I chose to go independent for my coffeehouse, for the flexibilty mentioned above, and because I didn't like the idea of paying royalties to the franchise for the life of the business. One thing to consider is that you pay the royalties to the franchise company regardless of whether you are making a profit or losing $$.

Good luck!

Marty
Sponsorship
March 15, 2006 3:24 PM quote 
BurgerMan1 is offline BurgerMan1
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First thing I would consider is the actual lease agreement. In particular the length of the terms, renewability and most important, how much control does Walmart have ovre putting you and the franchise out. I've seen several of these in Walmarts and they change on a regular basis. That would be the first major concern.

HB

"This business isn't about what the customer sees...It's about what the customer believes!"

March 15, 2006 5:50 PM quote 
Brandon94275 is offline Brandon94275
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I like Subway as a franchise. Lots of support. Good franchise to start into the food business with.

I don't like locations inside stores though. Limits the traffic too much. Other than employees of Wal-mart and surrounding stores, don't expect to get too much traffic from outside of the Wal-mart itself. People who eat fast food don't want to park and walk into a Wal-mart to get it. Even though Wal-marts get great traffic, by having the Subway inside a Wal-mart, you've already shrunk your market by a very large margin.

The average Subway does around $450,000 per year in sales. This one is low at $250,000 because the location is a weak one. Never expect marketing to overcome a bad location. It does happen, but very very rarely, and it's not something you can count on. If it were up to me, I would look for another opportunity.
Brandon O'Dell
email:

O'Dell Restaurant Consulting

phone: (888) 571-9068
web: http://www.bodellconsulting.com
blog: http://blog.bodellconsulting.com
March 15, 2006 5:54 PM quote 
Brandon94275 is offline Brandon94275
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Unless of course the asking price was extremely low, the lease was extremely low, and it carried a lower royalty structure than normal.
Brandon O'Dell
email:

O'Dell Restaurant Consulting

phone: (888) 571-9068
web: http://www.bodellconsulting.com
blog: http://blog.bodellconsulting.com
March 15, 2006 6:46 PM quote 
BurgerMan1 is offline BurgerMan1
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Plus another thing that you have to consider, especially when talking to Subway, what their normal stores do, will not be what you will do. Your profit margins will change. You will sell a tremendous amount of drinks (free refills in the ones that i've seen), snacks, expecially popcorn. Your subs will fall off because of limited traffic. If you talk to Subway make sure you are comparing concept aganist concept and same sales level stores.

Another thing to remember, you WILL have two bosses, Subway and Walmart.

I agree with Brandon...run

hb

"This business isn't about what the customer sees...It's about what the customer believes!"

March 15, 2006 11:10 PM quote 
troyhouse is offline troyhouse
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Thanks everyone for the insight.

But, you guys are scaring me....!! In all seriousness, I think I am getting this store quite cheap for around 150K, gross sales are around 250K, with net profit of around 50K, Payroll is around 50K that comes in-house too, as the store will be operated by my wife, and family members staying with me, so the total in-home take is around 100K or 80K if I have to hire a outside personnel..!!

Other thing to note is that the store location is very good, in a big strip mall, flanked by furniture stores, Office Max, Best Buy, and many other stores and there are NO other eating place in the strip mall.

What do you guys think of these figures and location??
March 16, 2006 10:23 PM quote 
rudds67 is offline rudds67
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where are u located?
March 17, 2006 12:33 AM quote 
Brandon94275 is offline Brandon94275
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Location: Wichita, KS
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Is that 50K net profit based on the history of the store, or is it the stated potential of the store?

Ask to see financial records for the store. Tax returns. Verify that the 50K is not overstated, or just what they're selling you as potential.

If the 50K per year is verifiable, ask why they are wanting to sell. Is the lease expiring and the seller expecting a rent increase? Why would someone want to get rid of a business that is returning a 20% net profit?
Brandon O'Dell
email:

O'Dell Restaurant Consulting

phone: (888) 571-9068
web: http://www.bodellconsulting.com
blog: http://blog.bodellconsulting.com
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