Subway’s Initial Franchise Fee, Royalty Fee + 41 Other Fees

Detailed Information on Subway’s Initial Franchise Fee, Royalty Fee + 41 Other Fees (Items 5 and 6, 2021 FDD)

1.  Standard Franchise Fee:  $15,000

• This is the standard franchise fee for a Subway restaurant franchise for all first-time franchisees except: (i) qualified United States Armed Forces Veterans (“US Veterans”) ($7,500), or (ii) a qualified Subway restaurant franchisee of Subway’s affiliates ($7,500), or (iii) those purchasing under Subway’s School Lunch or Community Development Programs ($0), or (iv) those purchasing for a qualified Non-Traditional location ($7,500).

2.  Extension Fee:  $1,000

• If you sign the standard Franchise Agreement, you will have 12 months to open your restaurant or Franchise Agreement will expire. You may request in writing and Subway may grant you in writing an extension to open your restaurant. You will pay to Subway the extension fee and will sign its then-current form of Franchise Agreement.

3.  Location Fees, Deposits, and Rent:  $2,050 to $14,500

• If you enter into a sublease for the premises, you will pay Subway’s affiliate $50 as a nonrefundable fee for administrative costs to record the master lease.

• In addition, you will be responsible for all other costs Subway incurs to record the master lease, including but not limited to, recording fees, recording taxes, conveyance fees, and conveyance taxes. Subway estimates that these costs may range from $50 to $2,500, depending upon your state and local laws.

• You must pay a deposit of 2 months’ rent when you sign the Intent to Sublease, representing one month’s rent and one month’s security deposit. Subway estimates that the security deposit will cost approximately $2,000 to $12,000.

• If you are required to sign a sublicense for the location, you may be required to pay an advancement fee when you sign the Intent to Sublicense. If the landlord does not require the security deposit, Subway or its designee will return the money to you.

4.  Equipment Purchase and Applicable Charges:  $75,000 to $150,000

• You will purchase all furniture, equipment, and décor through the approved IPC-managed ordering systems.

• You must pay the cost of the furniture, equipment, and décor charged by the manufacturer or distributor before the allowance of any trade discounts, plus the cost of all taxes, duties, freight charges, and other applicable amounts.

5.  Menu Board Translites, Promotional and Operational Items:  $8,725 to $14,725

• You must purchase your initial supply of menu board translites from Subway or SFAFT, unless Subway designates otherwise. The estimated cost for menu board translites is $125.

• You must also buy decals and replacement menu board translites from Subway or SFAFT, and certain operational items from the supplier Subway designates. The estimated cost is less than $600 and is nonrefundable.

• Once available, you may have the option to purchase digital menu boards typically consisting of four television screens, media players, HDMI cables, and menu content management services from Subway, an affiliate, or a designated supplier. The estimated cost to purchase and install the digital menu boards is $8,000 to $14,000.

• Ongoing licensing fees and support fees may apply. In the future, Subway may require you to purchase digital menu boards.

6.  Training Cancellation Fee:  $100

• If you register for and fail to attend the training program, or if you cancel a registration for the training program with less than 10 business days’ notice, you must pay the nonrefundable cancellation fee.

7.  Standardized Test Requirement and Retest Fee:  $20

• If you do not pass Subway’s standardized test to qualify for the purchase of a franchise, Subway charges a nonrefundable retest fee of $20 if it allows you to take the test again. Subway does not charge a retest fee for its standardized test conducted during the training program.

8.  Purchase Price of a Company or Affiliate-Owned Restaurant:  varies

• If you are purchasing a company or affiliate-owned restaurant, you must sign a Franchise Agreement and pay the initial franchise fee that applies to you. You must pay the purchase price in cash or by certified check. Financing is available for some of the purchase price.

9.  POS System Hardware Costs:  $57 per month

• You are required to use a computer-based point-of-sale system (the “POS System”) which must be obtained from an approved POS hardware vendor. You are required to enroll in the hardware-as-a-service component of Subway’s Restaurant Technology as a Service (“RTaaS”) program to obtain a POS System. Subway estimates the cost of the base package in the RTaaS program to be $57 per month, exclusive of tax and shipping charges.

10.  Software License Fees:  $636.80 for SubShop/2000

• You are also required to use point-of-sale software and web applications that Subway designates in all of your new and existing restaurants. SubwayPOS is the required software, except for co-branded locations. Certain non-traditional locations may also be exempt from this requirement.

11.  Payment Terminal Fees:  $241.44 for the P400 payment terminal; $225 for the gift card only Vx520 terminal; $313.56 for the P400 kit

12.  Royalty:  8% of total gross sales

• Due Date:  Payable weekly.

13.  Advertising:  4.5% of total gross sales

• Due Date:  Payable weekly.

14.  Additional Funds:  established by franchisees

• Due Date:  Payable weekly.

15.  Local Advertising:  established by franchisees

• Due Date:  Payable weekly.

16.  Audit:  overdue amount

• Due Date:  After billing.

17.  Fees for Unpaid Balances:  interest charge of 12% (or maximum rate allowed by law where your restaurant is located) per annum on amount you owe; late fee of 10% (or maximum rate allowed by law where your restaurant is located) per annum of amount you owe may be charged

• Due Date:  When payment is more than one week late.

18.  Transfer:  50% of Subway’s then-current franchise fee (currently, $7,500), plus $3,000 for any satellite; 25% of Subway’s then-current franchise fee (currently, $3,750), plus $1,500 for any satellite if you transfer to or transfer by adding your spouse or child to the Franchise Agreement

• Due Date:  When you submit your request to transfer.

19.  Location Rent/License Fee:  $1,000 to $6,000 per month, estimated

• Due Date:  Payable monthly on 1st day of the month; security deposit on signing of Intent to Sublease or Intent to Sublicense or when required by landlord if leased directly.

• Security deposit/advance fee paid to leasing affiliate or landlord; monthly rent paid to landlord/licensor.

20.  Equipment Purchase and Freight Charges:  cost of equipment plus buffer to cover freight charges, taxes, and other costs

• Due Date:  When you place order.

21.  Insurance:  $1,200 to $5,000 per year

• Due Date:  When you sign lease, license, sublease, or sublicense.

22.  Indemnification:  all liability, damages, and costs, including lawyers’ fees, incurred

• Due Date:  When incurred by Subway or other indemnified party.

23.  Noncompete Violation:  $15,000 for each competing business, plus 8% of its gross sales

• Due Date:  Upon competition.

24.  Confidentiality Violation:  Subway’s damages

• Due Date:  Upon violation.

25.  Trademark Violation:  $250 per day

• Due Date:  Upon violation.

26.  Limited-Time Offering and Auto Shipment:  costs vary, depending on the product to be shipped

• Due Date:  Varies.

27.  Dispute Resolution:  half of arbitration fee, except you will pay the whole fee plus costs, including lawyers’ fees, management preparation time, and travel expenses if you withhold money from Subway or an affiliate

• Due Date:  Your share of the arbitration fee will be due upon invoicing from the third party.

28.  Co-Brand Continuing Fee:  0%-8% of total gross sales of a co-brand concept

• Due Date:  Payable weekly.

29.  Fees Charged by Co-Brand Franchisor:  fees and rates set by third-party co-brand franchisor

• Due Date:  Payable weekly when your royalty to Subway is due.

30.  Optional Restaurant Listing Service:  $100 for each 90-day period

• Due Date:  When you list your restaurant for sale with Subway’s Help Sell Program.

31.  Restaurant Technology Fee:  $35 per month, subject to future increases

• Due Date:  Monthly.

32.  Subway Card Fees:  initial fee of approximately $60 to $140; redemption fee equal to 2.5% of each transaction amount that applies when Subway Card is redeemed; additional Subway Card supply costs of $0.10 per card, $.06 per envelope, and $20 per display

• Due Date:  As directed by VPS.

33.  Subway MyWay Rewards Program:  1.9%, subject to any annual adjustments, of the gross sales, for each transaction made by a Subway MyWay Rewards program member at your restaurant

• Due Date:  Payable weekly.

34.  POS System Hardware-as-a-Service Fees:  approximately $57 per month

• Due Date:  When you sign up.

35.  Digital Menu Board Hardware-as-a-Service Fee:  $155 per month

• Due Date:  Payable monthly.

36.  Other Technology and Digital Initiatives:  varies as Subway implements various new technology and digital initiatives. Usually paid to a third party.

• Due Date:  Varies.

37.  Taxes and Other Fees:  varies by State

• Due Date:  Payable when fee is due.

38.  ServSafe Certification:  $50 every two years

• Due Date:  When you apply for and/or renew certification.

39.  Training Fee and Costs:  no training fee for two persons; $7,500 for any additional persons trained

• Due Date:  Payable at the time of training registration, if applicable.

40.  Catering:  none; unless you participate in the Call Center and Website Program in which case a fee equal to approximately 5% of each catering order will be charged to cover administrative expenses and 2% of each catering order will be allocated toward credit card processing

• Due Date:  Payable weekly when a guest places an order with the call center or website to be fulfilled by your restaurant.

41.  Subway Listens Program:  none, except each guest receipt redeemed for two cookies or a 21-ounce drink will cost you approximately $.33 to $.35 per redemption

• Due Date:  Varies.

42.  Restaurant Excellence Visits Revisit Fee:  $125 per revisit, subject to increase by 3% per year

• Due Date:  Varies.

• Paid to a third party.

43.  Legacy Support Fee:  $200 per month of noncompliance

• Due Date:  Monthly, as assessed.

• Paid to Subway or its affiliate to cover its cost of noncompliance if you do not comply with its technology standards and specifications, fail to return hardware, fail to upgrade systems, fail to allow access in a timely manner, install unauthorized software, or attempt to hack or circumvent its software.