I pulled together some numbers of required royalty and advertising fees for sandwich franchises:
| Required Royalty and Advertising Fees for Sub & Sandwich Franchises | |
| Subway | 12.5 % |
| Quiznos | 11 % |
| Mr. Hero | 10.5% |
| Blimpies | 10% |
| Jersey Mike’s | 10% |
| Philly Connection | 10% |
| Togo’s Eatery | 10% |
| Zero’s Subs | 10% |
| Firehouse Subs | 9% |
| Jerry’s Subs and Pizza | 9% |
| Burger King | 8.5% |
| Charley’s Grilled Subs | 8.25% |
| Capt. Subs | 8% |
| Cousin Subs | 8% |
| Hungry Howie’s Pizza and SUbs | 8% |
| Subs Plus | 8% |
| Great Outdoors Subs | 7% |
| Lenny’s Sub Shops | 7% |
| Moe’s Italian Sandwiches | 7% |
| Nathan’s Famous | 7% |
| Pickerman’s Soup & Sandwiches | 7% |
| Port of Subs | 6.5% |
| Sub Station II | 6% |
| Baldinos Giant Jersey Subs | 5% |
An 8% difference in the fees for a franchise with $500,000 in sales is $40,000. Many would die to have that extra $40,000 to hire a qualified manager, enabling the franchisee be more of an absetnee owner.
Lower doesn’t necessarily mean better. I would want required pooling of local (maybe regional) funds for collective advertising and promotions.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
What that Pickerman’s franchise. Where are the franchising?
The slogan is “The Original Soup Cafe”. More info on Pickerman’s here. I’ve never been to one. I originally listed their advertising and royalty as 5%, but I change it to 7% becuase they say “they may” dray 2% for local advertising.
Interesting post. Thanks.
Damn, what’s with Subway’s 12.5%?!!?! How much of that is royalty and how much advertising? Has it been raised over the years? It must not be that bad since so many people have purchased Subway businesses.
Subway used to be 10.5%(8% + 2.5%), but franchisees were coerced and voted in for more in gradual steps as they just could not compete with the bigger Franchises with higher sales and Ad budgets.
That is why they are on TV and other media every month-they can finally afford it !
The 8%-well that was based on a smaller annual sales level; all that has now changed since sales are very nice and up about 50% and more
mrfranchiseman.com
It would be interesting to see a comparison of average sales vs royalty fee’s. I wonder if their is any correlation between them?.