Royalty and Advertising fees of sandwich franchises

Article by Ryan Knoll

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 312-212-3423. Read 401 articles by Ryan Knoll

Money TalkI 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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5 Comments Post a Comment
  1. Anonymous says:

    What that Pickerman’s franchise. Where are the franchising?

  2. Franchise Pundit says:

    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.

  3. Brooklyn native says:

    Interesting post. Thanks.

  4. Jess says:

    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.

  5. 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

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