Post: #1

Congressman Fleming has a gross income of $6.3 million from Subway shops and UPS stores. He has to pay rent, make payroll, pay insurance and the other ordinary expenses, giving him a net income after expenses of $600,000.

How many Subway shops and UPS stores does he own? (For those outside the US, Subway is the lowest cost franchise to open in the US. If you have $12,000, you can open a Subway franchise.)

http://news.yahoo.com/blogs/ticket/rep-j...05241.html

Post: #2

I had a look at a business plan for someone who wanted to open Subway franchises once.

Don't remember the ins and outs of the financials. I do remember thinking it was a lot of work for relatively slim returns. I don't have much to compare it to; I usually look at high risk, high margin internet businesses and have no experience with retail.

I think that in the early days corporate insist that new franchisees spend a lot of time at the shop, ie. you'll be the day to day manager. That's a lot of work. Add to that hiring, dealing with HR issues (low paid workers), high employee churn, marketing locally.

To grow to the sort of level you mention you almost certainly have to leverage your cash flows from the first shop with bank loans to open new ones. This is in addition to the first loan you take out to finance the first franchise. This can quickly crumble if things stop going well, interest rates go up, etc. if you're not cautious. On the other hand Subway is countercyclical and does OK in a down economy as people look for a cheaper lunch.

Margins look slim. Your figures suggest a <10% margin, and that's net income - before taxes? (figures in the article are vague). Also that figure excludes any reinvestment. I don't know how much they need to spend on new machinery, etc. but with a bunch of locations it's probably not an insignificant number. Still not bad for a relatively low-risk business, but take into account the risks and how you're going to have to bust your ass at the shop for the first couple of years and it looks less attractive.

This is speculation, but I bet that successful franchise owners have strong managers / management teams who they trust and completely delegate to. This lets them take a hands off approach and just collect their checks. If you're very operationally minded and good at process you can probably do this, but it will take time to build the team and figure out how to run the machine.

Finally finding good locations is tough. Safest option may be to buy out another franchise owner who wants some liquidity. That way you already have average sales numbers for the year and other metrics. Otherwise you may be in for nasty surprises unless you know the area year round very well.

This is just my outsider's view of things to consider. I'm sure there are plenty of resources addressing these questions from Subway HQ.

Post: #3

well think about it = if he had 12 Subways and each grossed $500,000 (which is doable in a decent location) then that would give him $6M in sales and a profit of 60k per store. Its not really worth it to have 1 store, you need multiple. But there are guys out there who have 50 McDonalds or 20 Burger Kings, or whatever, and they make serious bank. But you start w/one, open a second, and so on. It doesnt happen overnight.

Post: #4

If it were quick and easy money, everybody would be doing it.

Post: #5

(09-20-2011 06:23 PM)Brian Wrote:  well think about it = if he had 12 Subways and each grossed $500,000 (which is doable in a decent location) then that would give him $6M in sales and a profit of 60k per store. Its not really worth it to have 1 store, you need multiple. But there are guys out there who have 50 McDonalds or 20 Burger Kings, or whatever, and they make serious bank. But you start w/one, open a second, and so on. It doesnt happen overnight.

bingo, you need more than one store to be making quality paper.

Post: #6

Subway used to rule the roost in the Southeast. Over the last few years, however, franchises like Firehouse Subs and Quiznos have been giving them a run for their money. I don't see long lines in Subway like I used to. Quiznos is the BOMB.

There's more money in running a whorehouse. And the product tastes better than a sub.

Post: #7

I think Jersey Mike's is the best sandwich franchise out right now. startup cost is way higher than subway though. For those of up who have lived back east but don't anymore, it's about as close as you're going to get to an authentic hoagie from an Italian mom and pop deli in Philly. The store even has "that smell" when you walk in. If you know, you know. Like a mix of baking bread and capicola.

Post: #8

Quizno's are all having financial troubles. They did well early on but its been all down hill for awhile

Post: #9

A lot of these congressmen and women are getting rich off the stock market.

Remember, there's no law against Congressional insider trading.

These people create the conditions for growth and decline and then benefit financially off the industries experiencing either conditions.

Their staffers benefit as well.

http://online.wsj.com/article/SB10001424...03198.html

The funny shit to me is how the "powers that be" have always created diversions, "blacks are going to take your jobs", "mexicans are going to take your jobs", "dudes who grow up in caves are going to bomb your cities", while they commit some of the greatest atrocities ever known to mankind and continue to be pedastalized by society in the process.

Post: #10

I know Paul Wall owns a few around town. I wonder how much it costs to get shit started.

Post: #11

(09-21-2011 02:39 PM)houston Wrote:  I know Paul Wall owns a few around town. I wonder how much it costs to get shit started.

$100-$300K per location.

http://franchises.about.com/b/2010/08/14...e-cost.htm

Post: #12

(09-20-2011 08:17 PM)speakeasy Wrote:  Like a mix of baking bread and capicola.

That smell is pumped into the ventilation system. Starbucks smells like bread and butter even though they dont even have an oven in there.

So... Gross income is 6mil, he takes home 600k?

Fuck taxes.

Post: #13

(06-08-2014 01:21 PM)germanico Wrote:  

(09-20-2011 08:17 PM)speakeasy Wrote:  Like a mix of baking bread and capicola.

That smell is pumped into the ventilation system. Starbucks smells like bread and butter even though they dont even have an oven in there.

So... Gross income is 6mil, he takes home 600k?

Fuck taxes.

He's probably re-investing the 6 million into other things. I doubt he's paying much of that in taxes.

I was thinking about opening a Dairy Queen in Copley Square. Keep it lunch oriented sell burgers, fries, and ice cream. Perfect location for a discount ice cream shop with lots of volume.

These businesses are so easy to run. I worked at these when I was a teenage and the one i worked at had lifers who were paid decently (30-45k) which is a decent salary in my home town. Find good managers and treat them well. They'll make your life easy.

Post: #14

Most of the Subway shops out by me (suburban Philly) are owned by Indian families. Pakistanis seem to own most of the Dunkin Donuts. I'm not sure why this is, although I would suggest the low cost of ownership might make it ideal for a hard working immigrant family. Plus, there is the endless supply of relatives from the old country willing to work off the books for a ticket to the USA.

Post: #15

Franchises sound good, but what's lot of owners fail to remember is that it's not their business. You don't get to choose the menu, the suppliers, the advertising, or even which court you'll go to when the parent organization slaps you with a breach of contract. The franchise and advertising fees can make pretty deep cuts when you're starting out, too.

Subway, Quiznos, Dunkin Donuts, and Baskin Robbins have all spent quite a bit of time in court over the years with dozens of bitter franchisees who lost their entire investment when the franchiser made a breach of contract claim. Usually there's little or no recourse, either - US courts are pretty strict about enforcing contract terms.

Post: #16

(06-08-2014 01:21 PM)germanico Wrote:  

(09-20-2011 08:17 PM)speakeasy Wrote:  Like a mix of baking bread and capicola.

That smell is pumped into the ventilation system. Starbucks smells like bread and butter even though they dont even have an oven in there.

So... Gross income is 6mil, he takes home 600k?

Fuck taxes.

If that actually happened, there would be no businesses at all. Its very difficult to work your ass off for anything higher than 10x profit. You require that to break even.

Post: #17

(06-08-2014 02:01 PM)ColSpanker Wrote:  Most of the Subway shops out by me (suburban Philly) are owned by Indian families. Pakistanis seem to own most of the Dunkin Donuts. I'm not sure why this is, although I would suggest the low cost of ownership might make it ideal for a hard working immigrant family. Plus, there is the endless supply of relatives from the old country willing to work off the books for a ticket to the USA.

That is because of government funded Minority Grants & Loans. Basically, Indians and Pakistanis come to the US and the US government gives them extremely generous loan terms as well as other subsidies to start a business. It's pretty easy to get these kinds of loans. You don't even have to be an American to get these American taxpayer-funded benefits! The only criteria is that you're not a white male.

Post: #18

I know someone who owns a UPS store and I've had lengthy conversations with him about owning one. Down the line I would def like to get into franchising one given I can acquire a good collection.

Summary:
Obviously there is profit in shipping products. But they charge quite a lot in boxing, packaging of the products. Ex: Say you want to ship a bottle of pickles from LA to Nevada. If you have your own box and packaged it yourself then you would just pay 11 bucks to ship it. If you had them ship it they charge for the actual box, bubble wrap, peanuts, and a service fee. Now you're looking at 22 bucks. The actual cost of the materials/box cost 2 dollars since they order frequently and in bulk.
Now imagine shipping 300 dollars worth of china from LA to NYC. Let's say you're able fit it all in a 14 cubed box and you pack it yourself. Shipping plus insurance will run about 25. Now with packaging and the service fee you're looking at double that. I can go in forever.

Many UPS stores gain sales by renting mailboxes. They cost at least double po boxes but because Fed Ex, UPS, etc will not ship to PO boxes your SOL. Using that as a selling point will attract customers. Having say...100 small boxes at 30 a month will bet you 30k minimum. Now not all the boxes will be small as you will have medium and large boxes. The cost for medium could be 50 a month and large for 100 a month. On top of that you could have a 3 month minimum sign up for all mailboxes.

There's also profit in printing jobs, laminating, making banners, business cards which are all easy if you hire a student into media graphics or design.

There's other ways to earn sales but you just be in the right area..
An affluent area
Easily seen/accessible
Low competition with other Ups stores/fed ex

The best stores have a few million in profits a year but having anything over a million would put you in the top 20 in the US.

Post: #19

In my blue-pill days I tried (and failed) to sell commercial real estate. Learned a lot even if I didn't make $.

One thing I learned is that Subway is notorious for putting different franchises in very close proximity. You could own one for a year or so and another franchise owner could set up shop a block away... it's to a point where I've seen two on opposite sides of the same street corner. Corporate goes hard against any franchisee litigation (as Osiris mentioned) and I think the franchisees sign away the rights to sue over other owners setting up shop in close proximity.

I did come in contact with people who made a good living owning Burger Kings and Checkers. Of course neither are known for their nutritional benefits, and, as one guy said to me, "It's comfort food, there'll always be a demand..."

Post: #20

Subways are starting to appear like mushrooms around Buenos Aires. You see a new one each day!

Post: #21

Subway surpassed McDonald's in number of units worldwide back in 2011.

http://online.wsj.com/news/articles/SB10...2177464052

Post: #22

(06-08-2014 02:01 PM)ColSpanker Wrote:  Most of the Subway shops out by me (suburban Philly) are owned by Indian families. Pakistanis seem to own most of the Dunkin Donuts. I'm not sure why this is, although I would suggest the low cost of ownership might make it ideal for a hard working immigrant family. Plus, there is the endless supply of relatives from the old country willing to work off the books for a ticket to the USA.

Franchises are generally very strict about legal hiring practices. In most franchise contracts your deal can be rescinded if you breach certain clauses.

That said, Indians, Paki's, and other Asians kill it when they come over here because they are willing to work their asses off. The "American Dream" is only dead to lazy Americans. I complain about taxes and regulations constantly, but I still think that if you can't succeed in this country, you're just not trying hard enough.

Post: #23

(06-08-2014 03:31 PM)Mentavious Wrote:  Many UPS stores gain sales by renting mailboxes. They cost at least double po boxes but because Fed Ex, UPS, etc will not ship to PO boxes your SOL. Using that as a selling point will attract customers. Having say...100 small boxes at 30 a month will bet you 30k minimum. Now not all the boxes will be small as you will have medium and large boxes. The cost for medium could be 50 a month and large for 100 a month. On top of that you could have a 3 month minimum sign up for all mailboxes.

Exactly. Businesses love to use the physical address of the store where they have a PO box.

Post: #24

I second the comments about Jersey Mike's. I used to go to the original location in Point Pleasant growing up. Having the same sandwiches in L.A. now is a great piece of nostalgia. They are excellent sandwiches.

Post: #25

(06-08-2014 02:01 PM)ColSpanker Wrote:  Most of the Subway shops out by me (suburban Philly) are owned by Indian families. Pakistanis seem to own most of the Dunkin Donuts. I'm not sure why this is, although I would suggest the low cost of ownership might make it ideal for a hard working immigrant family. Plus, there is the endless supply of relatives from the old country willing to work off the books for a ticket to the USA.

It's a mystery to me how Subway can survive in the Philadelphia/South Jersey area, where you can get great hoagies at gas stations. The only two Subways I have ever seen in Cape May County didn't last very long. It's kind of like how horrible pizza like Domino's can survive in a place like Brooklyn.