Franchising | June 2011 | By Daniel P. Smith

The 10 Best Franchise Deals

Page 3

Subway

Subway holds more worldwide locations than McDonald’s, a spot the company has attained with low start-up costs and a flexible franchising model that places its outlets in distinct environments, such as parks, airports, hospitals, and gas stations.

 

U.S. Unit Count:

24,033 (all franchised)

Franchise Fee:

$15,000

Total Start-Up Costs:

$84,300–$258,300

Royalty:

8% of sales

Renewal Fee:

None

Marketing Fee:

None*

The sandwich company blends its recognizable name with an efficient and well-structured franchising program that provides training and guidance in all operational areas, highlighted by a development office in every state.

 

“These are our people on the ground, many from our franchising ranks, who can act as mentors to our franchisees and give them the support they need,” Subway spokesman Les Winograd says.

 

An Outside View: “The maturity of Subway will continue to enhance their development, and this is displayed by their opening support offices in each state,” Spencer says. “They also have the ability, even for a large company, to stay nimble in developing new menu items to meet ongoing consumer tastes and help their franchisees’ top-line revenue improve.”

 

*The Subway Franchise Advertising Fund oversees marketing and advertising on behalf of U.S. franchisees, and funds come from a royalty of 4.5 percent from each store’s weekly sales.

Which Wich

U.S. Unit Count:

130 (129 franchised)

Franchise Fee:

$30,000

Total Start-Up Costs:

$184,875–$422,250

Royalty:

6% of gross sales

Renewal Fee:

$15,000

Marketing Fee:

3%–4% of gross sales

With a hip spirit and creative ingenuity, Which Wich continues its surging momentum. The youthful Dallas-based brand features more than 50 customizable sandwiches. And customers enjoy an interactive ordering process that features a paper bag and a Sharpie—an engaging format that draws the coveted 18- to 35-year-old age group and white-collar professionals that define the restaurant’s core clientele.

 

Franchisees benefit from the Which Wich Support Center headed by company founder Jeff Sinelli, an efficient supply chain, a distinctive store look, and AUV near $650,000.

 

“We understand where we need to be positioned in the market and are working constantly with our franchisees to assemble programs that will resonate with our customers from city to city,” says Connie Alires, Which Wich’s director of franchise development.

 

An Outside View: “Which Wich shows competitive advantages for the future based on the ability to converge into the new sandwich, fast-casual category with great menu items and offers the next generation of franchise owners other [development] options,” Spencer says.

Shane’s Rib Shack

U.S. Unit Count:

66 (64 franchised)

Franchise Fee:

$30,000

Total Start-Up Costs:

$403,100–$690,500

Royalty:

5% of net sales

Renewal Fee:

$30,000

Marketing Fee:

2% of net sales

Inspired by the secret recipes of founder Shane Thompson’s grandfather, Shane’s features a menu of slow-smoked ribs, hand-chopped pork, hand-breaded chicken tenders, and nine signature sauces. In 2010, AUV topped $832,000.

 

Although little known west of the Mississippi, Shane’s began franchising its fast-casual concept in 2004, just two years after the original Shack in rural McDonough, Georgia, created a stir for its hearty offerings. The brand’s youth, however, has done little to stem its growth and following across 14 states.

 

“We’re always asking: What’s the best way for our operators to get in a restaurant and maximize ROI?” says Thompson, who has found recent success in conversions. “I understand our franchisees because I’ve been in their position.”

 

An Outside View: Although a small company compared to others, Kincheloe calls Shane’s “a unique concept in the quick-serve arena” and one that can “allow for a personal relationship and hands-on experience with the founder.”

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