Subway franchise cost: investment, fees and the SBA default rate
Items 5, 6 and 7 · Subway FDD 2026 · Updated 2026
A Subway franchise costs $263,000–$630,000 in total initial investment, according to Item 7 of the brand's FDD (2026), including an initial franchise fee of $15,000 (Item 5); the ongoing royalty is 8% of sales, plus 4.5% of sales to the advertising fund (Item 6). The standard royalty is 8%, but certain multi-unit franchisees entering into a Development Agreement may be eligible for reduced royalty rates ranging from 7.5% to 8%. On the lending side, Subway franchisees defaulted on 7.6% of SBA 7(a) loans approved FY2010–FY2019 (92 of 1,211), and the average SBA loan to a Subway franchisee in that cohort was $241,277.
| Total initial investment (Item 7) | $263,000–$630,000 |
|---|---|
| Initial franchise fee (Item 5) | $15,000 |
| Royalty (Item 6) | 8% of sales |
| Advertising fund (Item 6) | 4.5% of sales |
| Fee notes (Item 6) | The standard royalty is 8%, but certain multi-unit franchisees entering into a Development Agreement may be eligible for reduced royalty rates ranging from 7.5% to 8%. |
| SBA 7(a) default rate, FY2010–FY2019 | 7.6% |
| Average SBA loan, 2010s cohort | $241,277 |
| Average SBA loan since 2020 | $359,606 |
| Industry | Limited-Service Restaurants |
How much does it cost to open a Subway franchise?
Item 7 of the FDD estimates the total initial investment at $263,000–$630,000. It is the franchisor's own estimate of what a new franchisee spends to open one unit, typically the franchise fee, equipment, premises or vehicle costs, opening inventory and an initial working-capital reserve. The low and high ends usually reflect different unit sizes, leasing versus buying, and local costs. Range is for a single new traditional Subway restaurant (Item 7 also shows a mid estimate); non-traditional locations have a separate, lower estimate.
What does the SBA data add?
The federal loan record adds what the FDD cannot: Subway franchisees defaulted on 7.6% of SBA 7(a) loans approved FY2010–FY2019 (92 of 1,211 resolved loans), against the Limited-Service Restaurants industry average of 10.3%, according to U.S. Small Business Administration data with statuses as of June 30, 2026. Since 2020 they have taken 322 new SBA loans, of which 7 have already charged off.
Set the investment range against the loans: an average SBA loan of $241,277 against the $263,000–$630,000 investment range says roughly how much of a typical Subway opening was debt-financed in the 2010s. The brand page has the year-by-year record and the industry comparison.
What would Subway's royalty and ad fund cost at your sales level?
From Item 6: royalty 8% of sales, advertising fund 4.5%. Royalty and ad fund only · illustration. Other Item 6 fees, fixed or percentage, are not included.
| Annual sales | Royalty | Ad fund | Royalty + ad fund |
|---|---|---|---|
| $250,000 | $20,000 | $11,250 | $31,250 |
| $500,000 | $40,000 | $22,500 | $62,500 |
| $1,000,000 | $80,000 | $45,000 | $125,000 |
| $2,000,000 | $160,000 | $90,000 | $250,000 |
Most SBA default figures published online use loans approved since 2020 — loans that have had six years or less to fail — so those rates are floors, not outcomes. Every rate on this site is computed from the matured FY2010–FY2019 cohort: loans that have been paid in full or charged off, so the result is settled. Loans approved since 2020 are shown as counts so early charge-offs are visible without being mistaken for a rate.
Frequently asked
How much does a Subway franchise cost?
A Subway franchise costs $263,000–$630,000 in total initial investment, according to Item 7 of the brand's FDD (2026), including an initial franchise fee of $15,000 (Item 5); the ongoing royalty is 8% of sales, plus 4.5% of sales to the advertising fund (Item 6). The standard royalty is 8%, but certain multi-unit franchisees entering into a Development Agreement may be eligible for reduced royalty rates ranging from 7.5% to 8%. On the lending side, Subway franchisees defaulted on 7.6% of SBA 7(a) loans approved FY2010–FY2019 (92 of 1,211), and the average SBA loan to a Subway franchisee in that cohort was $241,277.
What is the Subway franchise fee?
$15,000, per Item 5 of the FDD.
What royalty does Subway charge?
8% of sales, plus 4.5% of sales to the advertising fund, per Item 6. The standard royalty is 8%, but certain multi-unit franchisees entering into a Development Agreement may be eligible for reduced royalty rates ranging from 7.5% to 8%.
What is Subway's SBA loan default rate?
7.6%: 92 of 1,211 SBA 7(a) loans approved FY2010–FY2019 to Subway franchisees were charged off.
Source
Sources: Subway Franchise Disclosure Document (2026, Minnesota CARDS file 36389-202604-19); U.S. Small Business Administration, 7(a) loan program charge-off data, FY2010–FY2019. Franchise data is matched on the SBA's franchise code / brand name. "Failure rate" here means the share of approved loans (resolved: paid in full or charged off) that were charged off; it is not a measure of unit closures. Last updated September 30, 2026.
Cite this page
Franchise Failure Rates (2026). Subway franchise cost, Items 5–7, and SBA 7(a) default rate. From the Subway FDD and U.S. SBA FOIA data, loan statuses as of June 30, 2026.
https://franchisefailurerates.com/franchise/subway/cost/ · Data & methodology