The Franchise Model Requires Regular Payments

2017 Words9 Pages
The franchise model requires regular payments to the Subway Corporation. This will eat into profit margins each year and decrease the potential upside that might have been realized from running a standalone restaurant. However, it will also allow the owner to build equity in the restaurant, and enable the potential sale the restaurant at a later date if it is successful (Amit & Zott, 2012). Importantly, there are restrictions on how many stores an investor can own and operate. Subway is not like Chick-fil-a in that they limit all owners to only a single store, but they do want to make sure that people are going to be successful at running a store before they will allow that person to take on many stores. This can limit the upside and…show more content…
In addition to the training one receives—which is both training and a test to ensure that people are a good fit for the franchise model—one receives critical support on marketing matters and other issues. This is ideal for a person who has not yet worked in the sandwich shop industry. It is like having a leg up on people who have decided to just test the waters and attempt to start a shop with no assistance. The ability to pool resources to come up with clever marketing pitches is also critical. Some might argue that this marketing approach is bad for small business owners because it takes away some of their ability to use local, customized marketing. This is not a fair criticism, however. One can still engage in community-based marketing as an owner of a Subway franchise. This provides the opportunity for the best of both worlds. The Subway can lean on the national messaging to build brand awareness and draw people to the store while at the same time going out and establishing good will in the community through various efforts. In addition, the franchise model allows a business owner to just focus on execution rather than having to constantly scheme with new ideas. Many small business owners fail because they have to be visionaries at all points. They have to see the bigger trends coming in the industry while also thinking of new and creative ways to connect with the needs of consumers. This is all in addition to
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