Subway franchise finance: how to fund a store in the UK

Subway franchise finance is the mix of personal funds and borrowing used to open a new Subway store, take over an existing one or add further stores in the UK. This guide is for prospective and existing franchisees who want to understand the costs and how lenders view them. Smart Funding Solutions is an independent broker, is not affiliated with Subway, and compares franchise lenders on its panel on your behalf. For franchise funding more generally, see our franchise loans page.

Subway sets minimum net worth and liquid funds requirements for applicants, and lenders expect a meaningful personal contribution alongside any borrowing. Fees and requirements change, so always confirm the current figures in Subway's UK franchise information and disclosure documents.

01What it costs to open a Subway

Upfront costs

• The initial franchise fee
• Shop fit-out, signage and equipment
• Lease deposit, rent in advance and legal fees for the premises
• Opening stock and training costs
• Working capital for the first months of trading

Total investment varies considerably with location, unit size and whether the store is a new build, a non-traditional site (such as a forecourt or campus) or an existing store being resold.

Ongoing costs

• Royalty: a percentage of net turnover paid to the franchisor
• Advertising fund contribution: also a percentage of turnover
• Rent, business rates, staff, stock, utilities and maintenance

Because royalties and advertising fees are based on turnover rather than profit, they must be paid even in quiet months. Build them into your cash flow forecast from day one.

02New store vs buying an existing store

03Financing options

Franchise loans from banks and specialist lenders

Many UK banks and lenders have franchise teams that look favourably on established brands with proven systems. They will typically fund part of the set-up cost, with the rest coming from you.

Government-backed lending

The British Business Bank's Growth Guarantee Scheme gives accredited lenders a government guarantee on part of a loan, which can help businesses that would otherwise struggle to borrow. The borrower remains fully liable for the debt. The Start Up Loans programme may help new business owners. Check the British Business Bank for current availability, and see our Growth Guarantee Scheme guide.

Asset finance for equipment and fit-out

Ovens, refrigeration, counters and point-of-sale systems can often be funded through hire purchase or leasing, reducing the cash you need upfront. Read about commercial kitchen equipment finance.

Unsecured and secured business loans

Once trading, franchisees may use unsecured business loans for refurbishments or working capital, or secured loans if they have property to offer.

04Your personal contribution and investors

Lenders want to see that you have your own money at stake. Your contribution can come from savings, equity in property or, in some cases, a business partner. Keep a cash reserve for unexpected costs rather than putting every penny into the set-up.

If you bring in an investor or partner, agree in writing how profits, decisions and any exit will work, and check that the franchisor approves the ownership structure.

Many UK banks and lenders have franchise teams that look favourably on established brands with proven systems.

05What lenders look at

• The size and source of your personal contribution
• Personal credit history and net worth
• Management, retail or food-service experience
• The proposed site: footfall, competition and lease terms
• A business plan with a realistic cash flow forecast, including royalties and advertising fees
• For an existing store, its actual trading history

06How to prepare

It is free to enquire, and any broker fee is disclosed separately before you proceed. For comparison with another quick-service brand, see our McDonald's franchise finance guide, or apply online when you have the franchisor's figures.