Subway is one of the cheapest restaurant chains to open — here's a breakdown of all the costs

Hayley Peterson

July 11, 2019 5:38 PM

Subway is one of the cheapest restaurants to franchise.

Subway restaurant

The company charges a $15,000 franchise fee, and startup costs range from $116,000 to $263,000.
By comparison, McDonald's charges a franchise fee of $45,000, and startup expenses can cost up to $2.2 million.
Visit Business Insider's homepage for more stories.

Subway is one of the cheapest major fast-food restaurants to franchise.

Subway's fee for becoming a franchisee is $15,000, and startup costs, which include construction and equipment leasing expenses, range from $116,000 to $263,000, according to the company .

Opening a McDonald's restaurant requires as much as $2.2 million in startup costs alone, by comparison, and the company charges a $45,000 franchise fee.

But Subway restaurants generate less revenue than McDonald's units.

A Subway restaurant, on average, generates $417,000 in sales annually, compared to $2.7 million in average annual revenue for McDonald's restaurants, according to QSR magazine .

Subway also charges its franchisees hefty ongoing fees.

The company charges franchisees a weekly fee of 12.5% of gross sales minus the sales tax. The company says 8% goes toward the franchise royalties and 4.5% goes towards advertising.

Here's a breakdown of some of the costs for setting up a Subway restaurant and operating it for three months, according to the company: