Marketing: Marketing is very important for franchises. It is not possible for franchisees to individually market the franchise as the costs of marketing are too high and their pool of capital small. Generally, marketing is done on a global scale by Subway. There is an advertising fund in which all franchisees have to pay, which is about 4.5% in US, Canada and Australia, and 3.5% in other countries (SUBWAY® Restaurant, 2008). Franchisees have flexibility in the case of nationally sponsored programs such as coupons. One franchise in the same country may be using coupons while another might not.
Operations Management: Daily materials are not centralized and can be bought from different suppliers but the initial materials such as equipment are bought from Subway’s associate manufacturers.
Costs: To set up a franchise with Subway, first you have to submit a filled online application at the Subway Website (www.subway.com). After the application is completed, you receive a brochure that gives additional information not available at the website. After that, you can contact the franchisor and discuss possibilities. The start up fee is USD 15,000 for US, Canadian Dollars 15,000 for Canada, Australian Dollars 12,500 for Australia and USD 10,000 for all other countries. An 8 % royalty has to be paid by all franchisees (SUBWAY® Restaurant, 2008).
The Break Even point for a BMT Sandwich is approximately 6340 units per month (See Appendix I).
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