Unbelievable but true. Subway offers no help to its franchisees and in particular give them no hint as to where to set up their store. Subway even declares they have no idea as far as the best locations for a store are concerned.
This was one of the findings of an investigation by the French economic magazine “Capital”.
35% of subway stores in France loose money
Once the 12,5% franchise fee is paid to Subway, Capital reveals, most franchisee have no profits left. The magazine gives for instance the example of a franchisee in the South of France who, because he has not enough traffic in his store, is in very bad shape. He explains that he chose his location without advice of Subway and realized afterwards he had made the wrong choice. Unfortunately it was too late to change plans.
Location, Location, Location
This is one additional example of why choosing the right location is essential. The example of Subway shows that even with a strong brand awareness people will not come to you unless you are in their immediate vicinity or on their way. The time when people were making efforts to visit their beloved suppliers is gone in the food retail sector (except for top notch 3-star restaurants of course)
Advice for your market research
Make sure you read our articles on choosing the right location for your stores, the different techniques that can be used to validate a location. And if you are still not convinced remember that renting a shop represent most of the time a huge amount of money. The best locations are not cheap. The best locations are expensive because landlords know exactly that there is business to be made on this spot. Even if it’s more expensive you should do the math: will the 500 or 1000€ saved each month make a difference? And, more important, what kind of difference will it be? A positive or a negative one. We know many entrepreneurs who wanted to save on the rent and who eventually stop their operations after a few years and start again in a better location (if they have not gone bankrupt in the meantime). This is the risk you’ll face if you don’t carefully and professionally do your analysis beforehand. If you want to get our feedback, feel free to contact us. The first advice is always free of charge.
Posted in Marketing.
