Subway Franchise Loan – Financing Costs and How to Qualify

Buying or starting a Subway franchise can be a strong business opportunity, but getting the right finance depends on your deposit, experience, store type and security.

Lenders may fund up to 70% of an existing Subway franchise, 60% of a new store, or up to 100% if you use residential property as security.

Here’s what you need to know about Subway franchise costs, loan options and how to qualify for finance.

How Much Can I Borrow For A Subway Franchise?

Lenders take a common-sense approach to globally recognized brands like Subway.

You can typically borrow up to 70% of the total business value for an existing store. For a new store, lenders limit the Loan to Value Ratio (LVR) to 60%. However, if you use a residential property as security, you can secure up to 100% financing.

Standard commercial loan terms run for 10 years, or the length of the franchise agreement. With residential security, loan terms can extend to 25 or 30 years.

Commercial Term Loans

These traditional business loans are ideal for purchasing an existing store or funding major physical upgrades. For example, you can use a commercial term loan to cover expensive store fit-outs and leasehold improvements required by Subway’s corporate design standards.

Asset And Equipment Finance

Subway restaurants require specific, high-quality hardware to operate efficiently. Asset and equipment finance allows you to purchase or lease essential items like commercial ovens, walk-in cool rooms, display fridges, and specialized Point of Sale (POS) systems.

Working Capital Loans

During your first few months of operation, cash flow can be tight. Working capital loans provide the necessary liquidity to cover day-to-day operational expenses, including initial inventory purchases, staff wages, and local marketing campaigns.

Subway's Own Financial Requirements

Before you even apply for a commercial bank loan, you must meet Subway’s corporate financial minimums. Specifically, Subway requires prospective franchisees in Australia to have at least $100,000 in liquid assets and a minimum total net worth of $150,000.

Subway Franchise Cost Breakdown

Investing in a Subway franchise involves both upfront capital and ongoing financial commitments. Depending on the location and store size, the initial capital investment generally ranges from $195,000 to $360,000. Here is a granular breakdown of what you can expect to pay.

Initial Start-Up Costs

When establishing a new location or taking over an existing one, you will face several one-off costs to get the doors open.

Ongoing Fees

As a franchisee, you must pay ongoing fees based on your store’s gross sales. These fees fund corporate support and national advertising efforts.

How Do I Qualify for Subway Franchise Finance?

Getting approved for a Subway franchise loan requires a strong financial profile and a solid business case. Banks will closely analyze the existing franchisee’s financials and your personal capacity to manage debt before issuing a commercial loan.

Typical Lender Requirements

To successfully qualify for franchise funding, you need to highlight your strengths. Lenders generally require:

Strong EBITDA

The existing store must generate sufficient Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to prove profitability.

Debt Service Cover Ratio (DSCR)

Lenders want to see a DSCR of around 1.5x, meaning the business generates 1.5 times the income needed to cover debt repayments.

Financial Records

You must provide 2 years of personal and/or business financials, including tax returns.

Managerial Experience

Evidence of 2–3 years of prior experience running a fast-food outlet, bakery, or similar retail store in a managerial capacity.

Step-by-Step Guide – How to Buy and Finance a Subway Franchise?

Buying a Subway franchise in Australia involves a structured process governed by the Australian Franchising Code of Conduct. From your initial enquiry to opening your doors, here is your roadmap to securing a Subway restaurant.

Step 1: Enquire with Subway and Request the FDD

Contact Subway’s franchise department to request the Franchise Disclosure Document (FDD). This comprehensive document replaces the outdated US terminology (UFOC) and outlines all initial costs, litigation history, and your strict legal obligations as a franchisee.

Step 2: Get Pre-Approved for a Franchise Loan

Before signing any binding agreements or paying non-refundable deposits, speak with a specialist mortgage broker. We can properly assess your situation, calculate your borrowing power, and get you pre-approved for a commercial franchise loan.

Step 3: Review Financials with an Accountant

Work closely with a business accountant to review the existing store’s financials. You will need to draft a robust business plan featuring cash flow projections and a clear strategy for growth or turning around a poorly performing location.

Step 4: Attend the Face-to-Face Interview

You must complete an interview with the local Subway Area Manager. They will assess your past business experience and determine if you are the right fit for their brand culture. This step is entirely separate from your bank loan approval.

Step 5: Finalize the Loan and Store Fit-Out

Once approved by Subway, finalize your commercial loan paperwork. From there, you can draw down the funds to complete your store fit-out, purchase inventory, and prepare for your grand opening.

Discover If You Qualify

Our mortgage brokers are commercial loan experts. We know exactly how to find the right lender who will take a common-sense approach to your Subway franchise loan application.

Call us on 1300 889 743 or complete our free assessment form today so we can assess your situation and come back to you with an indicative funding approval.