Franchise Fees Calculation for Subway

What is the total amount that Subway collects in franchise fees from its 42,000 franchisees?

The total amount that Subway collects in franchise fees from its 42,000 franchisees is $2,189,250,000.

Understanding Franchising

Franchising is a popular way for businesses to expand and grow. It is a marketing strategy where the owner of a business licenses its operations to third parties. In the case of Subway, they have approximately 42,000 franchisees who operate under the Subway brand.

Franchise Fee Calculation

To calculate the total amount that Subway collects in franchise fees, we need to consider the following data: - Total number of Subway franchisees: 42,000 - Average annual store revenue per franchisee: $417,000 - Percentage of annual store revenue paid to Subway as franchise fees: 12.5% First, we calculate the amount of fees paid by each franchisee at 12.5% of the average revenue: 12.5% of $417,000 = (417,000 × 12.5) ÷ 100 = $52,125 Then, we multiply this amount by the total number of franchisees to find the total franchise fee collected by Subway: Total franchise fee = 42,000 franchisees × $52,125 per franchisee Total franchise fee = $2,189,250,000 Conclusion: Subway collects a total of $2,189,250,000 in franchise fees from its 42,000 franchisees annually.
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