Subway Logo

Subway

Doctor’s Associates LLC
https://www.subway.com
1-800-888-4848
1 Corporate Drive, Suite 1000, Shelton, CT 06484

Initial Investment Range

$199,135 to $604,245

Franchise Fee

$15,000 to $82,500

As a Subway franchisee, you will sell foot-long and other sandwiches, salads and other food items from a retail establishment.

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Subway April 25, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
3
2
5

Disclosure of Franchisor's Financial Instability

Medium Risk

Explanation

The franchisor, Doctor's Associates LLC (DAL), was recently acquired by a private equity firm, which has since extracted significant cash through member distributions, as shown in the financial statements. While currently profitable, this ownership structure may prioritize short-term investor returns over the long-term health of the franchise system and your investment. This could affect the level of support and resources dedicated to franchisees.

Potential Mitigations

  • An experienced franchise accountant should review the franchisor's financial statements, paying close attention to cash flow, debt, and the impact of the recent acquisition.
  • Discuss the franchisor's long-term strategy and commitment to the brand under its new ownership with a business advisor.
  • Ask your attorney to clarify any guarantees or support obligations from the parent company.
Citations: Item 1, Item 21, Exhibit C

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a significant negative trend. Over the last two years, the U.S. system has seen a net decrease of over 1,200 franchised outlets. In 2024 alone, 881 units "Ceased Operations – Other Reasons" and another 139 were reacquired by the franchisor. These highly concerning numbers may indicate systemic issues, widespread franchisee distress, or lack of profitability, presenting a major risk to your potential success.

Potential Mitigations

  • A franchise-focused accountant must analyze the turnover tables in Item 20 to understand the real rate of unit failures and exits.
  • It is critical to contact a significant number of former franchisees listed in Item 20, especially those who ceased operations, to understand why they left.
  • A business advisor can help you assess if the high closure rate suggests fundamental problems with the business model.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. The data in Item 20 shows the system is shrinking, not undergoing rapid growth. Rapid growth can strain a franchisor's ability to provide adequate support. While not a risk here, monitoring system growth trends remains important for understanding franchisor strategy and resource allocation.

Potential Mitigations

  • Your business advisor should still assess the franchisor's capacity to support its current franchisees effectively, even without rapid growth.
  • Have your accountant review the franchisor's financial investment in support services relative to its size.
  • An attorney can review the franchisor's contractual support obligations to ensure they are clearly defined.
Citations: Item 20

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified, as Subway is a long-established and mature franchise system, not a new or unproven one. For new franchises, this risk is significant because they lack a track record, may have underdeveloped support systems, and possess minimal brand recognition, increasing the potential for business failure. This is not a concern with this franchisor.

Potential Mitigations

  • For any franchise, it is wise to have a business advisor evaluate the maturity and stability of the brand in its specific market segment.
  • An accountant can help assess if a mature system's fee structure is justified by its brand strength and support.
  • Your attorney should review the history of the franchisor as disclosed in Item 1.
Citations: Not applicable

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The business model is based on selling submarine sandwiches, a staple of the fast-food industry with a long history of consumer demand. A fad business, by contrast, relies on a fleeting trend which can lead to a collapse in demand after the initial excitement fades, leaving you with a worthless investment.

Potential Mitigations

  • A business advisor can help you assess the long-term consumer demand and competitive landscape for any franchise concept.
  • Even for established concepts, an accountant should model financial performance under various market conditions.
  • It is important to understand the brand's plans for innovation with your business advisor.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

Item 2 reveals that much of the top executive team, including the CEO, CFO, and Chief Marketing Officer, is very new to their roles, having started in April 2024 following the acquisition by a private equity firm. While they may have external experience, their lack of tenure with the Subway system itself presents a risk. Their ability to effectively manage this large and complex system is unproven.

Potential Mitigations

  • A business advisor should help you research the track record of the new executive team at their prior companies.
  • Discuss with current franchisees their perception of the new management team's direction and effectiveness.
  • Your attorney can advise on risks associated with management turnover in a franchise system.
Citations: Item 2

Private Equity Ownership

High Risk

Explanation

The franchisor was acquired by a private equity firm, Roark Capital, in 2024. This ownership structure often prioritizes maximizing short-term returns for investors, which can lead to decisions that may not be in the best long-term interest of franchisees. These decisions could include increasing fees, cutting support services, or forcing costly upgrades to make the company more attractive for a future sale.

Potential Mitigations

  • Discuss the implications of private equity ownership with your franchise attorney and business advisor.
  • It is beneficial to research the private equity firm's reputation and its track record with other franchise brands in its portfolio.
  • Speaking with franchisees who have operated under the new ownership can provide insight into any changes in strategy or support.
Citations: Item 1, Item 21

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package, as Item 1 provides extensive detail on the parent and affiliate corporate structure. In some cases, a franchisor might be a thinly capitalized subsidiary of a larger, undisclosed parent. Not having the financial information of a controlling parent company can hide financial instability and prevent you from fully assessing the backing of your investment.

Potential Mitigations

  • Your franchise attorney should always verify the corporate structure outlined in Item 1.
  • An accountant can help determine if the disclosed financials are sufficient to support the system or if a parent guarantee is necessary.
  • A business advisor can help research the full corporate family of any franchise.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Subway has a long history and is not operating under a recent acquisition from a separate predecessor brand. For other franchises, if a system was recently acquired from a predecessor, the FDD may not adequately disclose negative history like high failure rates or litigation under that prior ownership, hiding systemic problems.

Potential Mitigations

  • When evaluating any franchise, it is important to have your attorney review Item 1 for any predecessor history.
  • If predecessors exist, a business advisor can help you conduct independent research on that entity's historical performance.
  • Speaking with long-term franchisees about their experience under prior ownership can be revealing.
Citations: Not applicable

Pattern of Litigation

High Risk

Explanation

Item 3 and the accompanying Exhibit L disclose a very large number of legal actions. There are dozens of pending and settled cases involving franchisees, with many alleging serious issues like fraud, misrepresentation, breach of contract, and wrongful termination. This significant pattern of litigation between the franchisor and its franchisees is a major red flag, suggesting potentially deep-seated problems within the franchise relationship and system.

Potential Mitigations

  • A franchise attorney must carefully review the details of the litigation disclosed in Item 3 to understand the nature and frequency of claims.
  • Consider that the disclosed cases may only be a fraction of the total disputes; a business advisor can help you assess this risk.
  • Treating a high volume of franchisee-initiated litigation as a critical warning sign is a prudent step.
Citations: Item 3, Exhibit L
2

Disclosure & Representation Risks

Total: 15
3
3
9

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
3
5
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

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4

Legal & Contract Risks

Total: 16
10
3
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
2
2
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
5
3
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
1
3
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
6
6
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
12
5
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
2
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.