Subway, founded in 1965, has grown to become the world's largest submarine sandwich chain with over 37,000 locations globally and significant expansion plans in India. The company's franchising model allows for rapid growth and brand recognition with local entrepreneurs, although it faces challenges in brand awareness and competition from established rivals. Despite substantial benefits for both franchisors and franchisees, Subway contends with issues like outdated branding, fierce competition, and financial risks from market fluctuations.

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PRESENTED BY –
ASHISH SHARMA

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INTRODUCTION:
Subway was founded in 1965 by Fred DeLuca together with his
partner, Dr. Peter Buck. The first store of Subway was located
in Bridgeport, US. The foundation of Subway was built on serving well-
made and high quality product, providing excellent customer service,
keeping operating costs low and finding great locations.
The two partners started their franchise business policy in 1974 when
they realized their goal, which to open 32 stores was unable to reach in
time.
Today, Subway has been ranked as the world's largest submarine
sandwich chain with more than 37,000 locations around the world.

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HISTORY OF SUBWAY FRENCHISIS:
 Started in 1965 in Bridgeport Connecticut.
 Currently owned and operated by Doctor’s Association, Inc.
 One of the fastest growing Franchises.
 38,061 outlets in 98 countries.
 25,468 restaurants in the US, 476 in India.
 Largest single brand restaurant brand globally.
 Second largest global operator after Yum Brand.
FAST FOOD INDUSTRY IN INDIA:
 Relatively new concept in India.
 Estimated growth of 41% per year.
 Forecast 2013: Value of over $200 Billion.
 Forecast 2013: 95 Billion transactions.
 Key Players: McDonalds, Pizza Hut, KFC.

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MARKET ENTRY STRATEGY IN INDIA:
Franchising is the practice of using another firm's successful business
model. There are two parties, franchisor and franchisee, in franchise
model. The franchisor gives the right for franchisee to use the
franchisors trade names and know-how for a specific period of time. The
parent company also provides support for setting up a business. The
initial and ongoing support includes operating manual, training, quality
monitoring, and marketing effort such as advertisement. On the other
hand, franchisee gives loyalty fee and initial fee for the entrepreneurship
of business model. Due to the complexity of market, the franchising in
international or foreign market is often performed by master franchising.
With this method, the local franchise is given the right to sell the
franchise to other within the country.
SUCCESS OF SUBWAY IN INDIA
India will be among our largest markets globally: Burger King
Burger King India chief executive officer Rajeev Varman told Business
Standard the Miami-based chain does not see a limit or a ceiling to the
growth potential in India, as the “big numbers reflect”. It has joined

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hands with private equity major Ever stone Capital for India entry. The
plan is for 12 stores in the next two to three months.
“As the concept of Burger King comes in, there will be more exposure
and the market will grow further. India as a market has no ceiling right
now and that’s what the big numbers reflect.
The company plans to expand in Delhi and Mumbai initially, as it feels
these are the key markets to get a firm foothold in the country. This
would be the 100th country for the chain. It recently entered China and
Pakistan. Pricing in India will be competitive, keeping in mind its major
rival, McDonald’s.
Benefits for franchisor
Subway restaurant gains from using franchise to penetrate anew market. With
franchising model, the business is expanded at a rapid rate. Brand Recognition is
spread when franchisee set upthe store in anew location. The franchise is
operated by highly motivated entrepreneur who has the knowledge of local
culture as well as customer needs and wants. Huge amount ofinvestment is
Needed ifthey want foropening and operating on their own. Therefore, the risk of
failure foropening the branch in another country is minimized. Furthermore, the
franchisor receives the initial and royalty fee which can be used as a capital to
support and strengthen itsbusiness operation. The franchisee isprobably

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motivated to perform the business at highest level because they invest in the
business.
Benefits for franchisee
A local entrepreneur isalso favored by franchise model. By purchasing a
franchise, they have the right to operate the business under their parent company’s
brand. With well-known business, the selling power islikely to be high. The
success is higher than sole proprietorship. The startup cost islow as compare to
opening their own business. No trial and error learning is needed. The risk of
failure is diminished because the business operation has already been proven to be
success by the franchisor. Moreover, the franchisor also provides support such as
training, recommendation, and marketing activities tosupport the franchise
network. Forthe franchisee ofSubway, they have the chance to be one ofthe very
first to bring Subway into Indonesia. It wouldbe great forthem because the
potential health conscious consumer is there; hence, there is the possibility of
making huge revenue.
FAILURE OF SUBWAY:
The recent past has seen rebranding of Kentucky fried chicken,
McDonald’s and several other fast food chains and comparing to them,
Subway has an outdated branding concept. Subway has been unable to
expand considerably when comparing to the competitors mainly because

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of the lack of brand awareness among the customers (Lamb, Hair and
McDaniel, 2008).
Since Subway concentrates on nutritionand health consciousness, any kind of
negative news could impact the brand equity. Competition is fierce in the fast food
segment and the rivals are having higher brand equity.
SOME OF THE NEGATIVE ASPECTS:
1. Saturated fast food markets in the developed economies. The fast
food market in the developed countries is already overcrowded by so
many fast food restaurant chains and this already proves to be a threat to
Subway as it finds it hard to grow in the developed economies.
2. Trend towards healthy eating. Only part of Subway’s menu offers
healthier choices of meals, while the rest menu is rich in salt, contains
many calories and is accompanied by soft drinks. Customers who care
about their food and well-being may opt out for something else rather
than Subway.
3. Local fast food restaurant chains. Local fast food restaurants can offer
healthier food and menu that exactly represents local tastes.

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4. Currency fluctuations. Subway receives much of its income from
foreign operations. That income has to be converted into dollars and
may affect the company’s profits, especially when the dollar is
appreciating against other currencies.
5. Lawsuits against Subway. Subway has been involved and lost a few
lawsuits in the past because of the poor company policies regarding
franchisees management. Lawsuits are expensive, time consuming and
damages the firm’s brand.
Disadvantages for franchisor
Even if there are lotsofbenefits, several drawbacks are also emerged. With the
limited control, the quality offranchisee might not be met which, in turn, can
damages the reputation of franchise. Among ofall disadvantages, the greatest
concern iscontributed to the possibility of franchisee turning into a competitor.
When the technology and know-how isgiven to the franchisee, they might cancel
the contract and operating ontheir own to earn higher profit.
Disadvantages for franchisee
The franchisee isbounded to the legal contract and agreement with the franchisor.
They must followthe standard and procedure from the head quarter. Thus, there is
a lack ofindependence in operating the business. The cost ofowning a franchise
might be higher than expect. The initial setup cost, royalty fee, and some portion

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ofthe profits must be provided to the franchisor. This may cause the franchisee to
feel lack ofmotivation to continue the business.
BIBLIOGRAPHY:
 http://subwayain2.blogspot.in/2012/11/introduction.html
 https://prezi.com/0ejxjwfe_kdv/subways-growth-in-india/
 https://www.theseus.fi/bitstream/handle/10024/23519/Liutu_Riina.
pdf?sequence=1
 http://www.scribd.com/doc/87051203/Subway-International-
Marketing#scribd
 http://www.assignmentwriters.com/marketing-strategy-
multinational-fast-food-restaurant-chain-marketing-strategy-
subway/
 http://www.strategicmanagementinsight.com/swot-
analyses/subway-swot-analysis.html

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