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Subway Franchises Due diligence

Discussion in 'Small Business' started by Darlinghurst Boy, 11th Dec, 2015.

  1. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

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    Location:
    Darlinghurst Sydney
    expecting a redundancy next year I have been looking at buying a business , and noticed a lot of Subway stores especially in Sydney CBD for sale.

    Some low prices as 50k !!

    Sounds good so i checked out the Glebe Subway store which was selling for 50k , only to find one staff member and large time amount gaps between customers.
    I doubt it makes the 90,000 a year profit it says unless you personally work the 16 hour days by yourself.
    The business broker told me he has over 6 people ready to buy it and i should get in quick !!
    That was over two months ago and its still for sale .

    Have noticed another one in Sydney CBD in the Hunter Connection arcade has been in the market for over 6 months .
    The rent is 5k a week.
    So my questions are to do due diligence i should ask to see tax returns , and find a very good accountant .
    Anyone know where i can fi d a good business accountant who checks books ?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Adelaide, SA
    Essentially buying a job in most cases
     
    fullylucky likes this.
  3. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Most people go into business to make money, not lose it.
    Working those kind of hours, you'd be losing money compared to what you could earn elswhere, without the need for a 50k initial outlay too.
     
  4. Rixter

    Rixter Well-Known Member

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    Portfolio Perth Brisbane Sydney Melbourne
    @darlinghurstsboy Have a word with geoffw..he had one.
     
  5. larrylarry

    larrylarry Well-Known Member

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  6. geoffw

    geoffw Moderator Staff Member

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    One Subway is not enough to support you for a job in most cases.

    If you can get a good manager then you can get an income from it but not a big income unless it's a really high volume store.

    I had a low income with two high volume stores but then I had paid off large loans between buying and selling, so I did OK in the long run.

    But 50k is probably a lot lower than set up price. Stores have to remodel ever 8 years or so; it could be that a store is selling for a low price to avoid what may be a costly remodel.

    There's a lot more competition now in the sector; I don't know about Subway but I've heard stories of the really big players struggling now.