The royalty fee for a Subway franchise is 8% of gross sales. It is an ongoing payment made by franchisees to Subway for the continuing right to operate under the brand and use its systems, trademarks, and support.
The royalty is separate from Subway’s advertising contribution. Subway’s franchise materials commonly describe a combined weekly charge of 12.5% of sales after applicable sales-tax deductions: 8% goes to royalties and 4.5% goes to advertising. That distinction explains why figures such as 10% or 12.5% sometimes appear in franchise discussions even though the royalty portion itself is 8%.
Subway’s franchise model helped the chain expand rapidly because restaurants were generally smaller and less capital-intensive than many traditional fast-food units. The company supplies operating standards, recipes, training, purchasing arrangements, and brand marketing, while franchisees handle local staffing and day-to-day management.
The percentage is calculated from sales rather than profit. That means the royalty remains payable even when a restaurant’s expenses are high or its profit margin is low. Prospective franchisees must therefore consider royalties alongside rent, labor, food costs, advertising fees, equipment, and other operating expenses.