Subway FDD Item 19 is the section of the Franchise Disclosure Document that contains financial performance representations, the data that tells prospective franchisees what existing locations actually earn in gross sales. For Subway, this item is particularly consequential because the brand’s average unit volumes have declined significantly from their peak, and the combination of lower revenues with the current 8% royalty rate creates margin pressure that every prospective buyer must understand. At Lopes Law LLC, we analyze Item 19 data in the context of the entire FDD, because gross sales alone do not tell you whether a Subway franchise will be profitable.

This guide explains what Subway discloses in Item 19, how to interpret the data accurately, why declining average unit volumes combined with higher royalties create a challenging profitability equation, and what additional financial analysis you need to perform beyond what Item 19 provides.

What Does Subway Disclose in FDD Item 19?

Item 19 of any Franchise Disclosure Document is titled “Financial Performance Representations.” Under the FTC Franchise Rule, franchisors are not required to include an Item 19 disclosure. It is optional. However, when a franchisor does include it, the data must be truthful and have a reasonable basis.

Subway’s Item 19 typically provides gross sales data for franchise locations. The specific format and detail level can change from one FDD filing year to the next, but the disclosure may include average gross sales across the system, median gross sales, breakdowns by store type (traditional locations versus non-traditional locations), breakdowns by geographic region or sales volume tier, and the number of locations included in each category.

What Item 19 does not include is equally important. Subway’s Item 19, like most franchise FDDs, does not disclose net profit, operating expenses, cost of goods sold, labor costs, rent, utilities, or any other expense category. It provides revenue data only. This means you can see what locations earn in top-line sales, but you cannot determine from Item 19 alone what franchisees actually take home after expenses.

This is the fundamental limitation of Item 19, and it is why legal and financial analysis beyond the FDD is essential. For a general overview of how Item 19 works across all franchise systems, see our comprehensive guide on understanding Item 19 financial performance representations.

What Are Subway’s Average Unit Volumes and Why Have They Declined?

Subway’s average unit volumes (AUV) have declined significantly from the system’s peak. At the height of Subway’s expansion, when the system operated more than 27,000 US locations, average unit volumes were reported at approximately $450,000 or higher for traditional locations. Since then, average unit volumes have trended downward, with various industry sources estimating current AUV for traditional Subway locations in the range of $350,000 to $420,000.

Several factors contributed to this decline:

• Oversaturation: As discussed in our Subway Item 12 territory analysis, the relentless addition of new locations without territorial protections split the existing customer base among more restaurants, reducing per-location revenue.
• Competitive pressure: The fast-casual segment expanded dramatically during the same period, with brands like Chipotle, Panera Bread, and others attracting customers who might previously have chosen Subway. The QSR sandwich category also saw growth from competitors like Jersey Mike’s, Jimmy John’s, and Firehouse Subs.
• Brand perception challenges: Subway faced brand perception issues during this period that affected customer traffic and average ticket size.
• Menu pricing constraints: Subway’s value positioning historically limited the brand’s ability to raise menu prices at the same rate as competitors, which constrained revenue growth at the unit level.

The store closure program under Roark Capital has removed thousands of the lowest-performing locations, which mathematically improves the system’s average. If you close the bottom 20% of locations, the remaining locations’ average automatically increases, even if no individual location’s sales actually improved. This is important context when reading Item 19 data: the average may look better than it did three years ago, but that improvement may be primarily a function of pruning rather than growth.

How Does the 8% Royalty Interact with Subway’s Average Unit Volumes?

This is the central financial question for any prospective Subway franchisee, and it is where the analysis of Item 19 must be combined with the analysis of Item 6 fees.

Let us model three revenue scenarios to illustrate how the 8% royalty and 4.5% advertising contribution interact with different gross sales levels:

Line Item	$350K Location	$420K Location	$550K Location
Gross Sales	$350,000	$420,000	$550,000
Royalty (8%)	($28,000)	($33,600)	($44,000)
Advertising (4.5%)	($15,750)	($18,900)	($24,750)
Food Cost (~30%)	($105,000)	($126,000)	($165,000)
Labor (~32%)	($112,000)	($134,400)	($176,000)
Rent	($30,000)	($36,000)	($42,000)
Other Operating (utilities, insurance, tech, etc.)	($30,000)	($33,000)	($38,000)
Estimated Pre-Tax Income	$29,250	$38,100	$60,250
As % of Gross Sales	8.4%	9.1%	11.0%

These numbers illustrate the fundamental challenge. At a $350,000 location (which is below but not dramatically below the system average), the estimated pre-tax income is approximately $29,250. That is the owner-operator’s compensation for an investment of $150,000 to $300,000 and full-time commitment to running the restaurant. The return on investment is low, and there is virtually no margin for error: any unexpected expense, revenue shortfall, or cost increase can push the location into negative territory.

Even at a $550,000 location, which would be a strong performer by Subway standards, the estimated pre-tax income of $60,250 represents a modest return on a six-figure investment that requires the owner’s active involvement. Compare this to franchise systems with higher average unit volumes where the same percentage margins produce significantly higher absolute dollar returns.

What Does Item 19 Not Tell You That You Need to Know?

The gaps in Item 19 data are as important as the data itself. Here is what you will not find in Subway’s Item 19 and where to get the information:

• Actual profitability: Item 19 does not disclose profit. You must build your own pro forma income statement using the gross sales data from Item 19, the fee structure from Item 6, food cost estimates (from existing operators or industry data), and local market data for rent and labor costs.
• Sales trends over time: A single year’s data does not show whether the location is growing, stable, or declining. Request sales data for the past three to five years from the selling operator or from current franchisees in your market.
• Delivery vs. in-store sales mix: As we discussed in our Item 6 analysis, delivery orders have dramatically different margin profiles than in-store orders due to third-party platform commissions. Item 19 does not break down revenue by channel.
• Seasonality: Monthly sales variation can affect cash flow management. Some Subway locations experience significant seasonal swings that are not visible in annualized data.
• New vs. mature location performance: A location in its first year typically performs differently than a location in its tenth year. Item 19 data may aggregate all ages, obscuring this distinction.

A Client Scenario: When Item 19 Data Painted an Incomplete Picture

A prospective franchisee approached our firm after reviewing the Subway FDD and feeling encouraged by the Item 19 data, which showed an average gross sales figure that, on its surface, looked attractive. The buyer was considering purchasing an existing Subway location being offered at $175,000.

When we examined the data more closely, several issues emerged. First, the Item 19 average included both traditional and non-traditional locations, and the non-traditional locations in high-traffic venues (airports, hospitals) skewed the average upward. The traditional location the buyer was considering had gross sales of approximately $375,000, which was below the reported average.

Second, the buyer had not accounted for the fact that approximately 25% of the location’s revenue came from delivery platform orders, where the combined royalty, advertising, and delivery commission costs consumed nearly 38% of each order’s revenue. When we separated the in-store and delivery economics, the effective margin on the delivery portion was near zero.

Third, the buyer had compared Subway’s gross sales figures to other franchise opportunities without adjusting for the difference in royalty rates. A $375,000 Subway location paying 8% royalty generated less franchisee income than a $375,000 location in a different system paying 5% royalty, all else being equal. The difference in royalty alone was $11,250 per year.

After our complete analysis, the buyer decided to pursue a different franchise opportunity with higher average unit volumes and a lower total fee burden. At Lopes Law LLC, this is the kind of comparative analysis that a thorough FDD review provides. Item 19 is the starting point, not the conclusion.

How Should You Read Item 19 in the Context of Store Closures?

Subway’s store closure program directly affects how you should interpret Item 19 data. Here are the key considerations:

• Survivorship bias: When the lowest-performing locations close, the system average automatically improves even if no individual location’s sales increased. Be cautious about interpreting rising averages as evidence that the system is growing.
• Sample size changes: Compare the number of locations included in the current Item 19 sample to prior years. If the sample shrinks significantly (because locations closed), the data represents a different and smaller universe of locations.
• Redistribution effects: Closures in your target market may benefit surviving locations as customer traffic redistributes. Ask existing operators in your area whether they have seen sales increases following nearby closures.
• Future closure risk: If closures are still ongoing, consider whether additional closures in your market could benefit your location or whether your target location itself could be at risk of closure based on its performance level.

Why Legal and Financial Analysis of Item 19 Is Critical

Item 19 provides essential data, but it requires professional interpretation. The gross sales figure is a starting point for financial modeling, not a profit indicator. You need to combine it with the fee data from Item 6, the cost of goods data implied by Item 8’s sourcing restrictions, and actual operating expense data from existing operators or industry benchmarks.

A franchise attorney experienced with QSR franchise FDDs can help you identify what the disclosed data actually means for your specific investment, build a realistic pro forma income statement, compare Subway’s financial profile to other franchise opportunities, and determine whether the investment meets your minimum return requirements given the risk factors involved.

At Lopes Law LLC, we combine legal analysis of the FDD provisions with financial modeling of the unit-level economics. Our flat-fee FDD validation review is $3,000 and covers all 23 items, with detailed attention to how Items 6, 8, and 19 interact to determine your actual profitability potential. For a comprehensive overview of the review process, see our guide on what to expect from an FDD review.

Frequently Asked Questions About Subway FDD Item 19

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Last updated: March 10, 2026