Analysis
McDonald's vs Subway: Which Franchise Wins on Data?
McDonald's vs Subway compared on cost, revenue, fees, and SBA loan performance. The two biggest restaurant franchises, and why cheaper isn't better.
McDonald's vs Subway — total investment (high end)
McDonald's and Subway are the two largest restaurant franchises on earth, but they sit at opposite ends of the franchise spectrum. One demands over a million dollars and elite operator selection. The other is among the cheapest national brands to enter. The FDD and SBA data show why cheaper is not the same as better.
The numbers side by side
| Metric | McDonald's | Subway |
|---|---|---|
| Total Investment | $522,500–$2,642,000 | $238,625–$536,745 |
| Franchise Fee | $45,000 | $15,000 |
| Royalty Rate | 4.0% | 8.0% |
| Avg. Gross Sales (Item 19) | $3,964,000 | Not disclosed |
| Total Units | 13,457 | 19,502 |
| SBA Loans on File | 24 | 6,096 |
| SBA Charge-Off Rate | 16.7% | 6.8% |
| Avg. SBA Loan Size | $204,058 | $194,510 |
Cost of entry: not close
Subway opens for $238,625 to $536,745 with a $15,000 fee. McDonald's runs $522,500 to $2,642,000, and the company requires substantial non-borrowed liquid capital on top. If your constraint is capital, Subway is reachable and McDonald's is not. That accessibility is Subway's single biggest advantage, and the source of most of its problems.
Revenue: McDonald's discloses, Subway hides
McDonald's discloses average unit volume of $3,964,000 in its Item 19. Subway includes no Item 19 financial performance representation at all, so there is no official revenue figure for a prospective owner to underwrite against. In a category where margins are thin, buying without disclosed revenue is buying blind. Read why that matters in our Item 19 guide.
SBA data: read the sample size carefully
This is where context matters most. Subway has 6,096 SBA 7(a) loans on file with a 6.8% charge-off rate, the largest and most statistically reliable SBA record of any franchise in our database. McDonald's shows a 16.7% rate, but across only 24 loans, because McDonald's franchisees rarely use SBA financing. That near-zero rate is not a meaningful safety signal; the sample is too small. Subway's 6.8% across thousands of loans is the number that actually tells you something.
The verdict
These are not really competing investments. McDonald's is a capital-and-selection play with elite unit economics and disclosed revenue, available to very few. Subway is an accessible, low-cost entry with a vast footprint, no revenue disclosure, and a meaningful default rate that reflects real franchisee stress. If you can clear McDonald's capital and approval bar, its economics are in a different league. If you cannot, Subway's low entry cost should be weighed against everything it does not tell you. Compare both against the category in our franchise failure rate analysis.
Related franchise research
See the McDonald's franchise cost, Subway franchise cost, and McDonald's vs Chick-fil-A.
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Frequently Asked Questions
- Is McDonald's or Subway a better franchise to own?
- They serve different buyers. McDonald's discloses average unit volume of $3,964,000 but requires $522,500+ and elite operator selection. Subway opens for as little as $238,625 but discloses no revenue (no Item 19) and carries a 6.8% SBA charge-off rate across 6,096 loans.
- How much does a McDonald's vs Subway franchise cost?
- McDonald's costs $522,500 to $2,642,000 with a $45,000 franchise fee, plus a large liquid-capital requirement. Subway costs $238,625 to $536,745 with a $15,000 fee.
- Why is McDonald's SBA default rate so low?
- McDonald's shows a 16.7% SBA charge-off rate, but only across 24 loans, because McDonald's franchisees rarely use SBA financing. That sample is too small to be a meaningful safety signal. Subway's 6.8% rate across 6,096 loans is far more statistically reliable.
- Does Subway disclose franchisee revenue?
- No. Subway does not include an Item 19 financial performance representation, so there is no official average revenue figure. McDonald's does disclose its average unit volume. That transparency gap is a meaningful disadvantage for Subway buyers.