How to Finance a Port of Subs Franchise: Costs and SBA Rules
By Anthony Cornella
A Port of Subs franchise loan usually funds the build-out of a made-to-order sandwich shop, and the brand’s own Item 7 estimate shows how wide that range can be. The franchisor puts the estimated initial investment for a single-unit traditional restaurant at $419,895 to $938,570, with leasehold improvements and construction as the largest single line.
Below: the disclosed costs and fees, owner requirements, the SBA Franchise Directory notes and the loan types that fit a new or existing sub shop.
US Professional Funding is not affiliated with, sponsored by or endorsed by Port of Subs; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a franchise attorney and accountant.
Port of Subs Franchise Loan at a Glance
- Initial franchise fee: $25,000 per location, according to the franchisor’s franchising website.
- Royalty: 6% of gross sales.
- Advertising: 1% of gross sales, plus 3% of gross sales for co-op and local marketing.
- Estimated initial investment: $419,895 to $938,570 for a single-unit traditional restaurant, per the Item 7 figures the franchisor publishes.
- Owner requirements: $250,000 minimum net worth and $80,000 minimum liquid assets.
- Franchise term: 10 years.
- System size: more than 135 open units in seven Western states, per the company’s website.
- SBA Franchise Directory: listed under code S1335, with notes on lease addenda, purchase options and Regional Development Agreements.
What Is Port of Subs?
Port of Subs traces its roots to 1972, when two brothers from New Jersey opened a small submarine shop called the “Sub Shop” in Sparks, Nevada. John Larsen and his family acquired the company in 1975, and a community naming contest that drew more than 10,000 entries produced the Port of Subs name.
The Larsens built ten company-owned units between 1975 and 1985, and franchising began in 1985. The corporate office is in Reno, Nevada, and the company reports more than 135 open units in seven Western states.
The concept. Port of Subs is a quick-service sandwich shop. Meats and cheeses are sliced fresh, bread is baked fresh and sandwiches are made to order while the customer watches. The menu covers hot and specialty subs, wraps, salads, breakfast items, desserts and catering trays.
Formats. The franchisor offers traditional and non-traditional units, and it designs its restaurants with two or more make lines to handle digital orders. Non-traditional sites can include spaces inside travel centers, fuel stations and airports. Ownership paths include single units, Regional Developer territories and a real estate option.
Why lenders see it the way they do. More than 50 years of operations and franchising since 1985 give a lender a long record to review. Lenders still underwrite each shop on its site, lease and the owner’s capital, because sandwich shops run on thin margins.
Port of Subs Franchise Costs
The franchisor’s investment page, citing Item 7 of its FDD, estimates $419,895 to $938,570 for a single-unit traditional restaurant. The spread mostly reflects construction and occupancy costs, which depend on whether you take an end-cap, an inline space or a second-generation restaurant.
Initial franchise fee. The fee is $25,000 per location. The Item 7 table also lists a $5,000 real estate and construction support fee.
Real estate and build-out. Leasehold improvements and construction costs run from $183,895 to $475,000, the biggest swing in the budget. Architectural, engineering and legal costs ($12,500 to $24,000) and construction management ($12,500 to $17,500) sit on top of that.
Equipment and fixtures. Furnishings, fixtures and standard equipment run from $96,000 to $160,000, and point-of-sale and technology systems from $26,500 to $38,695. That covers slicers, refrigerated make lines, bread ovens, walk-in cooling and digital ordering technology. Because equipment is collateral, separate equipment financing can preserve cash for opening.
Opening costs and working capital. Grand opening marketing ($15,000 to $17,500), initial inventory and smallwares ($10,000 to $25,000) and additional funds for the first three months ($15,000 to $30,000) round out the opening budget.
Item 7 line items for a single-unit traditional restaurant:
- Initial franchise fee: $25,000
- Real estate and construction support fee: $5,000
- Site review: $0 to $1,800
- Training fee and expenses: $7,500 to $9,000
- Architectural, engineering and legal counsel: $12,500 to $24,000
- Construction management: $12,500 to $17,500
- Leasehold improvements and construction costs: $183,895 to $475,000
- Rent, CAM charges, lease, taxes and deposits: $0 to $69,700
- Signage, graphics and interior decor: $6,500 to $18,375
- Furnishings, fixtures and standard equipment: $96,000 to $160,000
- POS and technology systems: $26,500 to $38,695
- Insurance: $2,000 to $10,000
- Initial inventory and smallwares: $10,000 to $25,000
- Grand opening marketing: $15,000 to $17,500
- Licenses, fees and deposits: $2,500 to $12,000
- Additional funds for the initial three months: $15,000 to $30,000
- Total: $419,895 to $938,570
The franchisor has published a lower traditional-unit range on an earlier page, so ask for the current FDD and use its Item 7 table as the basis for your loan request. Our overview of restaurant build-out financing explains how lenders fund construction draws.
Ongoing Fees and How They Affect Your Loan
The franchisor lists a 6% royalty, a 1% advertising fee and 3% for co-op and local marketing, all on gross sales. Together that is 10% of sales committed before food, labor, rent or loan payments.
How lenders factor them in. A lender subtracts food, labor, rent and the 10% of fees from projected sales and checks that what remains covers debt service with room to spare. Item 6 of the FDD lists any technology, transfer, renewal and training fees that also belong in the model.
Franchisor Requirements for New Owners
The franchisor’s website lists these requirements:
- Net worth: $250,000 minimum.
- Liquid assets: $80,000 minimum.
- Strong personal credit: the franchisor also sets a minimum credit standard.
- Certified managers: each location must have at least two Certified Managers at all times.
- Training: certification includes four weeks of intensive restaurant training, 30 to 50 hours of self-study and one week at the Reno headquarters.
The franchisor says a traditional unit takes 6 to 12 months to open and a non-traditional unit 3 to 5 months, depending on milestones. Plan for loan payments, rent and training costs to start before sales do.
Ways to Own a Port of Subs
A new single unit. Most new owners will open a traditional restaurant. Lenders underwrite these on projections, the lease and your capital. Our page on restaurant start-up financing covers what that package looks like.
A non-traditional unit. A smaller host-location footprint can mean a lighter build-out, but the host agreement’s term becomes part of the lender’s review.
Buying an existing shop. With franchising underway since 1985, resales do come up. Lenders can use the shop’s actual sales and tax returns, and the franchisor must approve the transfer. Read about buying a franchise resale and our franchise restaurant acquisition financing.
Regional Developer. The franchisor publishes a separate Item 7 estimate for a Regional Developer of $176,000 to $671,200, including a territory fee of $125,000 to $500,000. Regional developers receive half of the franchise fee and half of the royalty income from franchisees in their territory. As explained below, the SBA Franchise Directory note makes applicants operating under a Regional Development Agreement ineligible for SBA assistance, so that route needs conventional financing.
Financing Options for a Port of Subs Franchise
SBA 7(a) loans. The SBA 7(a) loan can combine the franchise fee, build-out, equipment and working capital in one loan for a single-unit owner, which suits a new sub shop.
SBA 504 loans. If you buy or build the property, an SBA 504 loan can finance the land, building and long-lived equipment. Keep the directory notes on lease addenda and purchase options in mind when real estate is collateral.
Conventional term loans. A conventional business loan fits experienced operators, Regional Developers and buyers who want different terms or speed.
Equipment financing. Slicers, refrigerated make lines, bread ovens, walk-in coolers, beverage equipment and POS hardware can be financed separately. See restaurant equipment financing and leasing.
Working capital and lines of credit. Payroll for two certified managers and a crew, grand opening spending and the first months before sales stabilize all call for cash. Our restaurant working capital options can bridge those needs.
Seller financing on resales. A seller may carry part of the price on an existing shop. Any seller note would need the senior lender’s approval and is typically subordinate to the main loan, and SBA programs may limit how it is structured.
SBA Loans for Port of Subs Franchisees
SBA lenders check the SBA Franchise Directory to confirm a brand’s franchise documents have been reviewed for eligibility. A listing clears the franchise relationship for SBA review; it does not approve any borrower. The SBA 7(a) program maximum is currently $5 million, though program rules can change.
Port of Subs is listed under code S1335. The directory attaches three notes:
- Lease addendum: when the real estate where the business is located will secure the SBA loan, the Addendum to Lease Agreement may not be executed. In plain terms, if you own the property and pledge it, the franchisor’s lease addendum is not used.
- Purchase option: the franchisor may not enforce a purchase option on real estate owned by the franchisee or an affiliate and taken as collateral for an SBA loan.
- Regional Development Agreements: applicants operating under a Regional Development Agreement are not eligible for SBA assistance, so Regional Developers should plan on conventional financing.
Application tips. For a Port of Subs franchise loan, bring the current FDD, a signed or pending lease, contractor bids that track the Item 7 lines and a monthly projection that covers the opening timeline. Our SBA loan calculator gives a rough payment estimate for planning only.
How Lenders Evaluate a Port of Subs Deal
Personal credit and financial history. Expect a review of credit, tax returns and a personal financial statement, and a request for your personal backing of the loan.
Net worth and liquidity. The franchisor’s $250,000 net worth and $80,000 liquidity minimums are a floor. Lenders also want reserves left after your equity injection.
Industry and management experience. Food-service or multi-unit management experience helps, and so does a plan for who will be your two certified managers.
Business plan and projections. Projections should reflect the 10% combined royalty and marketing load, the opening timeline, labor for two make lines and the catering and digital ordering mix.
The FDD and franchise agreement. Lenders read Items 5, 6, 7, 17 and 21. Our guide to how lenders read an FDD explains what matters.
Site and lease. The lease term should cover the loan term, and the landlord’s terms should fit the directory notes.
Historical financials on a resale. For an existing shop, lenders compare several years of sales reports and profit and loss statements with tax returns.
Multi-Unit Growth and Development Agreements
A second shop is easier to finance once the first has a sales history. Lenders review combined cash flow and want each unit staffed with its own certified managers. The Regional Developer model adds a protected territory but falls outside SBA eligibility.
Real-World Scenarios
A first-time owner in a new strip center. A food-service manager signs a lease for an end-cap, uses an SBA 7(a) loan for the fee, build-out and equipment and keeps reserves for the 6 to 12 month opening timeline.
A resale purchase. A buyer takes over a long-running shop. The lender sizes the loan on its tax returns, and the seller carries a small subordinate note.
A Regional Developer. An investor signs for a territory and arranges a conventional loan, since the directory note excludes Regional Development Agreements from SBA assistance.
Common Mistakes to Avoid
- Budgeting from an older investment range instead of the current FDD’s Item 7
- Underestimating leasehold improvements, the biggest swing in the budget
- Forgetting that royalty and marketing fees total 10% of gross sales
- Planning SBA financing for a Regional Developer deal
- Starting without enough cash for the months before opening
- Signing a lease shorter than the loan term
More pitfalls are covered in restaurant loan mistakes.
Next Steps to Finance Your Port of Subs Franchise
Step 1: Confirm you meet the requirements. Check your net worth, liquidity and credit against the franchisor’s standards.
Step 2: Get and review the FDD. Study Items 5, 6, 7, 17 and 21 with a franchise attorney and accountant.
Step 3: Choose your format and site. Pick a traditional or non-traditional unit and get the site approved.
Step 4: Build your budget and projections. Match contractor bids to the Item 7 lines and model the opening timeline month by month.
Step 5: Talk with a financing specialist. Pick between SBA 7(a), 504, conventional and equipment financing for your deal.
Step 6: Apply and close. Submit your loan package and line up construction, training and opening dates.
Port of Subs Franchise Loan FAQs
How much does a Port of Subs franchise cost?
The franchisor’s Item 7 estimate for a single-unit traditional restaurant is $419,895 to $938,570. Confirm the figure in the current FDD.
What is the Port of Subs franchise fee?
$25,000 per location, according to the franchisor’s website.
What royalty does Port of Subs charge?
6% of gross sales, plus 1% for advertising and 3% for co-op and local marketing.
How much net worth and liquid capital do I need?
The franchisor lists a $250,000 minimum net worth and $80,000 minimum liquid assets.
Can I get an SBA loan for a Port of Subs?
Yes, for eligible borrowers. The brand is listed on the SBA Franchise Directory under code S1335, although applicants under a Regional Development Agreement are not eligible.
Can I buy an existing Port of Subs?
Yes, with the franchisor’s transfer approval. Lenders underwrite resales on the shop’s actual financials.
Can a first-time owner get a Port of Subs franchise loan?
Yes, if you meet the franchisor’s and the lender’s requirements. Food-service experience and solid reserves strengthen the request.
Does Port of Subs offer financing?
Check Item 10 of the current FDD for any franchisor financing.
How long is the franchise term?
The franchisor lists a 10-year franchise agreement term. Item 17 of the FDD covers renewal and transfer.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see whether it includes financial performance representations.
Final Thoughts
A Port of Subs franchise loan starts with the current Item 7 table, a realistic build-out budget and a plan that accounts for the 10% fee load. Single-unit owners have a clear SBA path through the directory listing, while Regional Developers should plan on conventional financing.
US Professional Funding helps franchise owners finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise financing and restaurant financing solutions.
