KBRA assigns preliminary ratings to Subway Funding LLC, Series 2024-1. Subway 2024-1 represents the inaugural securitization in which Subway Worldwide Inc. (Subway) will contribute substantially all of its domestic revenue-generating assets to the Issuer as collateral for the offered notes. Transaction cash flows are primarily derived from top-line royalty payments from system franchise locations in the United States (excluding its territories and possessions). These payments are generally less volatile than other income streams, such as profits from company-operated locations. The incoming securitized collections are largely from franchise royalty revenues (approximately 96.7% of securitization collections). The remaining collections consist of other fees and revenues.

Founded in 1965, Subway is the largest franchisor in the limited-service restaurant category in the United States by unit count and is known for its customizable sandwiches. As of March 26, 2024, Subway had approximately 19,937 domestic locations in 50 states and DC. Only United States franchise arrangements and related collateral are being pledged to the Series 2024-1 Notes, but the transaction documents allow for the contribution of international collateral, including franchise arrangements in the future, including in connection with the issuance of subsequent series of notes. The system is 100% franchised. As of the last twelve-month period ended March 31, 2024, the company’s domestic revenue-generating assets produced approximately $10.2 billion in system-wide sales.

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Methodologies

• ABS: Whole Business Securitization (WBS) ABS Global Rating Methodology
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1004475

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