Quiznos Sub
Encyclopedia
Quiznos is a fast casual restaurant
franchise based in Denver, Colorado. The company specializes in offering toasted subs, although they may be served untoasted at the customer's request. It is the second-largest submarine sandwich
shop chain in North America, after Subway
.
There are over 4,000 Quiznos shops located in the United States
, 300 in Canada
, and 100 more scattered across the world, in Central America
, the United Kingdom
, Ireland
, Iceland
, Sint Maarten, South Korea
, Venezuela
and the Middle East
. In the Middle East, Quiznos has outlets in Saudi Arabia
, Oman
, Qatar
, Bahrain
, Egypt
and the United Arab Emirates
. Quiznos plans to open 15 of its sandwich shops in Kuwait
under a master franchise deal. The chain also said it plans to expand to locations in over 40 countries and territories, including Europe, the Middle East, Southeast Asia and Central and South America, by 2012.
Between 2007 and 2009, 1,000 Quiznos stores closed. They are now attempting new strategies to grow the chain back.
In 1978, Terrell Braly, along with a group of investors, converted a closed Sinclair gas station located at 1275 Grant Street in Denver, Colorado into a sandwich shop called "Sandwich World". Hussain "Jeff" Jaffarie, the store manager at the time, began the practice of toasting sandwiches in a pizza oven that had been provided by Tombstone Pizza
.
In 1979, a competing restaurant opened across the street from the converted fuel station. Trading as Footers Restaurant and owned by Jimmy Lambatos and Todd Disner, this business offered to buy the larger and better located Sandwich World operation. The take-over was accepted in early 1980. The new owners of Sandwich World changed the name to Quiznos and began a franchising operation.
In 2002, Wendy's
acquired the rights to the brand for franchises in Australia (and later, New Zealand) but were unsuccessful in launching the chain in either country.
Although Quiznos may not have originated the concept of toasted sandwich, many competitors began offering similar sandwiches. Subway began offering toasted "subs" in 2004, Boston Market
in 2005, and Blimpie
in 2006.
As of 2009, Quiznos is currently a privately held Limited Liability Company
. Rick Schaden remains as Chairman with his family controlling the company.
campaign during the 2002 Super Bowl
. Early TV spots advertised the innovation of toasting sandwiches, as compared to the inventor of pants (humorously contrasted with men wearing bushes). Other ads included one in 2003 depicting a man (Jim Parsons
) "raised by wolves" suckling at a mother wolf's teat and several ads in early 2004 featuring Spongmonkeys. Quiznos ads in Canada have featured hockey commentator Don Cherry. In 2005, Quiznos launched a series of ads featuring Baby Bob
.
Quiznos has also been known to take advantage of underground advertising phenomena in localized areas. For example, they were one of the first advertisers to put ads on the back of famous San Francisco eccentric and alien protester Frank Chu
's sign.
In June 2006, Quiznos revealed their new slogan: "Eat Up". Nationally the subs feature a Quiznos sub with steam emanating from it with the slogan, "Mmmm... toasty", spoken as "Mm mm mm mm mm ... toasty". This slogan, the aforementioned one, and a newer one, "Love what you eat". are used interchangeably. Actor Michael Clarke Duncan
currently provides the voiceover for all Quiznos commercials.
On September 18, 2006, Quiznos launched the most aggressive advertising campaign aimed at Subway. Dubbed the Prime Rib Cheesesteak Challenge, customers were asked to compare the brand new Prime Rib Cheesesteak against Subway's Cheesesteak sandwich. The claim is that the Prime Rib Cheesesteak has twice the meat of Subway's Cheesesteak. If the customers are not satisfied, then they can fill out a form, mail the form along with their receipt, and they will receive a coupon for a free sandwich. One of the commercials features a woman saying "It's not lacking any meat, and that's what real women need".
In subsequent advertisements, Quiznos was shown competing with the fictional "Wrong Way" restaurant whose logo, name, and toaster look similar to Subway's
.
Towards the end of 2007, Quiznos unveiled "Sammies", small flatbread
sandwiches available for $2.
After a Subway marketing promotion for $5 "foot long" sandwiches, Quiznos began matching the promotion. In May 2008, Quiznos was offering Large Deli Sandwiches called "Deli Favorite Varieties" for the same price.
The Coca-Cola Company
was originally the primary soft drink supplier for the franchise, up until 2006. At that time, Coca-Cola went on to sign an exclusive agreement to provide soft-drinks to the competing Subway franchise. As a result, Quiznos in turn signed an exclusive deal with PepsiCo
(except in Canada and on college campuses that have exclusive deals with Coca-Cola).
reported that the company initially ignored the plight of a Quiznos employee that took over operations of one Quiznos store after the true owner abandoned it. Months later, the store was closed. In June 2004, the Quiznos at Downtown Crossing
, Boston, was at the center of a hepatitis
scare.
and Wisconsin
. It has faced more lawsuits from franchisees than bigger chains like McDonald’s, Burger King, Wendy’s, and even its sandwich rivals Subway and Blimpie, according to an analysis by the legal research firm Thomson West
. In February 2007, Quiznos franchisees filed a lawsuit seeking class-action status in Michigan.
One lawsuit filed in New Jersey that sought class-action status, said that the astounding growth record of Quiznos is merely a facade. In 2003 and 2004, Quiznos said it sold 234 “trade areas” in the state of New Jersey to franchisees, collecting the $25,000 franchisee fee, but none of these locations ever opened, according to the lawsuit. Three years after handing over her check for the licensing fee, Elisa Whitehall said she had yet to open a Quiznos in the location she bought and Quiznos refused to return her $25,000 licensing fee.
On November 27, 2006, Bhupinder Baber, franchise owner of two Long Beach, California
Quiznos locations, committed suicide
after a legal battle with the company. In his suicide note, Baber attributed mistreatment by Quiznos to driving him to suicide. The Toasted Subs Franchisee Association (TSFA), a group of franchisees, posted Baber's suicide note on its website, and intended to raise money for Baber's family. Quiznos attempted to terminate the TSFA's franchises. The TSFA in turn filed an injunction on December 15, 2006 in the District Court of Colorado
.
In 2006, Quiznos sent letters to 300 franchises saying mystery shoppers would be coming to test their services. It sued franchise owners Richard Piotrowski and Ellen Blickman for not putting enough meat in a prime rib sandwich. Piotrowski and Blickman counter-sued and won the lawsuit in 2009. Judge Morris Hoffman called the meat-weighing exercise and subsequent termination letters a “charade” aimed at bolstering a national ad campaign against rival Subway
.
As of July 1, 2010, Quiznos was close to reaching a settlement over the multi-year class-action lawsuit that covers nearly 10,000 of its current and former franchisees. The case comprise four separate class-action lawsuits dating back to 2006 which consolidated in 2009 — involved allegations by attorneys for franchisees that Quiznos Franchise Co. LLC and other entities with ownership or control of the Quiznos chain had violated U.S. racketeering and corruption statutes. Also at issue was the chain’s supply chain and food costs, marketing and advertising funds, and disputes among franchisees that agreed to but did not open locations and whether royalties are owed. Quiznos has denied all claims made in the lawsuits and the settlement agreement involves no finding or admission of liability. The cost to Quiznos has been estimated from $100 to $200 million USD.
In 2005, Fredrick N. Westerfield was running three Quiznos in Wisconsin. After spending $14,000 in personal savings to keep the stores running, he realized he had a debt of $750,000. He closed all his stores. “Customers used to come into the store and say to me, ‘You must be rolling in the money,’ ” recalled Mr. Westerfield. “If they only knew.”
About 1,000 Quiznos locations nationwide closed between 2007 and 2009.
Recently, Quiznos announced a new lease-to-own strategy to regrow the chain where aspiring restaurateurs can own the restaurant after two to five years. Quiznos also plans to build 400 square feet (37.2 m²) restaurants inside convenience stores. Industry analysts and former franchisees say however that the changes won't work. Former franchisee Brett Freifeld said these measures don't address the company's biggest problem: Owners have to buy everything from Quiznos - from meat and payroll services to toilet paper - at prices so high that it's hard to make a profit.
Analysts who follow the company say it is clear that the chain is nearing default on its loans and scrambling to restructure $875 million in debt. Quiznos had an estimated 14 percent drop in sales last year (2010) and the loss of 600 restaurants, the steepest decline of any major fast-food chain, according to restaurant consulting firm Technomic Inc.
Fast casual restaurant
A fast casual restaurant is a type of restaurant that does not offer full table service, but promises a higher quality of food and atmosphere than a fast food restaurant. In the US, it is a relatively new and growing concept positioned between fast food and casual dining...
franchise based in Denver, Colorado. The company specializes in offering toasted subs, although they may be served untoasted at the customer's request. It is the second-largest submarine sandwich
Submarine sandwich
A submarine sandwich, also known as a sub among other names, is a sandwich that consists of a long roll of Italian or French bread, split lengthwise either into two pieces or opened in a "V" on one side, and filled with various varieties of meat, cheese, vegetables, seasonings, and sauces. The...
shop chain in North America, after Subway
Subway (restaurant)
Subway is an American restaurant franchise that primarily sells submarine sandwiches and salads. It is owned and operated by Doctor's Associates, Inc. . Subway is one of the fastest growing franchises in the world with 35,519 restaurants in 98 countries and territories as of October 25th, 2011...
.
There are over 4,000 Quiznos shops located in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, 300 in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, and 100 more scattered across the world, in Central America
Central America
Central America is the central geographic region of the Americas. It is the southernmost, isthmian portion of the North American continent, which connects with South America on the southeast. When considered part of the unified continental model, it is considered a subcontinent...
, the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Ireland
Ireland
Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...
, Iceland
Iceland
Iceland , described as the Republic of Iceland, is a Nordic and European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. Iceland also refers to the main island of the country, which contains almost all the population and almost all the land area. The country has a population...
, Sint Maarten, South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
, Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
and the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
. In the Middle East, Quiznos has outlets in Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
, Oman
Oman
Oman , officially called the Sultanate of Oman , is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the...
, Qatar
Qatar
Qatar , also known as the State of Qatar or locally Dawlat Qaṭar, is a sovereign Arab state, located in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its...
, Bahrain
Bahrain
' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
, Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
and the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
. Quiznos plans to open 15 of its sandwich shops in Kuwait
Kuwait
The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...
under a master franchise deal. The chain also said it plans to expand to locations in over 40 countries and territories, including Europe, the Middle East, Southeast Asia and Central and South America, by 2012.
Between 2007 and 2009, 1,000 Quiznos stores closed. They are now attempting new strategies to grow the chain back.
History
Tombstone (pizza)
Tombstone is a brand of frozen pizza. It is available in several varieties, including pepperoni and sausage. The package design typically includes images of a cactus and the pizza.-History:...
.
In 1979, a competing restaurant opened across the street from the converted fuel station. Trading as Footers Restaurant and owned by Jimmy Lambatos and Todd Disner, this business offered to buy the larger and better located Sandwich World operation. The take-over was accepted in early 1980. The new owners of Sandwich World changed the name to Quiznos and began a franchising operation.
In 2002, Wendy's
Wendy's
Wendy's is an international fast food chain restaurant founded by Dave Thomas on November 15, 1969, in Columbus, Ohio, United States. The company decided to move its headquarters to Dublin, Ohio, on January 29, 2006. It has been owned by Triarc since 2008...
acquired the rights to the brand for franchises in Australia (and later, New Zealand) but were unsuccessful in launching the chain in either country.
Although Quiznos may not have originated the concept of toasted sandwich, many competitors began offering similar sandwiches. Subway began offering toasted "subs" in 2004, Boston Market
Boston Market
Boston Market, known as Boston Chicken until 1995, headquartered in Golden, Colorado, is a chain of American fast casual restaurants. It is owned by private equity firm Sun Capital Partners, headquartered in Boca Raton, Florida.-History:...
in 2005, and Blimpie
Blimpie
Blimpie is a submarine sandwich chain in the United States. The company is based in Scottsdale, Arizona.The first Blimpie store was opened in Hoboken, New Jersey, in 1964. . By mid-2002, there were about 2,000 Blimpie outlets in operation, located in 47 U.S...
in 2006.
As of 2009, Quiznos is currently a privately held Limited Liability Company
Limited liability company
A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...
. Rick Schaden remains as Chairman with his family controlling the company.
Advertising
The company's first major advertising push was a successful advertisingAdvertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
campaign during the 2002 Super Bowl
Super Bowl
The Super Bowl is the championship game of the National Football League , the highest level of professional American football in the United States, culminating a season that begins in the late summer of the previous calendar year. The Super Bowl uses Roman numerals to identify each game, rather...
. Early TV spots advertised the innovation of toasting sandwiches, as compared to the inventor of pants (humorously contrasted with men wearing bushes). Other ads included one in 2003 depicting a man (Jim Parsons
Jim Parsons
James Joseph "Jim" Parsons is an American television and film actor. He is best known for playing Sheldon Cooper on the CBS sitcom The Big Bang Theory, with his performance often cited as a significant reason for the program's success...
) "raised by wolves" suckling at a mother wolf's teat and several ads in early 2004 featuring Spongmonkeys. Quiznos ads in Canada have featured hockey commentator Don Cherry. In 2005, Quiznos launched a series of ads featuring Baby Bob
Baby Bob
Baby Bob is an American sitcom that aired on CBS as a midseason replacement in March 2002. The Baby Bob character had previously been on television since February 2000, appearing in commercials for FreeInternet.com...
.
Quiznos has also been known to take advantage of underground advertising phenomena in localized areas. For example, they were one of the first advertisers to put ads on the back of famous San Francisco eccentric and alien protester Frank Chu
Frank Chu
Frank Chu is one of San Francisco's best-known eccentrics. His street protests against US Presidents, corporations, and a distinctive concept he calls the “12 Galaxies” have been held in San Francisco and nearby locales since at least 1995.Chu lives in Oakland, California and commutes daily to...
's sign.
In June 2006, Quiznos revealed their new slogan: "Eat Up". Nationally the subs feature a Quiznos sub with steam emanating from it with the slogan, "Mmmm... toasty", spoken as "Mm mm mm mm mm ... toasty". This slogan, the aforementioned one, and a newer one, "Love what you eat". are used interchangeably. Actor Michael Clarke Duncan
Michael Clarke Duncan
Michael Clarke Duncan is an American actor, best known for his breakout role as John Coffey in The Green Mile, for which he was nominated for an Academy Award and a Golden Globe.- Early life :...
currently provides the voiceover for all Quiznos commercials.
On September 18, 2006, Quiznos launched the most aggressive advertising campaign aimed at Subway. Dubbed the Prime Rib Cheesesteak Challenge, customers were asked to compare the brand new Prime Rib Cheesesteak against Subway's Cheesesteak sandwich. The claim is that the Prime Rib Cheesesteak has twice the meat of Subway's Cheesesteak. If the customers are not satisfied, then they can fill out a form, mail the form along with their receipt, and they will receive a coupon for a free sandwich. One of the commercials features a woman saying "It's not lacking any meat, and that's what real women need".
In subsequent advertisements, Quiznos was shown competing with the fictional "Wrong Way" restaurant whose logo, name, and toaster look similar to Subway's
Subway (restaurant)
Subway is an American restaurant franchise that primarily sells submarine sandwiches and salads. It is owned and operated by Doctor's Associates, Inc. . Subway is one of the fastest growing franchises in the world with 35,519 restaurants in 98 countries and territories as of October 25th, 2011...
.
Towards the end of 2007, Quiznos unveiled "Sammies", small flatbread
Flatbread
A flatbread is a simple bread made with flour, water, and salt and then thoroughly rolled into flattened dough. Many flatbreads are unleavened: made without yeast or sourdough culture: although some flatbread is made with yeast, such as pita bread....
sandwiches available for $2.
After a Subway marketing promotion for $5 "foot long" sandwiches, Quiznos began matching the promotion. In May 2008, Quiznos was offering Large Deli Sandwiches called "Deli Favorite Varieties" for the same price.
The Coca-Cola Company
The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups. The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia...
was originally the primary soft drink supplier for the franchise, up until 2006. At that time, Coca-Cola went on to sign an exclusive agreement to provide soft-drinks to the competing Subway franchise. As a result, Quiznos in turn signed an exclusive deal with PepsiCo
PepsiCo
PepsiCo Inc. is an American multinational corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company...
(except in Canada and on college campuses that have exclusive deals with Coca-Cola).
Franchises
The Seattle TimesThe Seattle Times
The Seattle Times is a newspaper serving Seattle, Washington, US. It is the largest daily newspaper in the state of Washington. It has been, since the demise in 2009 of the printed version of the rival Seattle Post-Intelligencer, Seattle's only major daily print newspaper.-History:The Seattle Times...
reported that the company initially ignored the plight of a Quiznos employee that took over operations of one Quiznos store after the true owner abandoned it. Months later, the store was closed. In June 2004, the Quiznos at Downtown Crossing
Downtown Crossing
Downtown Crossing is a shopping district in Boston, Massachusetts, located due east of Boston Common and west of the Financial District. It features large department stores as well as restaurants, music stores, souvenir sellers, general retail establishments, and many street vendors...
, Boston, was at the center of a hepatitis
Hepatitis
Hepatitis is a medical condition defined by the inflammation of the liver and characterized by the presence of inflammatory cells in the tissue of the organ. The name is from the Greek hepar , the root being hepat- , meaning liver, and suffix -itis, meaning "inflammation"...
scare.
Lawsuits
Quiznos has been the target of several lawsuits related to its treatment of franchisees, including lawsuits in New JerseyNew Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
and Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
. It has faced more lawsuits from franchisees than bigger chains like McDonald’s, Burger King, Wendy’s, and even its sandwich rivals Subway and Blimpie, according to an analysis by the legal research firm Thomson West
West (publisher)
West publishes legal, business, and regulatory information in print, and on electronic services such as Westlaw. Since the late 19th century, West has been one of the most prominent publishers of legal materials in the United States...
. In February 2007, Quiznos franchisees filed a lawsuit seeking class-action status in Michigan.
One lawsuit filed in New Jersey that sought class-action status, said that the astounding growth record of Quiznos is merely a facade. In 2003 and 2004, Quiznos said it sold 234 “trade areas” in the state of New Jersey to franchisees, collecting the $25,000 franchisee fee, but none of these locations ever opened, according to the lawsuit. Three years after handing over her check for the licensing fee, Elisa Whitehall said she had yet to open a Quiznos in the location she bought and Quiznos refused to return her $25,000 licensing fee.
On November 27, 2006, Bhupinder Baber, franchise owner of two Long Beach, California
Long Beach, California
Long Beach is a city situated in Los Angeles County in Southern California, on the Pacific coast of the United States. The city is the 36th-largest city in the nation and the seventh-largest in California. As of 2010, its population was 462,257...
Quiznos locations, committed suicide
Suicide
Suicide is the act of intentionally causing one's own death. Suicide is often committed out of despair or attributed to some underlying mental disorder, such as depression, bipolar disorder, schizophrenia, alcoholism, or drug abuse...
after a legal battle with the company. In his suicide note, Baber attributed mistreatment by Quiznos to driving him to suicide. The Toasted Subs Franchisee Association (TSFA), a group of franchisees, posted Baber's suicide note on its website, and intended to raise money for Baber's family. Quiznos attempted to terminate the TSFA's franchises. The TSFA in turn filed an injunction on December 15, 2006 in the District Court of Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
.
In 2006, Quiznos sent letters to 300 franchises saying mystery shoppers would be coming to test their services. It sued franchise owners Richard Piotrowski and Ellen Blickman for not putting enough meat in a prime rib sandwich. Piotrowski and Blickman counter-sued and won the lawsuit in 2009. Judge Morris Hoffman called the meat-weighing exercise and subsequent termination letters a “charade” aimed at bolstering a national ad campaign against rival Subway
Subway (restaurant)
Subway is an American restaurant franchise that primarily sells submarine sandwiches and salads. It is owned and operated by Doctor's Associates, Inc. . Subway is one of the fastest growing franchises in the world with 35,519 restaurants in 98 countries and territories as of October 25th, 2011...
.
As of July 1, 2010, Quiznos was close to reaching a settlement over the multi-year class-action lawsuit that covers nearly 10,000 of its current and former franchisees. The case comprise four separate class-action lawsuits dating back to 2006 which consolidated in 2009 — involved allegations by attorneys for franchisees that Quiznos Franchise Co. LLC and other entities with ownership or control of the Quiznos chain had violated U.S. racketeering and corruption statutes. Also at issue was the chain’s supply chain and food costs, marketing and advertising funds, and disputes among franchisees that agreed to but did not open locations and whether royalties are owed. Quiznos has denied all claims made in the lawsuits and the settlement agreement involves no finding or admission of liability. The cost to Quiznos has been estimated from $100 to $200 million USD.
Finances and Profitability
One lawsuit cited a memorandum drafted by a Quiznos lawyer in 2003 that stated “40 percent of Quiznos units are not breaking even”, a fact that prospective franchisees say they were never told. The Small Business Administration said 25 percent of Quiznos franchises with SBA loans failed. In contrast, Subway had a 7 percent failure rate.In 2005, Fredrick N. Westerfield was running three Quiznos in Wisconsin. After spending $14,000 in personal savings to keep the stores running, he realized he had a debt of $750,000. He closed all his stores. “Customers used to come into the store and say to me, ‘You must be rolling in the money,’ ” recalled Mr. Westerfield. “If they only knew.”
About 1,000 Quiznos locations nationwide closed between 2007 and 2009.
Recently, Quiznos announced a new lease-to-own strategy to regrow the chain where aspiring restaurateurs can own the restaurant after two to five years. Quiznos also plans to build 400 square feet (37.2 m²) restaurants inside convenience stores. Industry analysts and former franchisees say however that the changes won't work. Former franchisee Brett Freifeld said these measures don't address the company's biggest problem: Owners have to buy everything from Quiznos - from meat and payroll services to toilet paper - at prices so high that it's hard to make a profit.
Analysts who follow the company say it is clear that the chain is nearing default on its loans and scrambling to restructure $875 million in debt. Quiznos had an estimated 14 percent drop in sales last year (2010) and the loss of 600 restaurants, the steepest decline of any major fast-food chain, according to restaurant consulting firm Technomic Inc.
External links
- Official website (US)
- Official website (Canada)
- Official website (Ireland)
- Official website (UK)
- Official website (Venezuela)
- Quiznos Franchise website
- Toasted Sub Franchisee Association (TSFA) website
- Bluemaumau website, a Franchise industry blog, with entry titled 'Judge Determines Quiznos Terminations Are a Charade'
- Backed into a Corner, an April 2005 story about the SeattleSeattle, WashingtonSeattle is the county seat of King County, Washington. With 608,660 residents as of the 2010 Census, Seattle is the largest city in the Northwestern United States. The Seattle metropolitan area of about 3.4 million inhabitants is the 15th largest metropolitan area in the country...
shop (with RealAudioRealAudioRealAudio is a proprietary audio format developed by RealNetworks and first released in April 1995. It uses a variety of audio codecs, ranging from low-bitrate formats that can be used over dialup modems, to high-fidelity formats for music. It can also be used as a streaming audio format, that is...
) from This American LifeThis American LifeThis American Life is a weekly hour-long radio program produced by WBEZ and hosted by Ira Glass. It is distributed by Public Radio International on PRI affiliate stations and is also available as a free weekly podcast. Primarily a journalistic non-fiction program, it has also featured essays,... - Quiznos Settlement Finalized, among Highest Penalties in Franchise History (August 2010)