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The Quiznos Lawsuit Settlement Number; It’s Only $206 Million!!!

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Quiznos business policies have been the target of angry (to put it mildly) franchisees for years, now. Being a franchise industry insider has it’s perks when it comes to juicy stories like this, and I’ve known the real deal about this franchise company for a long time.

Inside the industry, there are certain franchise organizations that are known to have a less than stellar reputation.

The International Franchise Association (supposedly, the self-governing arm of our industry) knows the real deal, about the franchisors that are.. shall we say…suspect, but they still gladly accept membership checks from any franchisor that is registered in the USA.

(I’m a proud, non-IFA member, by the way.)


I’ll save my bi-yearly IFA rant for another time.

 

This is about Quiznos. This is about the Quiznos that used to hold “Free Franchise Seminars” all over the country, as a way to attract new franchisees. (Some of the folks I’ve worked with attended them.)

Some may even say (it’s an opinion, of course) that it’s a little dysfunctional, over at Quizno’s corporate office.

Now, the classy execs at Quiznos have of course admitted no guilt in this particular class-action lawsuit. (They’re just willingly bending over because of the impending extreme pleasure they’ll experienced writing checks worth millions of dollars to hundreds, if not thousands, of pissed-off franchisees. Yum.)


Here are some of the details of the settlement, and what Quiznos will have to do, according to Nation’s Restaurant News;

 

 




    • Make $19.4 million in contributions to the chain’s advertising and marketing trust funds between January 2009 and Dec. 31, 2012.

 

    • Launch a formal program to assist franchisees who want to sell their stores and aid franchisees who want to acquire more locations.

 

    • Promise financial aid to cover franchisee costs associated with future mandates to take part in a national sandwich delivery program, if any.

 

    • Establish an annual third-party audit of the prices Quiznos charges franchisees for mandatory food products and supplies compared with prices available elsewhere, and create a formal program that streamlines and standardizes the process through which franchisees may request franchisor approval to use products or services other than those mandated by the chain.

 

    • Rework the chain’s franchise disclosure document to clarify the role of franchisor-owned entities in the system’s supply chain.

 

    • Develop a retraining program to help franchisees better understand the requirements of running a Quiznos restaurant.

 

    • Create a system for monitoring the backlog of franchisees who have not yet opened a store

 

Go Here To Avoid Mistakes 

 

Now, this is really important

 

 

Are you a former or current franchisee of Quiznos? Please let the community here know what you think about the settlement. Was it fair? Was it not enough? Does Quiznos suck, or are they getting better, as a company?

You can comment anonymously, if you want. Just put in your initials below. No one sees your email address.

 

Work with The Franchise King!

 

 



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Comments

  1. King,
    I’m not a Quiznos franchisee. Never was.
    Thanks for reporting this, though.
    J. Bailey

  2. With all due respect, I was also well aware of the Quiznos situation years ago. In fact I knew a number of franchisees looking to sell because they were not making money and were fed up with Quiznos.Here is another one that’s been on the radar from those of us in the “know” Cold Stone Creamery. Ed Teixeira FranchiseKnowHow. My wife calls me the Franchise Emperor.

  3. Ed,
    I’ll bet that The Franchise King knows about Cold Stone Creamery, too.
    You’re wife may call you an emperor, but for my money, there’s only one Franchise King.
    J. Bailey

  5. Sir
    I’ve been in franchising for 20+years, and was part of a corporate team that structured a similar settlement between a company and it’s franchisees. I’m willing to bet my annual spend at quiznos (not an insignificant amount) that any cash paid from This settlement came from insurance coverage. The company has to improve certain processes/programs, which they would need to do in order to recruit new franchisees in the future anyway. The real pain to the company will be in any future lawsuits, which they will do anything to avoid, since they have, in all likelihood, lost any insurance coverage.

  6. BL,
    Thanks for your comment. I’m sure that you’re right.
    Bill,
    Thanks for your comment, and insurance insight. I didn’t think about that part of this deal.
    The Franchise King®

  8. I was as of July 16 2010 a Quiznos franchisee. I can tell you 206 million breaks down to less than 20k per store due to the contingency’s in the settlement. Quiznos Corp lies and makes up scenario’s. They sell the American dream of owning your own business. In reality if your like me you end up losing your house and your car in chapter 7 bankruptcy, because Quiznos Corp robs you blind. They demand we buy their food, equipment, uniforms, local store advertising, and paper supplies from Quiznos Corp only. And yes the food costs more then if I went to the local Costco and bought it. Now when franchisee’s fought and bought their own goods their agreement with Quiznos was yanked.
    Fact 1: Quiznos Corp makes the majority of their profits from selling goods to franchisee’s not from royalties.
    Fact 2: Franchisee’s are told we can price items as we like but we get shipped POP with pricing already printed on them. (Permanent price written in)
    Fact 3: No matter how deep you are in financially it is never to late to save your self from Quiznos Corp. and walk away… for your families sake do not give Quiznos a dollar.
    Fact 4: Quiznos has not once actually reduced food costs from 2007 to 2010. Food costs have only gone up.
    Fact 5: Meat quality and quantity has gone down. Have you noticed how the prime rib sandwiches are not called double anymore…. because their is less meat, and a poor quality of meat now. Chicken now comes in two versions one good (for salads), and one not so good for sandwiches.
    So to all and any who are thinking about franchising with Quizno’s or planning on eating there heed my warning. Or not and keep helping Quizno’s Corp rip of people like me and you. I am just glad to be free and back on my feet even though I lost everything.
    N.S.

    • brother,still they are trying to sell everyday,with seminars,calling people,and put $5,000.00 now and they will give u store number,and then look for locations.they promising people to finance them through someone.They r cllaiming they had sold so many stores,,but seems like many stores are being closing down and what happens u put yrs blood in their,lilfe,money and one stores costs around 175,000.Still they are going strong or not?and some new investors have bought their business,thinking yrs franchiessee fee will go up.Not too many knows this

  9. Nasr,
    Thanks for sharing all of this information!
    I had no idea that “Fact 1: Quiznos Corp makes the majority of their profits from selling goods to franchisee’s not from royalties.”
    Anyone else hear about this?
    The Franchise King®

  10. In terms of time, money, ruined relationship, sleepless to worry about tomorrow’s payroll, $206M for all franchisees who had lost everything even his/her life, it is already a favor to Quiznos.
    Q, stop killing people…period.

  11. Former Quiznos Franchisee,
    I remember hearing about the Q’s franchisee that committed suicide. Crazy times.
    Your quote, “Q, stop killing people…period,” is pretty intense.
    Thanks for commenting.
    The Franchise King®

  12. Hi, Just curious. After all, will it help the franchise now. Will quiznos do something about their food cost ?
    Thank you,
    Sid

  13. 20k for the settlement. I wish. As a current franchisee I will see $3100 in food rebates as the settlement. Prices have not come down and quality has gone down. As far as listening to the franchisees what a joke. Corporate will do what they want and we have to go along with it or we could be fined up to $250 per infraction. Things have not improved as of yet but hopefully sanity will be restored to the corporate executives.

  15. Here are the facts!! Quiznos does not care about the franchise owners…The old BOSS is back or as we call him SS O B. Franchisers are losing their homes and everything they own while the fat cats up top put the food rebates in their wallets. You got that right they took away the rebates to the franchise owners. They are setting traps trying to catch franchise owners buying produce and other items out of the system. Even while the franchise owners have to dump thousands of dollars into the business to keep the doors open the BIG guys keep pulling money out of their banks and patting them on the head saying good little slave. Something has got to be done (Jail Time) you see Quiznos makes Bernie Madeoff look like an angel. Someone in the government needs to take a look at this ponzy scheme.Take a drive around with your GPS and see just how many Quiznos are closing…Then ask yourself if this is legal???Please please dont stop buying the subs because if you do you only hurt the franchise owner.

  16. I am also a former Quiznos franchise owner. I had perfect credit before a not so smart decision to open my own franchise. I had to file bankruptcy and lose my home also. Thanks Quiznos. Corporate has ruined so many lives…can’t wait for Karma on this one!

  17. They say if you have a good experience you’ll come to just expect it. But if given a bad experience you will share it with at least 10 people. There are people out there who still believe, where are those posts?
    My sales are down – because I have not been doing my LSM and getting people in the building.
    My inspection scores are always high and I do not get fined. Because I do my job, the same job I signed the contract to do. The 7 percent we pay is the same, why complain just go out and market. Bring your customers in and don’t deviate from the plan. You all loved the company at one point, take responsibility at least in part for low sales.
    As far as the law suit goes I don’t know enough to judge, still keeping eyes wide open.

  18. DB,
    Thanks for sharing that information.
    Everyone has to take responsibility for their own actions, for sure.
    I’ll side with Monica on this one.
    Being a franchise industry insider, I hear things.
    That’s all I’ll say.
    The Franchise King®

  19. to DB….My sales were good…still could not make it! I was in the top 3 out of 35 stores in my area. I was always a green store also. My husband and I were there almost all the time. We had great customer service, did everything by the “Quiznos book”….$4500 for new wallpaper was the last straw for me. Sorry, but in the economy, new wallpaper is not going to increase my sales. And why oh why do they keep changing bread and specs, and sizes, and prices….? The keep pissing customers off and losing more sales.

  20. I am a franchise owner and i can prove that quiznos overcharger. i received an item from Quiznos supplier and they charged me $5.19. I had a defective product, so the manufacturer sent me a replacement item – the cost from the supplier was $3.49. That is about a 30% markup on merchandise. Also, you can many items cheaper in a grocery store – they were selling us Ken’s pan asian dressing for over $3 a bottle and wal mart sells the item for $2.48. Where is the buying power from the company

  21. The corporation trick you saying you is big business and actually make you lose all your assets, you will never receive a response from them, but they took on time their royalties fees. I am a franchise owner and  I would like to do something against to them. Who knows who is suit them to joined them, I am in El Paso Texas.

  22. We have to sent the information about everything that we lost to Washington or to the Congress maybe is going to be one that could help us against this monster

  23. I was a Franchise Owner of two stores (Always in the top 5 of my market) that I bought cash and lost everything.(Retirement,House, My 800 credit score, my family etc. What can we do to try to get some of the money back from them? Mr Lidava please help us.
    [email protected]

    • worse franchisor ever. caused me to go bankrupt. still having a hard time with regaining my credit. If you like paying to go to work this is the franchise for you

  24. Nothing. Do you think I am entitle to some money? I closed my 2 stores on August 2010.

  25. I own three stores which rate in the top 5 for sales each week. With the business plan that Quiznos has the only person that makes money is Quiznos. I am within months of closing and going bankrupt. Since the lawsuit and change of ownership, nothing has changed they continue too over charge for food and supplies. Our food cost is 35 – 37%, and labor 20 – 25%, without even paying rent, insurance, repairs and other monthly expenses. How is anyone too survive with this model. My only hope is that if you are looking too own a Quiznos – run away as fast as you can, you will thank me later.

  26. I own three stores which rate in the top 5 for sales each week. With the business plan that Quiznos has the only person that makes money is Quiznos. I am within months of closing and going bankrupt. Since the lawsuit and change of ownership, nothing has changed they continue too over charge for food and supplies. Our food cost is 35 – 37%, and labor 20 – 25%, without even paying rent, insurance, repairs and other monthly expenses. How is anyone too survive with this model. My only hope is that if you are looking too own a Quiznos – run away as fast as you can, you will thank me later.

  27. Sounds like you should have bought into Subway – why didn’t you? I don’t think the problem is that you bought a small business, you just unfortunately didn’t buy the right franchise. Every Quiznos in and around Charlotte, NC goes dark repeatedly until it eventually ends up a Subway or some mom and pop sandwich place before it goes away completely. I know the experience had to be frustrating because the food isn’t bad – a lot better tasting than Subway to me but if they squeeze all the profits out, doom is inevitable.

  28. I owned two stores in the DFW metroplex for 10 years and it was easily the worst experience of my life. I can’t say anything that hasn’t already been said in these comments, but there’s one that should make your skin crawl. When the news came out about the suicide we were told by our area directors that “something had happened and we were not to talk about it.” They were actually trying to keep the news from us and when we found out we were instructed to not discuss it. Period.

  29. if you want to work for free as a franchisee owner/operator go right ahead.You will work for free for about 70 hours a week.I owned a Quiznos Franchise and lost all my money.If you have money don’t invest in these bad businesses.And mind you there many bad businesses around to take your hard earned/saved money.Quiznos was the worst.Take my advice stay home(job-less)with
    your money,because if you invest it 99% chance you will lose all your money.

  30. Still a Franchise owner and Quiznos corp, as you know has filed Chapter 11. I can tell you they still are bulling Franchise owners. The judge in this case needs to call on us owners to give him the real scoop and for us to tell him/her what will work and what will not. Another words what will and what the “store” finacial model really be and demand that Quiznos produce an actual model of a real operating Franchise store that Franchise owners would be able to say Yes that will work and is realistic. Also, the rules have to change so that owners do not have to pay rolyalties or purchase items if doing so results in falling below breakeven. Sorry, Quiznos model has been broken for years and many area directors in the past have ackowledged this fact. No one wants to be at odds with the Franchisor. We have more skin in the game and more to lose than someone who is going to get paid whether you do or not. Quiznos has spent their time making rules that almost garantee you will be in default one way or the other.
    The great “Groupon capper of 2010” and execution was an excellent example of Corp. making a decision that they thought would get them a lot of cash flow, they over sold the concept as usual and under delivered. Not only that they made the Franchise owner wait almost three weeks before they reimbursed them for half of the money that came in (thats right they held funds they recieved at our expense) In the Northwest they changed distribution companies at the same time.
    the old company immediately changed terms to cash during the transition so an owner had to pay for new product and also make their payment for the invoices on terms … and yes no money for those sales from due to Groupon promotion. The end result was food cost went up to 66 and 70 percent of sales … now what about those other expenses….?
    One brilliant corp guy told me ‘sounds like your under capitalize? My Banker said well pointed out the obvious facts everyone eventually becomes under capitalize if you experience declining sales year after year and as a result fall below breakeven long enough. So, as Corp spent all their time blaming Franchise owners instead of truly taking responsibility (well they blamed owners in order to arvoid liabilities) and addressing the real issues and fixing the culture and the way decisions are made truly accounting for the impact on cash flow at store level.
    There should be more legal accountablitiy for the Franchisor and Quiznos should not be allowed to emerge from Chapter 11 without demonstrating they are now willing to take responsiblity for their actions and impact of those decisions on Franchise owners current, those in good standing and bad standing. In fact Id say besides producing a real store model that would work, they would have to forgive any debts they have against owners or their own debts will not be forgiven or reduced. History will repeat itself if the true culture at corp. and their legal department does not go through a dramatic transformation!

  31. The reference to the Groupon promotion … this happened May of 2011 not 2010. Thought I should correct that infor.

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