Quiznos Claims More Profits for Franchisees

The problem as I understand it is the cost of food and franchise royalties as a percentage of total income. While all franchises have royalties the cost of food with Quiznos is higher because they use this as a revanue source, as opposed to just a cost of doing business. They also claim the food provided is of higher quality, however some alleged franchisees in this forum have disputed this.

Does anyone know why the problem of lack of profitability is unique to Quiznos and does not seem to affect other franchises such as Subway or McDonalds? Is it just cost of food? Seems like that would be an easy fix if they wanted to fix it.

I was definately considering buying a Quiznos franchise but after reading numerous opinions and weighing everything carefully I have decided not to move forward. Thanks to everyone who shared their painful stories on this site. I love the subs but this site helped me to focus on the dollars and cents aspect. Thanks again.

Martin wrote: If anyone out there is considering buying one of these DON’T. If anyone knows a good attorney who wants to sue Quiznos for their business practices let me know. (No class actions please, only the attorney’s make money). Assuming for the sake of argument that you have been harmed by a franchisors "business practices" you can of course retain an attorney to pursue an action on your behalf. But such an action is likely to be very expensive and likely cost-prohibitive, requiring a significant up-front investment on your part. Marks & Klein is the most well-known firm litigating against Quiznos--including on issues relating to their business practices, with decidedly mixed results. Jeffrey Cohen out of Denver just won a case against Quizno's, but that was for improper termination. Bottom line is that if you are seeking to sue for "business practices" the cost of litigation may exceed any potential recovery.

Hey, All of the above are true. By the way for the vast majority of us a 60% increase from zero or a negative number is still a zero or negative number. (Basic math, something that escapes Quiznos). I am in the process of reopening under my own banner (If anyone has done this any hints are appreciated), anyway I went the whole nine yards as the folks above. I would be willing to bet my investment is in that same $400,000 range. I kept trying to make this work. I now face those same consequences and I hope that I am not to late in making this move. If anyone out there is considering buying one of these DON'T. If anyone knows a good attorney who wants to sue Quiznos for their business practices let me know. (No class actions please, only the attorney's make money). By the way I spoke with my FBL this week and his only comments to my losing my temper were A) I won't be talked to like that (I informed him when he gives my money back he can respond that way) and B) maybe you ought to close. Great point. No more Quiznos and I know I will sleep better.

I am franchise owner with horrible experience with Quiznos. I think it is the biggest mistake we did by buying a Quiznos. I bought a poorly operated store and planned to work on that to make it profitable. I put lot of effort on the store, increased the sale a lot. But to make some profit me and my husband had to work basically everyday (no day off for 2 years) and we figured out it is not worth. So we decided to sell the store. After trying for a while we found a buyer. Now the horror story begun. We had no idea that Quiznos changed their rules for selling stores to make franchise owner's life miserable. The buyer we found was planning to run the store with his wife just like ours to keep the labor cost down. But that doesn't matter to Quiznos corporate. To them you have to have 20% + labor cost on your P & L. We were running it as a family business and we told the buyer that. We told the corporate repeatedly that our store is family operated store and so the labor cost is lower than 20%. But corporate told the buyer that according to them the store is not making profit. Obviously the buyer got scared and didn't buy the store. Then after few months we found another buyer. But Quiznos has such a bad reputation that after doing all the paperworks he decided not to buy the store. I talked to the corporate people and they told me that I have tell the potential buyers that the store is losing money. But there are people who are willing to buy a store which is at least making some money and they are willing to work on that. But if you tell everyone that "hey, my store is losing money and buy it", nobody will buy it. On top of that it costs so much money to buy a store - $12,500 transfer fee, $1,900 transfer-in-a-box and $6,250 delivery package. It is almost impossible to get buyer for a small store like ours with that much money added on top of the asking price. Quiznos charge too much transfer fee. Plus they recently made it mandatory that any buyer have to pay for the delivery package. We are frustrated so much. My husband has already moved due to his job change and I am stuck with the store. If I can not wrap up quickly I will be in serious trouble. Anyway to make long story short, we now realized that with all these criterias by Quisnos, our store is kind of non-sellable. I am thinking about closing the store now. I do not see any other opyion. Does anyone have any idea about how much it going to cost if we decide to close that store? Any suggestion will be appreciated. Thanks.

Thanks to Elizabeth and "also devastated." My partner and I were looking into purchasing an existing franchise. I had my suspicions after speaking with the current owner and looking at the numbers. It was painfully obvious that corporate was "gouging" the zees, cost were increasing, and sales were declining. He stated that Quizno's did not have territory restrictions, which was a large red flag (I now know why). A "turnaround" CEO can't save them all and the fact that they have had to hire one should be a flare to anyone interested in Quizno's. I am truly sorry to hear about your misfortunes and hope that more positive venture is in your future. Your story has definitely left an impact on me.

Thanks to Elizabeth and "also devestated." My partner and I were looking into purchasing an exsisting franchise. I had my suspicions after speaking with the current owner and looking at the numbers. It was painfully obvious that corporate was "gouging" the zees, cost were increasing, and sales were declining. He stated that Quzino's did not have territory restrictions, which was a large red flag (I now know why). A "turnaround" CEO can't save them all and the fact that they have had to hire one should be a flare to anyone interested in Quizno's. I am truly sorry to hear about your misfortunes and hope that more positive venture are in your future. Your has definetly left an impact on me.

Wow, unbelievable, I feel I am looking in a mirror as I read the above. I too have just lost everything ($400,000) on an enterprise, investment and adventure I so was looking forward to as well as my children. Everthing Elizabeth spoke of was never once communicated to us in the 2 years I have been a franchisee. The pretty picture that was painted to us originally by the Area Director that reeled us in never did happen. We opted to open a new store which we were beginning to think was our first mistake but as I read more and more from other franchisees that would not have made a difference. We ran a stealth store and our customers as well as our employees were thrilled and happy with our operation. We followed the rules we were given. And even with our continual losses we never put the Quiznos name or reputation in danger. I honestly feel I did perform due diligence in deciding to become a Quiznos franchisee, we did not come into this business with blindfolds on nor were we ignorant of the act of being a business owner. We have owned a business before. We did elect however to ignore the negative press, blogs and comments made about Quiznos. We sincerely chalked them up to the normal disgruntled franchisees who either didnt follow the Standard Operating Procedures or ignored them and therefore set themselves up for failure. I have now found THAT was my biggest mistake by not researching more closely the critics and the negative press and ignoring the message they were giving. Yes, we too have learned a very costly lesson that we may never recover from.

Hello my name is Elizabeth... Prospective Quiznos buyers please read this carefully. I have always prided myself in the fact that I try to make good decisions. Yet, the decision of my husband and myself to purchase a Quizno’s restaurant is one decision that has been anything but positive. Please take your time reading my story because it may help you to avoid making a terrible mistake. I am hoping that by sharing my experience the information may save your family, finances, sanity and future. We transfered our Quiznos over 23 months ago. Our weekly labor ranges between 22% to 25% - the goal is 20%. Average food costs range between 30% to 33% the goal is 30%. Not only have we not made money, but we have lost over $45,000 in the last twelve months in addition to $34,000 during the first 11 months. Additionally, another Quiznos near my location is also showing similar dollar losses based upon information that the owner has shared. I realize that there are poor stores in the system. It is unrealistic to assume that every owner runs a great operation. However, our store has one of the highest customer approval ratings in the area. In addition, our location regularly appears on the top half of page two of the weekly blast fax. The blast fax is an intra-company sales reporting tool utilized by owners in order to compare their store statistics to a large grouping within a certain geographic region. It is of great concern that our business is making more than 2/3 of our geographic region and yet we are not even breaking even. One wonders how the stores that are producing less volume than ours manage to survive? The fact is that most do not for long. The owners eventually become disappointed with this company and are either forced to sell or walk away because they can not find a buyer. Despite working as an unpaid “volunteer” at our location for the past 22 months I have never sacrificed quality or service. We have never skimped on labor in order to squeeze more money out of the bottom line. Our store is meticulously clean and the employees are well trained. Yet, despite all of our efforts, we have lost a lot of money. Yes, we conduct local marketing weekly in addition to other strategies that the company suggests to increase revenue - but to no avail. There are a fortunate few that are doing well, however, this is a rare exception. I too have a friend that is profitable. Her location is in a busy commercial district with plenty of daytime professional traffic in addition to evening residents as well. She is one of the fortunate stores that appear regularly on the top of the first page of the blast fax. Yet, despite the fact that her store is one of the more frequented locations, she has remarked that because her business is one of the highest grossing stores in the region, she is frankly surprised that she is not making a greater profit. She, like I, works her business diligently both in front and behind the scenes. She is also one of the fortunate few. In our case, the fact that the company put not one - but three - new Quiznos extremely close to our existing store has been but one of several factors for our lack of profit. Even our customers remark that they are surprised that the company places stores in such close proximity. Our restaurant, once grossed between $9,000 to $11,000 average per week before we bought it. The addition of the other stores dramatically cut into our customer base. Currently, a $9,000 week is the rare exception. After paying over $320,000 for this store, we expected to at least net $70,000 per year. We would settle for breaking even at this point. We still have customers that make the extra trip to patronize our store because we offer the best service and most pleasant environment of the other Quiznos in the immediate vicinity. Yet, that is not enough to help our bottom line. We realized that we were not going to make money two months into our venture. We put our store on the market right away. Today, almost two years later, we have been forced due to financial constraints to give it away. Another owner has offered us $90,000 and we are finally getting out. He knows that he will make a profit because at $90,000 it is a positive net sum gain for him. A store can not even be constructed for $90,000. He has said that based upon our P&L and the price that he is paying, he will probably make about $30,000 - perhaps $35,000 per year at our location. The key to profitability according to our buyer, is owning several locations that can be purchased for very little and planning to make about $30 - $50K per location based upon the traffic flow of each individual store. The key is to pay as low as possible for a store in order to squeeze out a small profit from each location. One might ask why do so many franchisees fail to make a profit and so few do? The Answers are: 1) The profitable stores are located in areas with significant traffic flow to offset the high costs associated with operating one of these stores. 2) Non profitable stores (poor operations excluded) have been canabalized by our very own franchisor. It is apparent that none of the company’s decision makers understand the franchisor’s own required reading of “Behind the Golden Arches, The Ray Croc Story”. If they understood the symbiotic relationship that exists between corporate and its franchisees, then they would realize that the franchisee is the life blood of the company and it is not in anyone’s best interest to undermine the very people that make the system operate. 3) A store’s location is not sufficient to produce the high traffic necessary to cover its numerous expenses. 4) In regard to expenses, the franchisor has a monopoly upon most services, food and equipment necessary for us to operate. There are simply too many hands in the till for profit to filter down to the bottom line - the franchisee. There is something very wrong when a person can go to their local Restaurant Depot and find the same exact product made by the same manufacturer, same weight and ingredients but pay half the price of the same item sold by our required distributor. Many of my fellow owners have found this to be true regarding food and equipment time and time again. Other franchises that have a “franchisee consortium” responsible for monitoring and regulating costs of the goods and services utilized by franchisees have not only a higher satisfaction rate but are profitable as well. - (Source QSR magazine.) Of course there are always problems even in the best of systems, yet the bottom line is profitability. No one buys a business because they “like” the product. Investors purchase businesses in order to make money. In addition, there is no transparency within the company despite the fact that our franchisee’s pay extremely high royalties. Where there are royalties there should be total transparency. These restaurants are a long shot in the very best case. Yes, there are those who will sing the praises of the franchisor, but the extreme and vast majority will say that it is simply not worth the time or investment. 5) The existing business model is fatally flawed and operates for the sole purpose of making money for corporate as well as their investors. 6) Many of us have paid too much for our stores. 7) The costs keep creeping back up from the reductions announced by last year’s new administration while the suggested retail prices have either fallen or remained the same. Our broker has decided not to sell any future Quiznos until the company changes its entire business model. Ours will be the last that he will handle until the tide truly turns. It has been predicted by the new administration that the future for Quiznos is “bright” and that eventually there will be more “positive” stories rather than negative ones such as ours. It is a known fact that there are at least 450 Quiznos for sale on a well known web based real estate site versus only 24 Subways. Why do you think that is the case? Stories just like ours have played out and are occurring every day. Of course, Subway has its share of difficulties as well, but one thing is undeniable, a Subway does not stay on the market very long before it sells, whereas it is almost impossible to sell a Quiznos - let alone give them away as lease assumption only. Someone must be making something worthwhile at our competitor’s stores otherwise they would not be in such high demand. It is widely viewed that the “happy” owners of the future will be the ones that are either the second or third generation franchisees. When those of us who have over paid and are not able to financially continue on at our Quizno’s “volunteer” jobs have either had enough and sold for pennies on the dollar or “gone dark” the next generation - the future “happy” ones - will take over what we have built with our blood, sweat, tears and cold hard cash. So yes, the company is accurate on one point: There will eventually be many more positive stories about which the company will boast. Those stories will come from the new owners who have purchased the deal of a lifetime and will ultimately profit from our failed investments. At the price that most of us are either walking away from or giving them away for in order to extricate ourselves from this financial nightmare called Quiznos, the next owners will actually be able to make a living from one of these stores. It is called “churning” and I firmly believe that this is an integral strategy to the corporation’s plan to make their restaurants a worthwhile investment in the future. It is simply a matter of time before we all cry “uncle” and corporate knows it. And yes, then the next generation will truly be “happy”. Please think carefully before you invest in ANY business. Perform due diligence, talk to other owners, read comments posted on the internet, read trade magazines - anything that will help you to make an informed and objective decision. I only wish that we had known about this web site as well as the many others that I have since found in our family’s nightmare odessy. Perhaps things would be different and life would actually be “normal”. This was a very costly lesson. Our lives, my children’s sense of security and future has been devastated by this experience. We are struggling just to survive at this point. I hope that you can learn from our mistake.

Wow, That's a great development To turn this into real dollars, franchizees will now be able to make minimum wage. This puts them on par with the 16 year old high school dropout they just hired last week. The moves by the new CEO were taken because they were worried that the Fedederal Labor Department may take action regarding Franchizees working 80 hours a week at below minimum wage. With the new improved outlook, Quiznos can now legally defend itself by showing how 80% of the Franchizees, thanks to the new improved plan, are now earning minimum wage, and they have plans in place to improve the remaining franchizees to reach minimum wage within 3 years. Unfortunately, that leaves most Franchizees below the poverty line.... but common.....you want your cake and want to eat it too?

Uh, the exact quote was: "the restaurant chain's chief executive said Monday he expects franchisee profits to increase 60 percent overall in the wake of improvements to the system." Heck, I expect to win the lottery on Friday. His expectation is probably as realistic as mine.

Quiznos is large enough to actually benefit from mass buying power. Instead of inflating the price of ingredients to their zees they could pass the discount to them and satisfy themselves with their royalty. Anything else, when such a simple partial remedy is available, is simply window dressing. FuwaFuwaUsagi

Food and paper prices have been reduced a bit and they did reduce the impact of coupons, but I didn't earn 60% more in October.

Like I said, it's all relative. Quoting 60% average increase in profits was a bold move because you know many zees aren't seeing it and it would draw immediate criticism. I don't buy it either. If it was the case, I'm sure the company would release a press release or be more specific.

60% increase? sorry but i'm calling BS on that one until more definitive numbers are revealed -- which they won't do as they have no obligation to do so (they're not publicly traded) and doing so would probably just open up another can of worms. I don't have proof - but i just flat out don't believe it. Everything i've read on boards, articles, etc... points to the new management team making modest changes to the existing model. 'Modest' doesn't produce 60% profitability increases.