Current CEO Rick Shaden in a Fox Business interview talks about his competition with Subway and the new torpedo sandwich.  A few notes:

• Blames slowdown on “economy and increased costs”
• Says customers want cheaper sandwiches
• Touts the $4 Torpedo sandwich, claims it is the “first portable sub”, “modern sandwich”
• Head to head to Subway, more innovative and edgy
• Frames Quiznos as a “challenger brand” to Subway

If I’m a franchisee, and my problem is low profit margins, I do NOT want to LOWER my prices…it just makes the problems worse.  However, from a franchisor’s perspective, earnings are based on TOTAL system sales.  So if forcing lower-priced sandwiches increases total system-wide sales but still lowers the franchisee’s profitability, some CEO’s may think that is necessary tradeoff.   Their short-term financial rewards often pave this path.  The interest between the franchise and franchisor are unfortunately are misaligned.If you haven’t seen the torpedo sandwich Shaden speaks of, here is a commercial for it:The Million Sub promotion left many customers upset when many stores refused to honor the “free sub” coupons, including a member of my family. The franchisees apparently are not reimbursed by corporate for the coupon - OUCH!Quiznos is in a tough spot. Their toasted sub concept is no longer unique, and the food and operational costs are still inflated due to franchisor imposed required purchasing.

• Quiznos Case Proceeds To Trial
• Where’s the Beef? You’re Terminated!
• Quiznos franchisees file class-action fraud lawsuit
• Quiznos New Leadership
• Potbelly’s Growth Slows…For Now

Quiznos is helping franchisees renegotiate leases at no cost to the franchisee. Good move.

Since the teams have been in operation, Quiznos has negotiated more than 40 leases thus far, with an average reduction of 15-20 percent in lease payments

Here is one franchisee’s experience in the press release

Thomas Mihailovich, a franchise owner in Rochester Hills, MI, participated in the lease renegotiation program in late February. Quiznos and a third-party team worked with Mihailovich and his lessor to arrange a reduction in rent of more than 20 percent, a cost savings of $50,000 over the term of the lease.

“I began the process and within one week I was saving nearly $500 per month on my rent,” said Mihailovich.

How do you renegotiate a lease?


If you are currently leasing a space for your franchise and want to renegotiate the lease, you do have a few leverage points. First, the landlord doesn’t want to lose a tenant because it will usually mean unrecoverable expenses and vacant space for a period of time. Second, along the same lines, a long-term stable lease makes landlords smile, so offering to extend or renew a lease for a longer number of years is very attractive, even at a reduce price per square foot.

Here is a sample approach. Find another space nearby that fits your needs equally well and is less expensive. Then approach your landlord and ask him to match the rent or you intend to move. See what the response is. From that point, ask permission to sublet. Depending on how long you have on your lease, ask also offer to sign a longer lease in exchange for reduced lease payments.

Getting the assistance of a real estate broker or better yet an attorney is usually well worth the money in renegotiating a lease.

Here is an insightful article with examples on the subject.

• What a Quiznos franchisee makes (II)
• Quiznos comments
• Quiznos Claims More Profits for Franchisees
• Quiznos Franchisee Grumblings
• Quiznos Case Proceeds To Trial

Imagine if you were a franchisee and a mystery shopper from the franchisor anonymously visited your store and ordered a sandwich.  The meat in the sandwich you served happened to be 1/2 an ounce smaller that the standard 4.5 ounces.  Would it be fair to lose your franchise because of default?  You did break the rules, eh?  But what if was really a charade to encourage compliance?This was the situation a Denver court had to deal with.    The final judgment was that Quiznos had in fact breached the contract by wrongfully terminating the defendants, and awarded them $349,797.http://blogs.westword.com/cafesociety/2009/01/quiznos_gets_grilled_in_a_new.php

• The Dagwood Sandwich comes to life!
• Beef & Salads
• Soup Nazi for $30K
• Potbelly’s Sandwich Works in Chicago Begins Franchising
• Dairy Queen Remodeling Fight

Quiznos seems to be in perpetual defeat.  Here is another money-losing franchisee from Quiznos:  

“We can’t make money,” said Quiznos franchisee Marty Tate, who said his Erie, Pa., store leads the region in sales. Mr. Tate, who is not part of the lawsuit, said 40% of his sales go directly into advertising, royalties and food for the next week. He added that three of seven locations in his county have closed in the past year. Mr. Tate said that when his contract expires next spring, he will open his own independent store.

Advertising funds are always somewhat of a mystery. Typically, the franchisee will pay about 5-8% into an advertising pool that is supposed to be leveraged across all applicable markets. Unfortunately, there is often not as much bang for the buck as the franchisor would like you to believe, particularly in the creative production and media buys. Quiznos example:

Then there’s the issue of advertising. Quiznos’ agency is Cliff Freeman & Partners. According to TNS Media Intelligence, the chain spent $83 million in measured media in 2007 and $55 million in the first half of 2008. Despite the increase, many franchisees said that they rarely see their own ads, and most say the work isn’t memorable. (By comparison, Subway spent $361 million in during 2007, according to TNS.

“The last good Quiznos commercial was Baby Bob, and that was 2004,” said Mr. Tate, who said he’s complained to executives about the creative. “I would challenge anyone to remember the last Quiznos ad they saw.”

• Quiznos Franchisee Grumblings
• What a Quiznos franchisee makes (II)
• Quiznos lawsuits (Part 21,412,219)
• Quiznos Claims More Profits for Franchisees
• Quiznos comments

Dream Dinners is an example of good idea but profit challenged business model.   It’s just too expensive to attract and retain customers.

A Forbes article looked through the Dream Dinners FDD from the state of Washington, and focused on the required audited financial statements.

As of Dec. 31, the company boasted $2.9 million in assets, against which it carried $3.4 million in liabilities. (Such negative book value implies that if Dream Dinners were unwound today, shareholders wouldn’t get much.) That’s a snapshot, but here’s a trend: Last year, the company lost $628,000 on $7.5 million in sales; compare that to 2005, when it earned $928,000 on sales of $4.5 million.

….

Typically, new business concepts need up to five years to season before they can be franchised successfully. Dream Dinners–along with its next largest competitor Super Suppers, now with 165 stores–both began franchising in less than two years.

Franchisees accused the franchisor of false promises and unsubstantiated financial projections.

A major point of contention has to do with rosy promises Dream Dinners seemed to have made to its franchisees. Under the Federal Trade Commission’s franchise law, franchisers are not permitted to make “predictions” about franchisees’ financial success–unless they do it in the Uniform Franchise Offering Document, which typically contains a host of disclaimers.

Dream Dinners “totally disregarded these regulations,” says Garner. It not only posted financial projections on its company Web site, he says, it also put them in a Power Point presentation given to potential franchisees.

Jennifer Hemann, a former Dream Dinners franchisee in Maryland and one of the plaintiffs in the suit, alleges that she was shown that Power Point presentation–which included estimated profit margins for a given volume of customers–when interviewing with the founders. “They told us, ‘Our lawyers said not to show this to you, but if you write fast, you can get it all down,’” she says…

The slides, provided by Garner, present some tantalizing figures: Allen and Kuna projected that, at 187 customers per month, a franchisee could expect to earn $75,400 in profit annually, or 18.9% of total revenue. On the high end, at a quoted 328 customers per month, net profits jumped to $163,300, or 23.3% of sales. The estimated distance customers would be expected to drive: two to five miles. Allen and Kuna insist that “the figures were realistic and based on the actual performance of stores.”

The owners look innocent and reliable enough, eh?  On face value and blind trust, I would be tempted to believe Allen and Kuna.

Meal Assembly Watch has an insightful 5 Ways to Save Dream Dinners.

I have acted as general counsel to franchisors in my law practice.  From what I have observed, most smaller franchisors do not have experienced managers.  This inevitably turns growth sloppy by allocating too many resources and cash to new franchise sales.  Marketing programs for their franchisees and brand/product development suffer.  Inevitably, the franchise sales process is much longer and more expensive than projected, and ends up monopolizing the franchisor’s time and money.  Sometimes this get worked out (McDonald’s), and sometimes it doesn’t (Quiznos).

• Dream Dinners Hammered by Forbes
• Not-so-super Super Suppers
• Celebrity Competition in Meal Prep & Assembly Franchises
• No freebie promotional coupons or gimicks
• Delivery-only Restaurants

As if the sub sandwich category wasn’t crowded enough, Domino’s Pizza is adding sub sandwiches to its menu and delivery service.  The $4.99 oven-baked sub sandwiches will include classic favorites like Philly Cheese Steak and Chicken Bacon Ranch.

The move comes five months after Pizza Hut began delivering baked pasta dishes as well as pizzas. And it will be a wake-up call for sub shops Subway and Quiznos, which find themselves competing with pizza chains.

For the pizza giants, the message is clear: If pizza sales aren’t growing in a sour economy, maybe something else will. Besides the hot subs and baked pasta, some pizza chains also deliver chicken wings.

“It’s an attempt by the pizza players to try to get back into being a growth industry,” says Ron Paul, president of Technomic, a restaurant research firm. “They’ve all lost their mojo.”

They also are further conflating a fast-food world that’s grown jumbled. McDonald’s (MCD), Burger King (BKC) and Wendy’s sell salads and chicken. Subway and Dunkin’ Donuts have tried pizza. Arby’s, once roast-beef-only, now makes a killing on Market Fresh deli sandwiches and sells toasted subs.

Domino’s U.S. same-store sales fell 5.4% in the second quarter after a 5.2% decline in the first quarter.

Brandon says the move should boost Domino’s lunch business and expects lots of calls from groups of office workers. (The minimum delivery order is $8 to $10, depending on location, and delivery fees are $1 to $2.)

Rivals are unimpressed.

Pizza Hut delivers hot sandwiches regionally but is focused on growing its national pasta delivery sales, says Brian Niccol, marketing chief.

Tony Pace, marketing chief of the Subway Franchisee Advertising Fund Trust, says, “Domino’s is watching our success and wondering how to get a piece of the action.”

Half of Quiznos’ locations deliver, and two-thirds will by year’s end, says Rebecca Steinfort, senior vice president.

The trend is clearly delivery to prevent a loss of sales, and online ordering.

• Royalty and Advertising fees of sandwich franchises
• Beef & Salads
• Dunkin’ Donuts - New Restaurant Design
• Delivery-only Restaurants
• Dunkin’ Donuts Makeover

Source: Daily Courier (Pittsburgh)A law suit was filed on July 3, 2008 by a few dozen franchisees in Western Pennsylvania.  

The allegations are:

The lawsuit alleges that Quiznos engages in a “pattern of racketeering” and generates “grossly inflated profits” at the expense of franchises that usually fail. It also accuses the company of saturating geographic areas with more franchises that can be supported.

Quiznos is accused of allowing customers to redeem coupons for free or discounted sandwiches, a practice that allegedly benefits the company but not the franchise holders, who are not compensated for the loss of revenue, according to the lawsuit. Quiznos, according to the filing, requires its franchise owners to buy products they do not need and work only with suppliers connected to Quiznos who charge high prices.  

The financial strain on the franchisees causes the business to fail, the suit maintains. When the franchise fails, Quiznos threatens the owners with lawsuits to enforce the agreement, which requires them to pay royalties for 15 years even if the business has been forced to close, according to the lawsuit.    

Quiznos Response:

Richard Emmett, general counsel for Quiznos, said the allegations in the lawsuit are similar to those in an action filed two years ago in Illinois that was dismissed recently by a federal judge.”This is a copycat of that lawsuit,” Emmett said. “We’re confident the claims have no merit and this lawsuit, like the other one, will be dismissed.”  

He added that the allegations contained in the action arose several years ago.”

They have nothing to do with the way we’re operating now. It’s historical rather than present day,” Emmett added.

• Quiznos lawsuits (Part 21,412,219)
• Quiznos Claims More Profits for Franchisees
• More on the Quiznos Class Action in Wisconsin
• Quiznos Case Proceeds To Trial
• Quiznos franchisees file class-action fraud lawsuit

I would not let one semi-positive article influence my opinion of Quiznos, but here it is:

A year after some franchise owners sued Quiznos over business practices, 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.

60% increase sounds fantastic, but it is relative from the starting profit level. Going from a $20,000 profit to a $32,000 helps but doesn’t save the day.

Danny Kessels, a Quiznos store owner in Boulder who said he was not invited to the meeting, said he knows of other Quiznos store owners who are struggling.

“Nothing’s really changed, in my opinion,” said Kessels, the head of an Quiznos independent franchise group called the Toasted Subs Franchisee Association. “The whole system is still on shaky ground.”

It looks like the new CEO-turnaround specialist is trying to make changes, but as I have personally learned in business - don’t try to catch a falling knife.

• Quiznos Case Proceeds To Trial
• Quiznos Sales & Profitablity - Summary Report
• What a Quiznos franchisee makes (II)
• Quiznos comments
• Surprise - Quiznos sued by Franchisees Again

Download the Quiznos Profit Spreadsheet

Based on the 115 comments, the most popular post on FranchisePundit.com has been What a Quizos Franchisee Makes, posted on April 10, 2005. The purported author of the financial projects also founded the web site QuiznosSucks.com (don’t bother going there, it now defunt and replaced with a domain aggregator’s advertising search engine). More of his experience is posted in this forum thread (pdf) on ToastedSubs.info. Here is the main snippet:

QuiznosSucks
08-10-2005, 11:35 AM
Yeah, Corporate is aware of Quiznossucks.com. Richard Sauls, the fellow who is responsible for the site, is himself a former Quiznos franchisee. Corporate actually sued to force him to kill the site and lost. My own feeling is that Quiznossucks makes them a bit nervous. It was developed on a shoestring and to little fanfare, but now averages in the neighborhood of 30k hits per day. I know that ever franchisor has its share of unhappy franchisees, but the situation with Quizno’s has reached a fever-pitch. From my research, the only
comparable situation I have found is UPS Store franchisees.

Ultimately, the Quizno’s business model doesn’t work. particulars vary from region to region, and depend heavily upon the franchisee’s rent and debt load, but break-even for a Quizno’s store is astronomical for this type of operation. The only thing keeping this house of cards aloft are second and third owners, who buy existing stores based on cash flow, at a fraction of the cost of a new store. I actually had a Q owner in my area approach me to see if i was interested in buying his store. The store was 3 years old, and he was running at break-even for the first year-and-a-half, with sales around 6700 per week. The Q opened a store near him (you have no radius protection with Q. technically speaking, if they wanted to open another store across the street from you, and could find someone fool enough to do it, they’re within their rights), and his sales dropped off 5%, which put him in the red to the tune of about $1100 per week. he offered the store to me at 80k, and i wasn’t interested. I am one of the “lucky” ones, in that I’ve very little debt, and an excellent location. For the time being, my store is making money. Unfortuantely, though, there is a lot of new development around me, and I am waiting for the day when Q decides that I am doing too well and opens stores closer to me. My store is for sale, along with his, and I am hoping i can sell the thing while it is still making money. The short of it is that Q is in the business of selling franchises, and they do this extremely well. Too well, if you ask any current franchisee. In the grand scheme of things, they would prefer that we make money than not, but it doesn’t much matter to them. Corporate makes more money from its supply chain. We’re forced to use their Q-approved vendors, each at a rate consdierably higher than we could find ourselves: accounting firm; CINTAS, a company which takes care of the rugs and towels; Vistar for food, chemicals and paper; Muzak…it goes on and on. The real shame of it is that Q doesn’t have to do business this way. It is ultimately self-defeating, in that no franchisor can alienate its franchisees to the degree Q has alienated us without serious repercussions. Quiznossucks.com is a natural by-product of the contempt with which Q treats its franchisees. If anyone is still interested in acquiring a Quizno’s store after all of my ramblings, and visiting quiznossucks.com, i would suggest that you go to bizbuysell.com, find an existing store in your area and save someone who is losing money, or someone like me, who has a store that is making money…for now. really! I am too young and nice looking for the headaches and stress!

This web site posted his projected monthly expenses based on $40,000/month in sales:

I think quiznossucks may have made a mistake in his numbers and the cash left over at the end of the month is actually a little less than he projected. He projected 9.4% or $45,120 left at the end of the year for the franchisee, but plugging the numbers into a spreadsheet nets 7.15% or $34,320 (perhaps he paid himself a small salary included in labor). Regardless of the $9K discrepency, the debt load and returns are not worth the risk for nearly anyone looking at this deal. I’ve uploaded a spreadsheet for you to play with the numbers for yourself. It makes for a simple planning tool/reality check for any franchise.

Download the Quiznos Profit Spreadsheet

• What a Quiznos franchisee makes (II)
• Quiznos comments
• Quiznos lawsuits (Part 21,412,219)
• What a Quiznos franchisee makes
• Quiznos Sales & Profitablity - Summary Report

Quiznos CEO puts turnaround skills to work

The former Burger King boss is applying his turnaround expertise to the troubled sandwich chain, whose dissatisfied franchise owners have complained about low profits, company operating requirements and the franchisee recruiting process.

Since jumping into the fray in January, Brenneman has worked to reduce food costs by as much as 4 percent, improve communication with franchisees and test new products, like a Quiznos taco, to boost profits.

…

Last year, private equity firm J.P. Morgan Partners became an ownership partner, and Brenneman later became a partner through his company, Turnworks.

Through the roller-coaster ownership ride, the chain expanded quickly, to at least 5,000 stores. Today it’s ranked third behind Subway and Arby’s by Technomic, an industry analyst firm.  Although Quiznos does not release much information, Technomic restaurant industry analyst Darren Tristano said Quiznos has average sales of about $425,000 a year per store while Subway has average sales of about $375,000.

Quiznos’ success has come with growing pains.

Lawsuits by franchise owners in Illinois, Michigan and Wisconsin allege the company draws in prospective owners, who pay $25,000 for a franchise, but doesn’t give them complete facts about restaurant locations and business operations.

…

Lawyer Justin Klein contends many franchisees sign contracts only to wait a year or more for the company to build a restaurant. The suits
also accuse the company of requiring franchise owners to buy all supplies from Quiznos at higher prices than if they bought locally.

The company denies the allegations and filed motions to dismiss the suits.

Brenneman, meanwhile, has reached out to franchisees and targeted their food and other costs. If he can cut food costs by 3 percent and coupon discount offers by 4 percent, Brenneman believes he can add $25,000 to $30,000 in franchisees’ profits.

Change has to come from the top and it will be slow, getting a better handle on the franchise sales group will be difficult, but relief for most owners will likely never come. The realistic best case scenario is lower costs, same or better quality, and more efficient and effective promotions. Cutting food costs by 3% and coupon discounts by 4% seems hardly enough to squeeze $25k - $30k in profits. The franchisor prefers heavy coupons because it is paid on gross sales, and the franchisor dislikes coupon generally beacuse they still have to find a net profit margin on sales.

• Quiznos Claims More Profits for Franchisees
• Quiznos lawsuits (Part 21,412,219)
• Surprise - Quiznos sued by Franchisees Again
• Quiznos Sales & Profitablity - Summary Report
• More on the Quiznos Class Action in Wisconsin

Death of a toasted sandwich salesman

Quiznos had sought to strip eight franchisees of their franchises after a franchisee gripe site posted the suicide note of a Quiznos franchisee on its website. The note blamed the Quiznos Corporation for ruining his business and his life. The franchisee, Bhupinder “Bob” Baber, was found dead last November in the bathroom of a Quiznos restaurant in Whittier, California, after pumping three rounds from a .380 caliber handgun into his own chest.

….

Another group of angry franchisees, the Toasted Subs Franchisee
Association (TSFA), took up his cause, and posted his suicide note on
its website to raise money for the Baber family. Quiznos quickly
responded by yanking the franchises of the eight directors of the TSFA,
and the TSFA responded by filing for an injunction in federal court in
Denver seeking to hold onto their franchises until the defamation
allegations filed by Quiznos could be litigated.

• Quiznos Sales & Profitablity - Summary Report
• Quiznos Claims More Profits for Franchisees
• What a Quiznos franchisee makes (II)
• Quiznos comments
• Quiznos franchisees file class-action fraud lawsuit

 The NY Times highlights several despondent Quiznos franchisees.   The article does a good job of summarizing the major complaints and law suits currently pending against Quiznos.

Hat tip:  Perry in the forum.

• What a Quiznos franchisee makes (II)
• Quiznos lawsuits (Part 21,412,219)
• New Quiznos Lawsuits
• Quiznos comments
• More Quiznos Franchisees Can’t Turn A Profit

• A Pizza Pizza franchisee in Ontario recounts his decision to buy into the system, the training, paying the franchise fee, and steps along the way to opening.
• Atlanta Bread Co. and Sbarro bail from the Macon, Georgia mall.
• “40 percent of Quiznos units are not breaking even”

• Franchisee loses his pizza franchise
• Pizza Styles
• Online Ordering Systems
• How to franchise your business, and what franchisees can learn
• Pizza Hut Stagnant

This article is a few months old, but makes for a good reminder:

The suit alleges Quiznos forces franchisees to buy food and supplies from the parent company, or its affiliates, at inflated prices, but sets artificially low prices for its products. That strategy makes stores unprofitable for franchisees, according to the suit.

The franchisees further allege Quiznos unlawfully sells franchises by leaving out or misrepresenting facts about its business operations. The plaintiffs seek lost investment funds in the suit.

Two similar suits against Quiznos, filed by Colorado and Arizona franchisees, were dismissed by Denver District Court judges in 2005. Those cases alleged Quiznos allowed franchisees to encroach on each others’ territories, overcharged for food and supplies, and misused advertising funds. A suit filed against Quiznos by 17 New Jersey franchisees last year remains open. Quiznos seeks the dismissal of this suit.

Quiznos denies the charges.

• Quiznos franchisees file class-action fraud lawsuit
• Surprise - Quiznos sued by Franchisees Again
• More on the Quiznos Class Action in Wisconsin
• Quiznos Case Proceeds To Trial
• More Quiznos Franchisees Can’t Turn A Profit

A Quiznos franchisee discusses why he is dumping his 3-year old franchise in favor of opening his own restaurant at the same location:

“Over the years, the cost of operating has gone up to the point where it’s not profitable, and it actually has never been profitable,” he said. “The business model is just too expensive and advertising fees have gone up recently.”

The risk that the franchisor will increases the mandated advertising fee or cost of inventory is risk born solely by the franchisee.

Tully said advertising rates and product costs hindered the Quiznos operation. He said he was only allowed to buy products pre-approved by Quiznos, which led to higher prices.

“I understand Quiznos has a system and brand, and they want to promote the brand in every way, but the model is such that a lot of us are having trouble,” he said.

What’s the attraction to running his own restaurant?

“The nice part about running it myself is I’ll have control of it, and if something doesn’t work, I can throw it out right away. It also gives a closer relationship to the customer,” Tully said. ”

“The nice part about running it myself is I’ll have control of it, and if something doesn’t work, I can throw it out right away. It also gives a closer relationship to the customer,” Tully said. “We hope to create the atmosphere of a neighborhood place.”

Needless to say, I would’t buy it!

• More Quiznos Franchisees Can’t Turn A Profit
• Quiznos lawsuits (Part 21,412,219)
• What a Quiznos franchisee makes (II)
• Quiznos Claims More Profits for Franchisees
• Quiznos Case Proceeds To Trial

BusinessWeek documented Bhupinder “Bob” Baber founding of the Quiznos Subs Franchise Assn and its litigation soap opera.  The independent franchisee associations of Diary Queen, Subway, and few others are also mentioned along with their individual legal battles with the franchisors.  For example, Dairy Queen franchisees litigated over the new DQ Grill ‘n’ Chill concept, and Subway franchisees litigated over a potential loss of influence over an advertising fund.   Toasted Subs Franchisee Assn members pay $50 per store per year for membership - well worth it in my opinion.

• Dairy Queen Remodeling Fight
• Royalty and Advertising fees of sandwich franchises
• Quiznos Case Proceeds To Trial
• Quiznos Claims More Profits for Franchisees
• Domino’s Subs

Personally, I prefer the Pepperblue Steak Sandwich from Panera Bread. Several chains introduced new beef sandwiches:

But it was the beef sandwiches that debuted in 2006 that seemed the most inventive. In February, Quiznos introduced its Prime Rib and Peppercorn Sub, followed by its Prime Rib Cheesesteak in September. Subway rolled out two premium steak sandwiches of its own, the Blackened Cajun Steak and the Steak and Cheese, in September.

On a related note, here is an article discussing the strategy behind Quiznos’ new salad offerings.

• Domino’s Subs
• Delivery-only Restaurants
• Starbucks Back is Back to Breakfast
• Top 10 of 2007
• Franchisee Won’t Sell Certain Foods, Says Against Religion

More biting accusations from 28 Quiznos franchisees in this class action in Wisconsin. Here are some excerpts:

Quiznos Sub forces its franchisees to buy food and supplies from the company or its approved vendors at unfair prices and sets retail prices too low for the stores to make a profit, according to a lawsuit filed by 28 operators of Quiznos franchises in Wisconsin….

The lawsuit, which seeks millions of dollars in damages for lost investments, accuses Quiznos of fraud, violations of federal and state antitrust laws, racketeering, breach of contract and violations of Wisconsin’s fair dealership law, attorney Justin Klein said Tuesday…

“They tell you who you can buy from and who you can’t buy from,” he said. “The prices are unreasonably high. Quiznos gets rebates from approved vendors.”

• Quiznos franchisees file class-action fraud lawsuit
• Surprise - Quiznos sued by Franchisees Again
• Quiznos lawsuits (Part 21,412,219)
• Quiznos Franchisee Grumblings
• More Quiznos Franchisees Can’t Turn A Profit

Another group of franchisees accuse Quiznos of fraud:

A group of Quiznos franchisees have filed a class-action lawsuit against the Denver sandwich chain in U.S. District Court for the Eastern District of Wisconsin.

The lawsuit alleges that Denver-based Quiznos has “systematically defrauded its franchisees in a scheme designed to build the brand at the expense of its operators in the field.”

The suit contends that the company forces franchisees to buy food and supplies from Quiznos or its affiliates at inflated prices while setting retail prices so low that franchisees can’t profit. The lawsuit also alleges that Quiznos omits or misrepresents key facts about its business operations when selling franchises.

Link to another background article.

Link to previous Quiznos articles on Franchise Pundit

• More on the Quiznos Class Action in Wisconsin
• Quiznos lawsuits (Part 21,412,219)
• Surprise - Quiznos sued by Franchisees Again
• More Quiznos Franchisees Can’t Turn A Profit
• Quiznos Claims More Profits for Franchisees

Interesting article in the Dallas Morning News highlighting common “disagreement” points between franchisees/franchisors.

This week, Pizza Inn Inc. said it is being sued by former franchisees who say the company, based in The Colony, “intentionally and negligently misrepresented development and operation costs.”

Subway parent Doctor’s Associates Inc. faces two lawsuits filed this summer stemming in part from a fight for control of the brand’s advertising dollars….

Chris Bray, a franchisee of the Denver-based Quiznos brand, complained of what he views as a lack of communication between franchisees and headquarters….

Most [of Quiznos’ disclosed litigation in the UFOC] involve claims the franchisees say were made about exclusive territories or the inability to get their outlets open within the required time.

Hat Tip: Paul Steinberg in the forum

• Quiznos lawsuits (Part 21,412,219)
• Quiznos franchisees file class-action fraud lawsuit
• More Quiznos Franchisees Can’t Turn A Profit
• Quiznos Franchisee Grumblings
• Quiznos Case Proceeds To Trial