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LEXINGTON, Ky. – Keith Rentschler, president of the independent Quiznos Franchisee Association speaks with Blue MauMau on how franchisees feel about the new initiatives of a brand trying to remake itself.
Keith Rentschler is president of the months-old independent association that represents Quiznos' franchisees. The association was born out of a record breaking $206 million settlement with Quiznos for alleged franchising abuse with its franchisees. Part of the settlement stipulated that money be given for an independent franchisee association to be formed. Some of the largest multiunit franchise owners sit on the association's board to help direct the fledging organization. Its aim is simple: to be a mouthpiece and force for the interests of the investors of the chains' franchised sub shops.
Franchisee Keith Rentschler is one of the largest multiunit franchise owners in the Quiznos system, having six sub shops in the St. Louis, Missouri area through his firm Newrent Overland LLC.
Quiznos announced last week another new branding and menu initiative for the franchised shops that bear the Quiznos name. It's called "Better than Ever." The franchisor hopes to lift its sagging brand and to drive restaurant traffic to Quiznos-branded franchised sandwich shops with its new strategy. The president of the Quiznos Franchisee Association (QZFA) gives his take on the new branding effort by the franchisor Quiznos (QFA Royalties, LLC).
What sort of input did you, your association or franchisees in general have into the 25 new menu items and branding initiative that were just released?
QZFA: I feel that Quiznos did a very good job of "vetting" the new line and the level of involvement from the two councils. As one might expect there remain a couple of things we are still addressing, however we are having those conversations and communication between the association and Quiznos has been steadily improving. Like with any major changes, some felt this may reflect too many changes all at one time and could be both operationally challenging as well as consumer confusing. All in all, all parties worked together amiably toward the BTE launch.
Do you franchisees know how the new items will impact your store's bottom line? How plugged into your bottom-line is Quiznos now compared to before — when they were clueless?
QZFA: This continues to be the focus of our conversations with Quiznos Corporate (QFA Royalties). They currently have little information regarding the financial condition of the system and this lack of emphasis on true profitability at the store level is exactly what QZFA is trying to impact by working with our new owners, the new Quiznos' Board of Directors and the management team in Denver. We have pointed out on multiple occasions that it is one thing to say franchisee profitability is the number one priority for Quiznos management, and an entirely different thing to take action, set goals for where profitability should be, create a uniform profitability measuring system, to consistently communicate the results to the entire system and to follow through with it at all levels.
Currently the vast majority of stores are operating at a loss while Quiznos continues to make margin on goods and services that they require franchisees to purchase – without fundamental change to this business model, stated quite simply, the brand stands little chance of surviving. Stores that lose money close; it is that simple. Quiznos Franchising has concentrated for much too long on only its profit structure of royalties and food margin sales, while giving little thought to managing the franchisee profitability level at the store level. The QZFA is doing all within its power to change this so that both parties can begin to align themselves together for mutual prosperity for both parties.
In recent days Quiznos' management and its Board of Directors have had discussions about meeting on these exact issues within the current month at a time and a place to be decided. Our independent franchisee association will not veer off of this message until A) there is an agreed upon method of determining what we all define franchisee profitability as being (the formula) B) that we develop systems within the organization to consistently measure that formula and communicate that to the entire franchise base monthly on a timely basis and C) that we establish companywide parameters to the profitability percentages and goals that a franchise owner should aspire to achieve and measure Quiznos' effectiveness accordingly. Internal employees and management of Quiznos alike should be directly tied to these goals.
Quiznos has roughly 2,700 restaurants left. That's down from nearly 5,000 units. Does that sound right to you?
QZFA: That is about right – however Quiznos has aggressively added hundreds of "convenience store locations" and has used these in their overall store counts. Most of these locations gross less than 150K a year – far less than a traditional Quiznos. For example – if the system lost 100 traditional stores and added 75 of these convenience store locations they would report a loss of 25 total locations. In reality they have lost the equivalence in sales of close to 75 stores. And we are unclear as to what these types pay in royalty and ad dollars. We suspect much less than traditional store owners.