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DENVER – After two days of meetings last week in Denver with new owner Avenue Capital Group, the Quiznos Franchisee Association issued its lackluster progress report.
“The most exciting and positive thing about the meetings is the fact that the QZFA . . . was able to openly discuss in detailed dialogue the many issues that we are all dealing with . . . not only with Quiznos senior management, but also with both Avenue Capital, the ownership group, and the new board of directors of Quiznos.”
But in QZFA’s report, emailed to Quiznos franchisees on Wednesday, leaders apologetically stated, “The QZFA had hoped to come back from these meetings with more concrete solutions that could be implemented to improve all of our bottom lines immediately.”
That obviously did not happen.
The association leaders said they made it clear to Avenue Capital that immediate change and relief was needed to keep a large wave of stores from closing in the very near future, including those that were owned and operated by the QZFA board members. To put it simply, they told management there must be a shift in two major areas. One, Quiznos number one client should be the franchise owner, not the end user of our product, something that has been incorrectly inbred into Quiznos for years and must change now.
Secondly, the only measurement of the success of Quiznos corporate should be the profitability and health of their franchisees. “All aspects of the franchisor-franchisee relationship should be positively affected by these changes,” they state.
The QZFA was pleased that it was able to spark some changes for franchisees. One is related to the rebate program, and another is the way Quiznos measures franchisees success by using a number basis to make their costs look lower than they really are. Association board members told the company that method offers no value to the true measurement of the franchise business metrics. “There are no other concepts in the industry that measure their success in this way . . .” they stated. QZFA said Quiznos’ new board of directors agrees with the franchisees. The franchisee group expects several other changes to be made in the way they calculate net sales and true costs of goods sold.
Another accomplishment was forming committees to begin working in areas of finance, development, marketing and operations. While each committee will have five people on it, three will be from QZFA and two from Quiznos. Association leaders said they expect to see true change and improvements in the brand for franchise owners as a result of these committees.
Both sides agreed to continue dialogue, meeting on a regular basis, multiple times a year. They also discussed at length the Better Than Ever (BTE) program, which has not been successful in improving the Quiznos system.
Blue MauMau has learned from other franchise owners that the Better Than Ever marketing campaign has been a failure so far. One said that two months into the long-awaited BTE program, national same store sales are down year over year in excess of five percent. “What makes this more disturbing is our discounts (coupons) have been huge--over 11 percent discounts last week alone.” Quiznos corporate is also flooding the market through Facebook, its own internal customer database, and any other electronic medium it can use to blast out limited time offers. “Last week without notice, they sent out a $2.99 coupon that included any small sandwich, chips and a drink. Franchise owners are up in arms with what the new ownership is doing,” another unidentified franchisee explained.
They say food costs have soared to over 40 percent, based on net sales after discounts, which is 10 to 15 percent higher than their competition. One said, “I've never seen the business model so completely broken at Quiznos. I had hoped, as all Quiznos franchise owners did, that the new owners of Quiznos would bring some common sense solutions to this organization but that has not been the case.”
It seems to be well-known in the Quiznos community that the current ownership is not pleased with the results of the BTE launch and the pressure is on the current management, which has been in place for the past two years. One multi-unit operator said regional corporate field managers for Quiznos are not even trying to defend what is currently going on and basically shaking their head in disbelief.
Plea for new membership
Over one year old, the QZFA report states that it currently represents 20 to 25 percent of stores in the Quiznos system. It needs to increase membership to have a stronger voice. The association is now offering free membership for 2012 to anyone joining from the report sent out this week, on or before July 20.
Keith Rentschler, president of the Quiznos Franchisee Association, was unavailable to make comment.