Quiznos Responds to TSFA Letter

It does alot to help explain the decisions that Brennenman and HIS pack of liars and good timers have made over the past year.

Quiznos wrote: "We have been and remain committed to franchise owner profitability. It is our number one priority and it plays a role in every decision that we make. Over the last year, we have improved communications with our franchise owners, returning calls within 24 hours and sending weekly executive voicemails to update the entire system. We brought down food and paper costs significantly and reduced complexity in our stores, leading to more efficient in-store operations for our franchise owners. "

Here is the rub: Thomas Schelling won the Nobel Prize in Economics for demonstrating that true commitment entails giving up some option.

His classic example, which I update, is this.  When Cortes landed on the Mexican shores, many of his troops wanted to retreat back to Cuba.  To demonstrate his commitment to going forward, Cortes burned his boats and convinced his troops that this was for the best.

If Quiznos is committed to franchise operator profitability, then they have to turn over some control wrt pricing to the operators.  Otherwise, they should flee back to Cuba.

 

Michael Webster PhD LLB

Franchise News

Richard Emmett is a slick lawyer with a forked tongue. There is no one at Quiznos committed to franchisee profitability - but there are plenty who look to siphon every dollar from franchisees struggling to survive. Food costs remain over 30%, the focus on $2.00 sandwiches drives traffic counts but results in higher labor costs and lower store earnings, there is still no accountability concerning food costs and advertising, Q still take the kickbacks from suppliers rather than pass them on to franchisees, and discounting and couponing with no reimbursement for franchisees is alive and well. And as for you Mr. Emmett, you still haven't bought a Quiznos franchise. If Quiznos is such a great franchise opportunity, if our profits are up 60%, put your money where your mouth is and buy one. Or are you just waiting for the suckers on Wall Street to take this albatross public?

The only thing Quiznos has accomplished in the last year has been its PR department that ironically is funded by the franchise owners so that Quiznos can defend themselves against the franchise owners. Greg Brenneman is not only the CEO he is the figurehead of Quiznos and the Chief Spin Master. As Chief Spin Master he appears to have mastered the art of telling lies…. or simple has no idea what is going on in the company that he runs. Two of Greg’s recent public lies have been franchise owner profits are up 60% and Sammies are about 6 inches. The facts are Sammies are closer to 4 inches and franchise profits are down. As a franchise owner I have seen my store profits completely vanish the last 3 years with the past 12 months losing me about $100,000. Now we have Richard Emmett, Chief Legal Council for Quiznos who spins himself as a franchise owner to the media... but wait he doesn’t own a single Quiznos. Richard owns about a dozen Papa Johns. If you like spin… just has Richard as a seasoned franchise owner why he doesn’t own a Quiznos, and then decide for yourself if they are making any money. A lot of what Quiznos says is hard to validate because they are private and they share nothing with the public or franchise owners and almost everything they state is never substantiated or simple a lie. For example as a franchise owner I have seen no evidence the franchise owner profits are even going up… and to claim 60% is a blatant lie. Another outrages lie is that a Sammie is about 6 inches. This is a great example because everyone in America can go purchase a Sammie to validate it is closer to 4 inches, not 6.

Quiznos reminds me of a more perverse, dishonest, and sleazy version of something you hardly hear about any more, "network Marketing" or MLM companies. I remember way back when in my 20's going to a meeting about Amway. Oh the stories on how much money you're gonna make... How you're going to be in business "for yourself but not by yourself" and all the crap about the American Dream. Quiznos is as much a load of crap as the worst of Amway on a bad day! True, there was always that one guy, who was it, Dexter Yeager, who was making 15 billion a month or whatever it was, but the majority - the VAST majority - of people who got in not only never made a dime. In fact, most of the time they lost money, often loosing large sums of money. As for the one guy who's held up as an example of someone making all kinds of money (and how that could be you!) now it seems that Quiznos is even doing that, according to the recent AP article. I doubt any professionals on here would speak highly of those MLM's. I'm sure those companies are still out there too, still surviving even though thousands of people lost all kinds of money. Yet, those same professionals on here say good things about Franchising - which it's not - not when you have companies like Quiznos doing it! Quiznos make those MLM look honest and great opportunities. If I made my living in the Franchising business, like apparently some of you on here do, I would be pissed off and doing something about Quiznos. As I said, Quiznos makes Franchising, as a concept, look no better than MLM ever did. In fact, it probably looks worse than any MLM or "home business" scam ever has. I've never heard of an Amway guy killing himself, and Amway suing distributors for posting that poor guys suicide note for people to see and to mourn for him. My God, this is a farked up company, and I honestly feel sorry for any person that fell for the scam that is the, "Quiznos opportunity". Avoid scams, stay away from franchising, the modern day MLM.

I saw this from another poster and agree so I figured why not pose the same post to Mr Emmett. All of this he said, she said stuff is almost comical. But all of the "facts" can easily be validated. I know when I was looking at Q as an opportunity, I was hounded by their Real Estate/Development Directors to the point where I finally had to say back off!! I never got involved with them (thank god) because there was too many "grey areas" in almost everything presented to me. When questioned, I would get a response that never answered my question. There were a couple of people that I remember being at these meetings (that was when they had open meetings for interested folks...now I understand that they meet with potential candidates more on a one to one basis. Wonder why??) and when they would ask the same types of questions, they would get the same results. I remember in one video segment where it showed this one owner (a woman) working in the store (in the am.....putting dressing on the bread in advance...they used to do that too for some recipe...can't recall) and she makes the statement that they're going to earn _____ so many dollars and that they paid their note (a 10yr) in less than 5 yrs. So I asked the question.....what was their total start-up cost, along with their rent, CAM, taxes etc, Labor wage averages and their debt load. It was like looking at "deer in the headlights". They couldn't answer the question. All of the other folks in attendance were looking at me like "Yea, great question" but I could never get an answer. This occured at the OMNI Hotel in New Haven, CT. So again, I'm glad I never did get into bed with the sandwich devil (as the poster alludes to below) but I have to say, it would be easy to validate these claims. Thanks. "Mr Brenneman can easily "prove" his statements. Simply release all of the P&L's of your franchisees to an independent auditor who can then arrive at the truth!! I, for one, as a franchisee, would have no problem if they did that. In fact, I wish they did that. Then we would all know if his statements were accurate or fabricated. Is it just a few that are below the 60% profit?? Or more?? Maybe less?? Don't know. What I do know is the feedback that I receive from franchisees almost daily saying how bad it is for them. That, and all of the pieces of mail that arrive at my door announcing equipment auctions, stores for sale at firesale prices, emails from various news agencies announcing store closings etc, etc. Come on Greg, put the cards on the table....it's time to show your hand"!!! "Don't get into bed with the Sandwich Devil"

Come to think of it, I remember seeing that video too.  I'm in the Mid West area and it was some reddish blonde woman that was cleaning tables out in her dining room (while talking) and then the video shows her slicing the bread in half lengthwise and then painting something on it prior to toasting it.  I can remember that statement about making the money and paying off the loan early but I don't recall if there was an actual dollar amount mentioned.  Anyway, by the time I opened my store, that spec (regarding the bread prep procedure) had changed (along with some of the other specs/menu items).  I found it odd that some of my training materials that were provided to me by Quiznos weren't applicable to what I was going to be selling in my store when my store would be opening.  Yet I had to study them knowing that I wasn't going to even need to know them because they were going to be on our testing exams.  How messed up is that???  My whole experience with this concept has been an expensive lesson overall. 

 

I find it funny to read Emmett's claims about overall cost reductions.  Some things have gone down....but they are off set by the price increases of other items.  A couple of for instances:

Recently Roast Beef climbed over 15%. In addition tuna has jumped up 9%.  Breads (white and wheat) up $.39/case.  Rosemary Parm bread up $.93/case.  Our capicola has jumped up 3%.  Also our Broc and cheese soups went up $4.50/case.  Our BIB's (Bag In The Box) soda/syrup is up $2.50/bx.  Guacamole is up $2.23/case.  All of our Frito Lay products are up.  Our lettuces (both Romaine and shredded iceburg) are all up.  One of our pepper bar freebies (Horseradish sauce) is also up $1.90/case.  Our basil pesto sauce is the same price per ounce...but they increased container sizing in the case and now that pushes up our cost $21.15 each time you need to reorder.  That doesn't benefit us as the franchisees.  It's a dressing that doesn't move cuz it's on one Sammie now (used to be on the Caprese...but we dumped that pig).  Chipotle Mayo up $1.67/case.  There are others too that I am missing, maybe someone else can chime in.  These are facts.  So when you lower costs on most our pepper bar items, Mr. Emmett, realize that we DON'T charge customers to utilize that...it's free.  So you can lower all you want.  Unless it's free to us..it's still a cost of doing business.  That's Economics 101!! Take those items right out of the equation as they are skewing that already "fuzzy math" to begin with. 

Granted they did lower costs on our napkins (also changed to a cheaper "green" type...a good idea), some of our paper products such as sub wrap, Tshirt bags....(again I ask why were we being so blatantly overcharged for these to begin with) and flatware, chili (dropped $3.14/case), raspberry lemonade (dropped $23.81/case...that's great but I can't help but wonder why we were charged over $50.00/case to begin with???), our ham (down $.10/lb), chicken strips (down $4.00 case....amounts to $.11/lb drop...somewhat significant) and turkey too (almost $.10/lb).  However all our cheeses have skyrocketed!!  Cheeses on average have gone up 20% (swiss 22%, cheddar 18%, mozz 22% increases based on mid '07 pricing). 

 It all boils down to the simple facts.  Some items have dropped, but the increases outweigh the reductions.  Now let's add in the additional increases for energy costs and some of the other incidentals and you should see an overall increase of your costs of doing business Mr Emmett.  Again, release the P&L's of your owners to an independent auditor to find out the TRUTH.

 

Thinking of owning a Quiznos??? Tread carefully!!  Very carefully!!!

I'm surprised that none of the attorneys commented on Emmett's swipe at his adversary.

Not only is it unprofessional, in speaking of gathering "moral support" Emmett only draws attention to questions which have been raised about his own company's conduct and in making reference to the youth of his adversary he highlights the reality of a clubby little franchise bar where nothing much ever changes.

I do not agree with all of the tactics employed by Emmett's adversary. But I would disagree on the merits, not based on how young or old the attorney is. If Emmett is as old as the hills, one would think Emmett would have acquired some class.

Q now claims that you can make money participating in their delivery program making 3-5 deliveries per day. That's with the added cost of a driver (labor), insurance, and advertising. That advertising, by the way, consists mostly of coupons giving discounts; money, food, chips, and/or drinks to customers. Now if your food, paper, labor, and discounts cost is more than 60% and Q is taking another 11% where will your profit come from if you're a franchisee? The answer, there is none. Sure, your sales go up and Q's 11 percent off the top looks even better, and of course those scum are raking the kickbacks in on the outrageous food costs, but once again the franchisee work harder and still make NOTHING. Nothing has changed at Quiznos. If you buy a Quiznos you will work long, hard hours for much, much less than the corporate job you complain about. Of course, you will have your equity in your Quiznos that no one in the their right would ever want to buy. Hey Emmett, you forked tongue lawyer, want to buy my Q? I thought not.

You are completely missing the point. ANYONE can make it sound like they are making improvements, when they are really not. As reported by in the AP article, Brenneman came out with a statement, that is an over the top, bold face lie, and that is that zee profitability is up 60%. Ask yourself one question... why would he lie like that? The answer is simple, just look back at some of his earlier changes. One that had the FO community very excited was that he was going to tie ALL corporate bonus to increased FO profitability. Sounded great at the time, but then when we didn't get them I guess he decided to lie and say that we did! Bonuses for them, one step closer to bankruptcy for us - that is what he is about, himself and his profits.

You do not have to take anyone's word for the health of the Quiznos brand, you can see it for yourself, if you allow yourself to do something for a few days. All you have to do is use Quiznos own "store locater" on their website, and leave the zip code field blank, so you come up with all the stores that they have listed. Here, I even have a shortcut that I personally have bookmarked that will do it: http://www.quiznos.com/storefinder/results.aspx?CountryID=1&StateID=0&City=&Proximity=25&Zip=&GoButton.x=28&GoButton.y=7 Simple math will tell you if the store count went from 4670 to 4660, that it is impossible that that happened without 10 stores closing. More likely, a few new ones opened so it was actually more then 10 that closed - but to be fair, lets assume no new ones open the day that some close. So how does it look? Here are some recent days that I took the data: 12/11 4658 12/14 4669 assume zero closed - means a minimum 11 opened 12/19 4637 assume zero opened - means a minimum 32 closed 12/20 4640 assume zero closed - means a minimum 3 opened 12/21 4642 assume zero closed - means a minimum 2 opened 12/22 4640 assume zero opened - means a minimum 2 closed So from just looking at those dates, we know FOR A FACT, that AT LEAST 16 new Quiznos opened, and 34 closed. Does anyone think that is heathty? Looked at objectively, would you think that is a company that is being honest when it says "profits are up 60%" and things are getting better? Or it is more likely the signs of a company that is not being honest and still trying to open stores in spite of how stores are dying? Now here's the kicker... that pattern has gone on for the past year!! The net open is higher for the year, but the failures???? I won't even take the time to add it up for the year, but its disgusting to think of the destroyed lives, broken homes, and yes even suicides left in the wake of this company.

So what's with the new site its promoting? Could be interesting. http://www.myspace.com/insidetheq