Wisconsin Court Reverses Quiznos Judgment, Franchisees Claims Granted

"Wisconsin Court Reverses Quiznos Judgment, Franchisees Claims Granted" Does anyone know when this case is going to be heard? I'm a current Quiznos Franchise owner and all of the allegations are nothing but true! We are being dragged through the mud by Quiznos. We are days away from shutting down our store and filing bankruptcy. My husband in restaurant management for 20 plus years, I'm experienced in sales, marketing, banking and finance for 30 plus years. The perfect formula for owning a Quiznos. WRONG!!!. We have been sucked dry by Quiznos. We have lost our entire life savings. Our perfect credit is no longer perfect. This experience with Quiznos will haunt us for the rest of our lives. I believe justice will prevail! !

And it is a long shot that much will happen with any of the lawsuits.

The Truth Shall Set You Free!

TIF

A lawsuit has now been filed against Quiznos in Pennsylvania. Yes (p)Rick, Tricky Dick, Brennenman, and the rest of you modern day cattle thieves the noose is slowly tightening and your day of reckoning is fast approaching. In other Quiznos news, Q recently went through another layoff at the corporate HQ and there's speculation that the Quiznos "brain trust" is looking at bankruptcy. The facade of Quiznos working with franchisees is over. The Q goons are telling franchisees to follow the $5 giveaway and increase hours...or else. Meanwhile, hundreds of franchisees have been sucked dry and Q is bracing for a wave of closings over the next few months. For those of you thinking of buying a Quiznos franchise...this system is withering on the vine. Save your money and your health - find another way to invest your hardearned money. A cd and a job at Walmart will leave you way ahead of a Q investment.

I have not heard about that ...... If Q's management is smart, and I believe the current management is, they will settle in mediation. If they end up in court, and their business practises get exposed in front of a judge & jury, they will fry ........ !!!

You would think that Janet Sparks would have reported on this development? 

The Truth Shall Set You Free!

TIF

I have read the various complaints and I missed the part where they could end up going to prison as result of a civil penalty. 

The Truth Shall Set You Free!

TIF

Guest - hope you used the info here and everwhere to reach your decision not to buy into a Quiznos. It is one thing to read stuff posted by "Guest" posters, but another to do your own due diligence first hand. Believe me when I say, I would use my real name and store number & location, were it was not for the extremely one sided FA I signed in good faith with the Q. They can construe anything anyone says as "harming the brand", and they have proven that on many an occasion. The 68 items of litigation in their March 28th UFOC/FDD bears testimony to that fact and their actions.

Great Decision. As one of the posters on this stream I hope that I in some small way helped in your decision. The posts on this site and many others aren't the rantings of a few malcontents. They're descriptions of how we live, what we endure, and how we are treated by the Q scum. No one pays a premium for anything expecting to be ripped off, and to add insult to injury, be told by the sanctimonious elites that it's our fault for being so stupid and be told by the Qscum that it's our fault for not being able to operate in a system that promotes franchisee failure. All I asked for was a fair deal from the Q scum. What I received is a franchise in a legalized ponzi scheme - and more than likely, financial ruin.

You now have part of an answer. You know that Quiznos isn't right for you. Now what?

Do you still plan to go into business for yourself? If so, what are you thinking of investing in?

Guest writes: "First let me say, I don't like to write on blogs. I normally consider it a waste of my personal time. No offense to Bluemaumau, as it provides a great service."

So it is a waste of our personal time reading past your second line? Ok, by me.

Michael Webster PhD LLB
Franchise News

Thanks for your reply. I know Steve Shaffer quite well, what happened and why during his tenure. I can only tell you that he was not in power to control pricing, that was and is a completely seperate entity that reports directly to the board of directors. 1. Pricing, not much you can do about the cost of goods sold, and I agree that the mark ups were ridiculous. 2. Default for changing spec. I only changed spec on custom catering to places like school lunch programs etc.. They ordered off of the menu so there really is no spec for that. I opened satelite locations inside of Walmart distribution centers, small junior colleges, sports facilities and stadiums and sold sandwiches along with anything else they would buy. I never received a default notice as all of these sales occurred outside of the store. I paid royalties on all sales and that was always their main concern. I booked one sports camp where I served over $35,000 in sandwiches over a 3 week period every summer. I had numerous car dealerships that wanted bagels, fruit and cheese trays and morning coffee every Saturday. I always figured that a default notice came a very distant second to my cash flow as long as I stuck with the basic concept within my four walls. In my 14 yeaars I never saw them close a store except for health issues or gross misconduct. 3. Q was certainly not the business experience I planned when I bought my first store. On the other hand they were not intentionlly evil. The money they raised from up charging for product is largely where their growth capital came from in the early years. Once they brought in capital partners they were married to that cash flow commitment as part of their financial obligations. While I may not have liked this fact, it was not something that was ever going to change, so I decided to work around it. My perspective is that this goes on to one degree or another in the vast majority of businesses today. I was able to get on with my business plans and quickly opened 9 stores. I owned some of those stores for 14 years before I sold off the last one. I made money in most cases, but it was never a great business model. 4. I never saw canibaliztion as the big problem. The problem was not enough sales to cover the cost of doing business. I found enough business out there all over town to more than make up for there being other Quiznos around. There are still only a fraction of Quiznos locations in the US as compared to their major competitors. I was looking for us to build critical mass so that we could advertise nationally and build name awareness. When I started we didn't have any name awareness and it was very tough. As people began to hear about and recognize us my sales increased. I always found that good locations with dedicated owners that really worked their businesses always did fairly well. They weren't getting rich quick, but they were making a living and expanding. Poor sites with weak owners obviously failed, and there were a lot of them around. In many cases I saw failing stores purchased by strong owners that took them over, doubled or tripled sales within months, and either kept them or sold them at a profit. I know a number of people that made a lot of money just doing this. The fact that they were able to buy stores at a discount did not cause sales to double or triple. They did this by being strong owners, outgoing marketers, and providing great service and great food. It's amazing how you canjust walk into a store today and tell if it is well run within one minute. Many owners today are very surly, the place is filthy, and they don't treat people very well. When you are charging a premium for a product, that is probably not going to work real well. 5. I am very glad to be be out of the system given the mind set of many owners today. Quiznos grew in the first place because people like me made it happen. There was no support to speak of, food cost was always high, I paid about the same fees, and had to figure it out on my own. Sometimes fear of failure and desperation is a great teacher. Some times it just paralyzes people. Each of us knows what camp we are in, we just have to look at the bank account and there is the score card. I certainly hope they turn things around, and I believe thatey are on that road. I think it will take another 2 - 3 years to get it done.

To answer the various points:

I owned a large number of stores. I dare say far more than any anyone else in this site.
I know the Schadens quite well, as well as all of the other senior management that lead the brand over the years, all the way back to the early 90's.

I was intimately invloved in all aspects of the brands development over the years. I both suffered and benefited, as the case may be through all of the ups and downs over the years.

While I initially lost a lot of money, I stuck with it and made it work in the end.

I have many friends today that are some of the largest multi unit owners of very well established national brands, such as McDonald's and Dominoes. Their experiences were not much different in how they built their businesses from how I built mine.

What I did to make it work:

1. I did all of my own homework. I studied the sites in detail, negotiated the leases down to the dime, knew my numbers backwards and forwards, built the stores with my own contractors, and created whatever materials/programs where needed to build sales. I never took Q's word that something would just work because some employee said it would. I knew it was my money on the line and acted accordingly. Sometimes that didn't win me any friends at Q, but I did it nonetheless.

2. I trained and developed my own people and programs before they ever knew how to do things. I worked in the stores every day, 7 days a week - lunch and dinner for years. I had stores in different states so sometimes that meant driving all night since I couldn't afford to fly or rent a motel room. It meant sleeping on the office floor for months. I went out and sold catering, introduced myself to all of the local businesses and devised cross promotional ideas and events, hung door hangers, stood on street corners and tried every wild idea I could think of. I sold catering events that were larger than some stores monthly revenues just by working at it every day. I sold car dealerships lunches every Saturday by calling all of them every Friday to see if I could deliver lunch to their crew the next day. One of my stores sold 1200 sandwiches a week to the local schools. I put together a sandwich that I could afford to sell them at a cost of $1.00 to sell them at retail for $2.00. I didn't wait for Quiznos to devise a school lunch program, I did it. Some worked and some didn't. Some made money and some didn't. Quiznos couldn't give me the answers I needed so I figured it out, printed up the materials and executed.

3.My managers helped design and execute all of the programs. I treated people well, promoted them, and they stuck with me through the tough times. Did I have major cash flow problems, employee problems, corporate problems and problems in general? Of course. But unlike many others I worked day and night until I figured it out. Many of the things I figured out are still used in Quiznos today.

4. I believed with my heart and sole we would be a successful national brand. No one believed it and I couldn't prove it, but because of my blood, sweat and putting my life savings on the line we made it happen. I had every excue in the book and abunch that people on this site never even thought of. But I plowed through the really hard times, never, ever quit, and built a lot of wealth for my family and I. Because of that I get to stand toe to toe with anyone else, look, them in the eye, and tell them it can be done.

It may not be easy, but no one ever promised me easy. It has paid off in spades despite the tough times we had to endure.

1. They are in business, like all corporations, to earn a return on investment. They are in the business of franchising. This may come as a shock to you but they have been extraordinarily successful in providing that return on investment to the shareholders. Franchisees are not, in case you missed it, shareholders. This clear fact seems to escape many franchisees. I believe that the original sharholders and investors are highly satisfied with their returns. 2. Wrong again. You are mixing up corproate expenses and overhead with franchisee operating expenses. I don't have the time to teach you the differences, but they are vast. They can cut costs down to pratically zero. They are not a retail center with required operating hours, costs of sale, advertising, rent etc.. They can outsource virtually every function within the company, and only incurr expenses upon the recipt of revenue. Very little fixed overhead in comparison to revenues. This may not get them where thay want to go in the long run, but it means they have the ability to nimbly manage expenses in the short run to gaurantee that they hit their financial obligations. 3.Obviously they were in a horse race to become the number 2 sandwich chain in the world. They clearly won that race against a slew of competitors. Had they not won that race no one would ever have heard of Quiznos. Now they have to go back and fix the mess they created along the way. That may take a couple of years. While it may continue to be messy for some time to come I suspect that they will get there in the end. I also suspect that they are in no great hurry since the best time for an IPO is probably 1 -2 years out anyway given the state of the equity markets. 4. I am pro-business and capitalism. I admire the successes that Quiznos achieved against substantial odds. All of the very negative Quiznos comments I read ignore the fact that this company achieved what very, very few brands accomplish. They have become a household name and generate billions in annual revnues, all accomplished in a very short period of time. I have had my share of business successes and failures. I know the pain of many of these posters, but I also know that there is generally another side to the story. You don't get to 5,000 stores without some success stories along the way. That is logically improbable and statistically impossible in the age of information in which we live. It is definitely not a popular position to take the side of Quiznos, or most other franchisors, particularly on this site. I have owned and am still heavily invested in many franchises. I have lost and made a lot of money along the way. I never depended on the franchisor to provide me with success. I always did whatever it took to make things work, regardless of the conditions. I could have blamed the franchisor for their incompetence and false promises, but that did very little to solve my problem. Along the way I learned and awful lot about what it takes to be successful, and it continues to be valuable to me and my family today.

On page 11, Judge Griesbach gives the Wisconsin legal standard for "puffery."

In many cases the definition is a close call, but I don't think that saying you will negotiate "for the benefit of" another party is puffery. If Quizno's said "we have the best purchasing department" or even (a closer call) "we'll get you the best prices" one might argue puffery.

Stating that I am working "for the benefit of" Jane Doe is not puffery. Indeed, it suggests assumption of a duty of loyalty or even a fiduciary duty to Jane Doe.

As to comparisons with other sandwich QSRs, the discussants miss the point. While that might be helpful evidence, it is not dispositive. My guess is that discovery will turn up evidence that the franchisor was not in the least bit concerned with the franchisees, but quite concerned with getting kickbacks. The irony is that with this Judge (and Pallmeyer as well), if the franchisor had just kept in the language about getting kickbacks and discarded the "for the benefit of" language, the zor would have been free to plunder to its heart's content.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400