Quiznos headquarters with flagship state-of-the-art restaurant Photo/Sparks

DENVER – Quiznos has begun an aggressive employee-layoff program only two years after moving into its new headquarters in Denver’s expensive downtown district, showcasing its state-of-the-art flagship restaurant.

A notice was filed by QCE LLC, Quiznos' parent company, under the Worker Adjustment and Retraining Notification (WARN) Act, which requires that companies that plan large-scale layoffs notify government officials so that employee assistance programs can be offered. Although the filing did not give how many employees it currently has, some reports show between 100 to 250. But one news report in 2008 by Redorbit.com stated Quiznos had 900 employees.

The filing reports: "QCE LLC ... has developed plans to restructure certain operations at the facility located at 1001 17th Street in Denver, Colorado. In keeping with these plans, the first employee separations are expected to be effective on or about March 6, 2011 or during the 14-day period that begins on that date. Approximately sixty-nine company employees at that location will be affected," says the notice, signed by Jeffrey K. Stahlhut, Quiznos executive vice president and general counsel.

In February 2008, the sub sandwich franchisor signed a lease with Miller Global Properties for 91,000 square feet in its 20-story transformed building in central downtown Denver. The property management firm described it as “what is likely the biggest lease deal so far this year, Quiznos, the country’s fastest growing quick service restaurant chain, plans its corporate headquarters in the building.” The Class A building was designed to compete with the new breed of energy efficient offices under construction.

At that time, Clyde Rucker, Quiznos’ executive vice president and chief administrative officer issued a statement saying,  “We believe that this high profile location provides many advantages for us as we position ourselves for the next level of growth and brand expansion.” The new building included a product innovation center with a test kitchen, and an integrated Quiznos University.

Gregg Brenneman, then CEO of Quiznos, described the space as a “Denver institution.” He said that thousands of franchise owners each year will visit the headquarters adding, “That is an economic development benefit often overlooked.” Rick Schaden, portrayed as the “founder of Quiznos and Denver-area philanthropist” made a statement saying he was pleased that “Gregg and the management team” were keeping the headquarters in Denver.

Quiznos Drained with Problems, Litigation

The past five years has been a roller coaster ride for Quiznos and thousands of franchise owners as they battled in courtrooms across the country. Several class action suits were filed by franchisees claiming Quiznos has been engaged in a prolonged deceptive business practice that had been carried out since 2000. The allegations included fraud, misrepresentation, breach of contract, fraudulent inducement and other charges. In 2007, a class action suit was filed against the company for allegedly selling 3,000 franchises that never opened, known as SNOs, Sold but Not Opened. Under their franchise agreement, the initial franchise fee was non-refundable if a location was not found or opened.

In 2009, the four class actions were consolidated into one (Ilene Siemer, et al. vs. The Quiznos Franchise Company LLC, et al), after attorneys on both sides negotiated under an arranged mediation plan to settle all claims. Lawyers then presented to the Illinois district judge a 160-page settlement agreement, structured with a plan to compensate approximately 10,000 restaurant owners, in order to wipe the slate clean. The $206 million agreement included significant monetary payment, although much of it was given in  product allowances and forgiveness of unpaid royalties and advertising and marketing fees.

Recently, there have been Internet postings stating the payout on the settlement agreement has been a financial drain on Quiznos. Franchisees continually send news clippings showing stores are being closed across the country.

Although Quiznos declined an interview, the corporate office issued this statement: 

“Quiznos is committed to franchise owner success. This commitment requires that we operate as efficiently as possible at every level.  Continued pressure brought by a slow economy has led the company to make the difficult decision to reduce corporate expense in order to provide additional financial assistance to the franchise owners. Quiznos remains the 2nd largest sub sandwich chain, and we expect continued improvement in 2011.”

Related Articles:

• Quiznos will lay off 69 workers - The Denver Post

•  About 69 to be laid off at Quiznos HQ -Denver Business Journal

•  Quiznos Announces Plans for State-of-the-Art Restaurant Support (RedOrbit)

• As Franchises Collapse, Quiznos Launches 600 Company Stores

• Quiznos New Growth Plan Flawed

• Vendor Requires Quiznos Franchisees Pay in Advance

• Quiznos Bites More Than It Can Chew

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• Canadian Class Action Lawsuit Against Quiznos for Price Gouging Given the OK