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Rick and Dick Schaden, who own 51 percent of Quiznos, are still trying to find a way to save their highly leveraged franchising company. According to what this bird is hearing among finance experts at a current national restaurant conference in Sin City, what is at stake for the firm is lender's default or worse. That is to say, what looks increasingly likely is a notice of default, a debt for equity swap, or dare I say — the filing of Chapter 11 bankruptcy.
The financial saga of the large Quiznos brand is taking a long time to play out. Financial experts are whispering at the water coolers of the conference that the current situation is an elaborate game among the Schadens, PE firms CCMP and CCP, and debt holders. Schaden seems to be running out the debt clock while the company scratches its head to figure out what's wrong with the chain. That attempt at an answer is probably five years too late.
Other Schaden intimates have publicly noted that the "franchisee cash extraction model " is no longer valid. There just doesn't look to be enough franchised sandwich shops left in the network to fund the company's obligations through royalties and product mark-ups.