Court Finds Terminations of Quiznos Franchisees Probably Wrongful

Posting of Suicide Note Unlikely to Prove Detriminal to Brand

DENVER (Blue MauMau) –  Quiznos has been prohibited from terminating a group of franchisees for posting a former franchisee’s suicide note on a web site, pending trial on the merits of the franchisees’ wrongful termination action.

Quiznos had attempted to terminate the franchisees after they posted the suicide note, a note pleading to the media,  from Bob Baber, who fatally fatally shot himself last November in the restroom of a nearby Quiznos. The note attributed his suicide to Quiznos and the litigation that he had pursued against the franchisor and pleaded with the media to publish his story regarding his dispute with the franchisor.

After becoming award of the posting of the suicide note, Quiznos sent termination notices to the board members of the Toasted Subs Franchisee Association (TSFA) for engaging in conduct that, in the sole judgment of the franchisor, impairs the goodwill associated with the Quiznos’ marks. The terminations were effective immediately, with no opportunity to cure.

The eight terminated board members brought a wrongful termination action against the franchisor. Five of them resolved their dispute with Quiznos. The other three (Christopher Bray, Sabine Bray, and their wholly-owned company) brought a motion to enjoin their terminations.

Following a three-day hearing, the federal district court in Denver issued a preliminary injunction against the terminations.  Senior U.S. District Judge John L. Kane ruled that the franchisees were terminated “in retaliation for the board’s decision to post the Bader suicide letter on its website. The decision was made by [Quiznos’ general counsel] Myers and issued immediately upon his learning of the posting. Myers undertook no investigation into the source of the posting and, instead, simply directed outside counsel to send overnight notices of terminations to any franchisees who were members of the TSFA board.”

According to the court, the franchise agreements at issue allowed Quiznos to terminate franchisees it concludes have acted  to impair the good will associated with its mark. However, the franchisor “must exercise judgment in assessing this,” the court said.

Rather than exercising such judgment, Quiznos acted in an impulsive and retaliatory fashion, the court found. In the absence of any investigation or consideration regarding the posting’s impact on the Quiznos trademarks, “it is substantially likely that the [franchisees] will prevail” on their wrongful termination claims.

Further information regarding this decision can be found at “Trade Regulation Talk.”

Regarding the CCH article, Chris Bray, president of the TSFA board said, The people in the inner circle know that is all true and that the ruling was according to those guidelines. A spokesperson for Quiznos said they had no further comment at this time She said readers could refer to its statement previously posted on Blue MauMau.