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40 Comments

Dunkin' Litigation

Is paid from the Ad Fund under the veil of Brand protection and future betterment for all other franchisees..you know, the good franchisees. Therefore, DBI's corporate veil must be pierced.

Craig Hsueh's picture

Who ultimately pays for litigation?

Remember Richard Piotrowski and Ellen Blickman's award of $350,000 from Quiznos? They deserved that money. Quiznos was way too heavy handed in so flippantly terminating their franchise because the meat in a sandwich was slightly under the specified amount.

In this $50 million cash-out-of-hand settlement with thousands of franchisees, surely the rest of the franchisees will also pay for that award by being charged higher prices for services and goods. The system could more easily afford that loss because it was just one franchise.

Isn't charging franchisees with higher costs the reality of how litigation is typically paid for?

This is probably one of the reasons that bad franchisors don't mind litigation unless it actually gets so bad that it affects their selling of franchise licenses or raising product prices to the point that large swaths of consumers can no longer afford buying it.

Worthless Settlement

I'm in it and I know it. Q has already raised its prices to franchisees and showered a ton of free cookie and bogo coupons to pay for whatever this will really cost, which in real dollars is significantly less than the publicized amount. This settlement was a win for Q because the lawsuit disappears and the current franchisees are paying the freight, a loss for current franchisees for the reasons already mentioned, a loss for past franchisees who got less than 1% on the dollar for the illegal practices admitted by Q in this settlement, and a big win for the lawyers who made out like the bandits they are.

Ray Borradale's picture

I would suggest that

I would suggest that franchise traders having gone from ‘issues’ to ‘dispute’ to ‘conflict’ know they need to protect their interests. The record breaking Q payoff was a pittance when split between franchisees, much like the ACCC v Allphones debacle.

Q is continuing to implode and it does not appear that franchisees are coming out of this having protected anything. There is a need for aholes when a franchise is heading toward being an absolute disaster and when it becomes obvious there will be an inevitable collapse, loss of investment, why not have a great ahole working for you and preferably before it is too late.

It is great to see a return bout but you two should really get a room.

Darnelle White's picture

A piece of the action

Want a piece of the litigating action, eh? Quiznos has spawned a host of major lawsuits that continue to pop up. So I can't say I blame you. This brand is some of the most fertile litigation soil in the country.

When it comes to the formation of a trade association, remember this rule. Litigators do what they know best. Litigate. And traders do what they know best. Trade.

RichardSolomon's picture
Darnelle White's picture

Blaming zees for bad zors

Fishing for business, Richard?

If you have been following the news from Quiznos, you'll know that Quiznos recruited seasoned restaurateurs and business people. During these conflicts, their franchisees have hired some of the very best attorneys that money can buy.

The results? Franchisees have a settlement, which is among the highest in franchise history. Unfortunately, it took thousands to ban together to get it. That means not much for each individual. Unlike many franchise systems, this brand has an independent franchisee association that has fought hard, so hard that the franchisor attempted to terminate the franchise agreements of the association's leaders when they posted news that Quiznos didn't want out there (franchisee Bob Baber's suicide and his grievences with Quiznos).

The settlement requires an independent franchisee association to be built and recognized. I guess you want that job. You'll have to get in line behind the Toasted Subs Franchisee Association and others.

I hope Quiznos franchisees keep in mind that Bozo attorneys that are little more than whiners for their own business with no coherent execution produce nothing worth while. Don't ever expect wolves to resist eating sheep.

Litigators do what they know best. Litigate.

RichardSolomon's picture

In the final analysis, this is not all the fault of Quiznos or

its management. Many franchise systems have predatory franchisor management. Many such organizations succeed in bleeding the system dry, leaving its franchisees just dessicated financial corpses.

There have been sufficient incidents of this that one might think franchisees would wise up to the often touted suggestion that they get competently organized very early on in their franchise existance. Sadly they do not. So they are left to contend one at a time with predations that cannot effectively be addressed by one franchisee at a time.

Later on, when the predation has continued unchecked to the point of no return, the franchisees whine that they have gotted bad treatent. But those who get bad treatment without being organized to resist bad treatment don't get sympathy from any save others who are similarly unorganized and also getting their own bad treatment from their own franchisor.

I don't know where you all got your educations, but where I grew up and was educated, you learned to to protect yourself. If you are too lazy or too cheap to get that done, don't expect the world to weep at your financial demise. Mr Barkan is seeing the fruits of this in his "case" and the Quiznos franchisees are seeing the fruits of their inefective resistance in their cases and lives also.

Bozo franchisee associations that are little more than whiners' clubs with no coherent militancy produce nothing worth while. These and many other case histories bear this out.

Don't ever expect wolves not to eat unresisting sheep.

buffalo chicken

Solution to this: Dont serve the buffalo chicken!!

The Incredible Shrinking Q

Well, Q is now "officially" under 3,000 operating restaurants. 2900 according to the website. That's half the number that were open just three years ago. Who is to blame? Upper management. Dick and (p)Rick Schaden get the lion's share of the (dis)credit. But lets not forget others who did their part. Among them are "Turn around expert" Greg Brannanman, junior "turn around expert" David Dino, jailbird Scott Lippett, "tricky" Dick Emmett, and former hair dresser turned CEO Ronald McDonald. For those franchisees seeing this please feel free to add other losers to this Hall of Shame.

Ray Borradale's picture

Excellent point

Short, sweet;

We were swindled by experts.

If Q and so many other self-nominating franchise systems have done nothing else of value then perhaps investors will finally start to ‘anticipate that degree of deception’.

We were swindled by experts.

We were swindled by experts. We are not stupid. No one could anticipate that degree of deception.

AMEN

AMEN

Ray Borradale's picture

Chapters

Guest, You could start chapters all over the world that came under one catchy Wellness banner. There is a huge market so you would need those chapters to be consistent in delivery and obliged to fulfil the functions set down by a central management unit utilizing a binding promise where chapters were bound by documented Wellness enhancing methods. As Wellness needs evolve so should the documented methods be allowed to evolve.

Of Course, chapters would need to contribute to administration costs and to be fair that should be based on a percentage of membership fees. You would need to promote Wellness so likewise, the chapters would need to be required to contribute to a centrally managed promotional fund.  Guest, I suspect you continue with a childhood predilection where your need to pull the legs off insects leaves you socially isolated and even your mother has admitted you should be permanently institutionalized.

FuwaFuwaUsagi's picture

DoDilignece: I am not sure

DoDiligence:

I am not sure why you are so reluctant to state the most obvious, simplistic path, that will directly get to the crux of the problem.  If you are not a businessman or businesswoman, or do not have years of operational experience in an industry do not open a business!

The problem I have with the stance you are taking is, the odds are, it will simply become a diatribe on how I paid for advice but the dirty rotten consultant/lawyer whatever was incompetent so I still go screwed and once again the zee will exonerate themselves of blame, and point the finger elsewhere.

I am serious here.  People need to set a course in life, choose if you are going to:

 

  1. work for someone else
  2. work for someone else and put something aside and then go into business for yourself
  3. be entrepreneurial out of the gate and go immediately into business for yourself.

 

Here are the realities of those three positions.

 

If you chose (1) above, then you have the incumbent responsibility to make sure you have the proper mix of skills to maintain employment, adequate savings to weather storms, and a financial plan that is modeled on a global economy.   

 

If you chose (2) above, learn an industry, put some money aside, but make sure you are fully prepared.  You should know far more about a given business vertical than most business owners do, and you should have near encyclopedic knowledge of every offering in that vertical in your area, talked to the owners, seen their operations and be known in the community.  You should have a business degree geared for small business consisting of accounting, finance, marketing, management, law, possibly real estate, and you should keep up on trends in all these areas and observe how successful companies and failures operated in these areas.  

 

If you choose (3) above, you accept that you will probably fail several times, or have several false starts before you hit the right concept for you, your times, and market conditions.    This means you have a hole card, exit strategies and alternative plans.  You learn as you go, expect failures but view them as learning experiences and are prepared to get back on your feet and come out swinging again.

 

Working for someone else, saving some money, and then one day starting to do research and taking maybe a year or two to decide on a business is an asinine approach that is going to get you fleeced or in over your head.  The later, is what most people do.

FuwaFuwaUsagi

 

Nothing Changes

at Quiznos. Since I've had the misfortune to be part of this chain I can attest that this is SOP; create a sandwich, overcharge for the ingredients, give it a low price, and try through force and intimidation to force franchisees to sell it at that price. You can bet Q makes sure there's a hefty markup on anything sold to franchisees and that the "recommended price" won't be enough for franchisees. It's impossible to buy exclusively from Q, sell at Q's "suggested" prices and survive long-term, as several thousand former franchisees can tell you.

Wellness program for people recovering from failed franchises

It would be an holistic approach including olde world techniques like self-flagellation, blood letting leech therapy and the wearing of hair shirts.

Barbara Jorgensen's picture

Wellness program for what?

People who get fleeced by bad zors?  The way our system works is fleeced zees get screwed period.  The only solution to make sure you have a emergency fund when you go out so you can reorganize your life.  First of all people need advice from the beginning.  People need to know who to go to before signing on the dotted line. 

Barbara

You seem like a good Christian woman and I am a God fearing man who would like to establish a wellness program, that I've pioneered, on the west coast. Would you be interested in helping me?

Barbara Jorgensen's picture

I agree with you Richard

I do know that there are many franchise wannabees who don't have a clue what due diligence is.  What needs to be done is educate people.  That is why I believe BMM is important. 

It still doesn't make sense to me that zors get a free ticket to misrepresent people and not have consequences for what they do.  The fraud is all over the internet.  Fraud is everywhere.  Regardless the zees always looses in most cases. 

Dick's Gone But Not Forgotten

Well the qtards are doling out the settlement checks and Dick has re-retired but franchisees are still considered piggy banks by the Qtards. The latest example is the Buffalo Chicken Sub. The food cost for this sub, which is a mandatory $5 sub by the way, is well over 40% if made to specs, more than 50% if franchisees give in and add the tomatoes, lettuce and other conditments without charging. Now add the free cookie coupon (with no purchase) that Q has sent out to thousands of people and franchisees are losing money everytime someone walks in the store. Dick may be gone but that clown Ronald McDonald has learned his lessons well.

Granville_Bean's picture

and so....

"By opting out there maybe some type of remedy in the future. All stories are not the same and people have different reasons for opting out so one shouldn't assume that the reason for opting out was only to be able to sue for more in the future.    "

Sooo.....  is there a real indication of hope for "some type of remedy in the future", which is totally and absolutely different from wanting to be able to sue for more in the future?  Okay so let's not say "sue", even though that seems to be what a lot of opt outs have said.  What are the chances for this some kind of remedy, what kind of remedy would it be, and how would this kind of remedy be achieved?

Is Mr. Schaden really going to call a press conference and unilaterally announce that he feels really bad because he LIED to you and took away your savings and your retirements and your houses and he is so sorry that he is taking $250 million out of his own pocket so that he can pay $500,000 each to everyone who has opted out?

What is this future remedy that you are hoping for and how do you get it?

The Quiznos case was about fraud

This was mostly about old-fashioned fraud. Yes, there are plenty of stupid franchisees out there, but this case was about deception in the UFOC and the franchise agreement. Quiznos simply did not do what they said they would do in those documents and that's why they settled.

Les Stewart's picture

Apparent Converts: fault deflection, stock phrases & totalism

Richwa (Fuard?),

As anyone with military traning knows, thought control techniques that confuse and make the prisoner falsely internalize an "offense" is one of the preliminary stages of having someone falsely "convert" to self- (from other-) blame.

I just love the way you 2 "frame" the argument that  some individual must be "at fault". To coarse to compare it to the use of she-must-have-been-asking-for -it in the sexual assault context?.

The use of non-sensical phrases (see "killer due diligence": as if, like, the risks are constant over the life of the contract) is noted clearly in the literature on what some people call "brainwashing".

Classic, China post-communist takeover, circa 1948-55. The objective is to maintain an unjust regime.

Apparent converts were those who made newspaper headlines, who emerged from prison in a state loudly proclaimed as "brainwashed." However one may deplore journalistic sensationalism, there is no doubt that these people did undergo a startling personal change in their view of the world. To talk with one of them immediately after his arrival in Hong Kong was, to say the least, an imppressive experience. They seemed to speak only in cliches, parroting the Communist stock phrases, and defending the Communist position at every point..

Thought Reform and the Psychology of Totalism, A Study of "Brainwashing" in China, C. 7: Varieties of Response: Apparent Converts, p. 117,Robert Jay Lifton, 1961.

Maybe the term "communist" is ill-fitting for you two.

Other words, however, do come to mind.

Ray Borradale's picture

OK

I find it very difficult to debate anyone not impressed with imbecilic government bureaucrats.  They would be a major component to why it is so bloody difficult to get some sense into how business is done. 

Did you like my cat? That was Richard driving. It was a model T with non-optional KDD.

FuwaFuwaUsagi's picture

Ray: I am not sure there

Ray:

I am not sure there can be balance in the sense you allude to.  There are a lot of reasons, and one of them is, in general, the people who labor outside of Government are in general much smarter than those who actively seek Government employment. 

Take Mr. Solomon for example, I think Richard would agree that he represents who pays his tab.  So if a zor hires Richard they get a toothy agreement designed with all his wit and talent to their advantage because he has to represent them to the best of his ability.  And when a zee hires Richard they get him with all his wit and talent too. 

Now ask yourself, do you really think a schlemp in some Government agency is a match for Richard?    And I am not picking on Richard here, I am just stating the obvious.  Guys like Richard soar with eagles, and they know that flocking with a bunch of turkeys is going to take their edge off.  That is why guys like Richard don't work in the State's Attorney General’s office in the franchising and business opportunity division.  

BTW do you know what is one just abut every U.S. IRS agent's desk:  J.K. Lasser's guide to income tax.   There is a reason for that, and it has to do with the fact most Government employees are near idiots and the Government is incapable of adjusting to near real time change.   

Lastly in the U.S., the greatest frauds and your greatest enemy is the Government.  For fraud examples see Social Security, the Department of Education, the SBA, HUD, etc.

So while a balance sounds good, I thin the reality is the other side of the equation will always have the upper hand in terms of agility and intellect.

RichardSolomon's picture

The only real regulation against being fleeced in a franchise

investment is to purchase killer pre investment due diligence assistance.

Even most children now know there is no free lunch. What you think you are entitled to because you may pay taxes is not what you really get just because you pay taxes. DUH!

Ray Borradale's picture

Balance

Clearly investors shoot themselves in the foot in tricky business deals in tricky sectors. Smart people have no excuse for being tricked by smarter people. Stupid people get what they deserve. Buyer beware! Of course regulation and legislation should never evolve to meet tricky evolving markets?

It’s worked this way for as long I can remember so why change it? Make compliance voluntary because I don’t like it.   Al Caponyup

When regulation exists and evolves you would think that better than regulation set in dogmatic concrete.

The ‘blame’ in the franchising formulae stretches a long, long way and only includes zees.

Surely there can be balance.  Fuwa would agree.

Why op out

I opted out of the settlement. I owned 3 stores and knew that the chances of making it 3 years to benefit from the food rebates was highly improbable. I was correct, I closed all 3 stores at the end of March. Had I opted in I would have ended up without anything. By opting out there maybe some type of remedy in the future. All stories are not the same and people have different reasons for opting out so one shouldn't assume that the reason for opting out was only to be able to sue for more in the future.

RichardSolomon's picture

I can't argue against that statement, and as I predicted many

years ago, the investors are finding themselves unable to get around the following facts:

They are over 21 years of age

They claim to have college educations.

They claim to have had substantial experience in business.

They claim to be finaicially capable of undertaking the obligations of the franchise agreement they signed.

FuwaFuwaUsagi's picture

We already have regulation

We already have regulation for franchising and have had it.    We already have reasonable regulation.  And yet people sign a statement that says I relied only what is in these docuemnts to make my decision and then later claim they actually relied on information outside the documents they say they soley relied on.  At some point people have to be held accoutnable for their actions.  But the example above is basic, people sign something that says today is Tuesday when it is Sunday.  The regulation is there, it is plain, and guess what peopel still shoot themselves in the foot.

RichardSolomon's picture

Regulation is an institution in which those regulated select

the regulators and have them appointed through a process in which - fueled by lobbyist cash - the government is convinced that the only competent regulatorss that can be found have to come from the regulated industry itself.

Illustratively, if you want to do the homewrks, see the FDA, the FTC, the FAA, the SEC, the Federal Reserve and Treasury department all insurance regulators, and the list goes on much farther.

Should Wall Street be

Should Wall Street be regulated. Should insurance be regulated. Reasonable regulation does not have to hold back business unless the operator relies on taking advantage of the power that follows the smoke and mirrors. Governments will always be incompetent when voters accept incompetance.

FuwaFuwaUsagi's picture

  Here is a perspective. 

Here is a perspective.  If you do not blame the zee then what is the alternative?  Consider where this leads.  Either you believe each person who decides to engage as an opertor in a franchising arrangement is competent or you have to decide they are incompetent and need protection, which means one of two things, either the Government will regulate things or Franchisors will regulate things internally.  

The implications are unsettling.  On the one hand more Government, and under the auspice of the most ardent supporter of Government in the form of Obama, we have seen the total incompetence of bureaucrats in action; these people have no clue what  a business is and they should be kept as far away from business as possible.    And that includes the King of Morons, Barack himself.

So we have eliminated Government as a desirable recourse (and if you think differently see anything the King of Morons – Barack has done – anything – he is the epitome of incompetence) leaving us with the zors.  Now what are they likely to do if we insist on protection?  Simple, they will raise the bar, insisting on higher education models and probable multi-operator experience.  This will effectively solve your problem because they will simply deny folks such as yourself the opportunity to engage in franchising from the get go.  Think about it, you will get your wish, the small person will be protected by exclusion, thus leading to yet another barrier between the potential haves and have not in society.

Given that, are you sure this is the game you want to play?  Is it not better simply to place the blame where it belongs, with people who played with fire by going into business when they did not have the requisite skills to get involved in the first place?  Because if I was a zor, I would council with other zors and tighten up my requirements and become exclusionary rather than face the idiot brigade regulating my line of business.  

Just something to ponder…

Barbara Jorgensen's picture

It is not right.

Zor screws zees.  Zees need lawyers.  Lawyers make money.  Zees make little recourse.  Lawyers are happy.  Either way the zee is unhappy.  Zor still made alot of money. Zee is screwed.  What amazes me is all the educated people in the mess agree on one thing:  It is the zee's fault.  God help our country. There is something wrong with this picture.    

Granville_Bean's picture

You think I don't know that?

"We opted out so we would have the opportunity to seek damages against them in the future."

I never asked you why you opted out.  Pretty much all the opt outs say that.  I am still waiting for even one to show how they sued on their own, more successfully.  I have also asked opt-outs well then why have you not sued already.  Well they say "I don't have the money right now".  Okay then when will you have the money, being that you have a losing store with a non-viable system busness model.

I understand that you have retained your right to sue on your own.  What I am questioning is if this right is worth any more than, say, $3,000.  So far I have seen no evidence of that. 

Grandville

We opted out so we would have the opportunity to seek damages against them in the future. My husband called the lawyers who handled the case the other day to talk to them... they have NO record of us opting out! How do you like them apples? We may be sunk for sure.

Granville_Bean's picture

so the advantage was...?

" After the settlement, which amounts to credit for food purchases, they quickly increased the price of our food. "

If you opted out, did you still get the increase in food prices?

JOKE!!! I opted out...that

JOKE!!! I opted out...that tells you how much one would get for accepting this settlement. After the settlement, which amounts to credit for food purchases, they quickly increased the price of our food. An effort no doubt to cover the cost of said settlement. They also commenced in increased inspections and resulting fines in an effort to raise capital to pay for just such a settlement. The list continues to increase of ways Q-Corp. can bilk it's franchisees out of the money we use to support our families. Many are loosing their homes because of the actions taken by Q-Corp. and its fraudulent business practices aimed squarely at it's franchisee's. Worst time of my life has been while in business with these common criminals...their time is coming!

Quiznos Settlement

Wow....$3000 to be paid over the coarse of three years totally has made it all worthwhile! The only ones who got rich off this was the lawyers! Oh yeah, they jacked up all of our food prices so ....this is where the settlement money is coming from...US!