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Quizno's Conversations
Guys and gals,
There is a time and place for everything. Comments under the news of Mr. Baber's demise should probably be focused on him and his family. So, I've started a thread discussing the Quizno's franchise concept in our forum area.
We are getting a high decibel level of vitriol from some disgruntled Quizno's owners. Arguments like, "Your quoted closure rates are incorrect, and you simply... are incorrect" do not hold much water. I'd like to think that we like to hear the facts and the whole picture here.
"If you go in for argument, take care of your temper. Your logic, if you have any, will take care of itself." - Joseph Farrell
Let me get the discussion rolling. We are franchise owners. We sometimes like to gripe about our franchisers (it's kind of healing) but...
1. We understand that failure and risk are part of every business, not just Quizno's. There ain't no such thing as a sure thing. How much risk? Well, there's a study in Blue MauMau's franchipedia (franchise encyclopedia) that collects failure rates of independent versus franchise businesses from various studies.
"Success is the ability to go from one failure to another with no loss of enthusiasm." - Sir Winston Churchill
2. A case has not been persuasively made about why Quizno's sticks out in not having a viable franchise model. Let me give the Quizno's owners some help in their argument. TSFA has their own list of unprofitable Quizno's franchise rates that frankly, does not seem statistically robust to me. Here it is from an article that ran earlier...
(25 votes)
Meyers is a founder of
Meyers is a founder of Quiznos, the second-largest sandwich chain in the United States. Launched in Denver during the early 1980s, Quiznos grew from 18 units in 1990 to 40 in 1993, when the company went public. Quiznos’ founders took the company private in 2001 at 1,400 units, and it has since grown to over 5,000 restaurants in the U.S., Canada, and other countries. The chain is all franchised, with the majority of franchisees being single-unit owner-operators. 642-901 Meyers has helped drive Quiznos’ growth through his service in a range of leadership positions. At various times since its founding, he has led the company’s Finance, Information Technology, Human Resources and Law functions. He is also a member of the Board of Directors. 642-812 Under Meyers’ lead, Quiznos has earned tremendous recognition for its growth and innovation. For five years in a row, Nation’s Restaurant News has ranked Quiznos as the top restaurant chain in growth in number of units. In the Mystery Shopping Providers Association’s 2007 Wait Time Study, N10-004 Quiznos led the quick-service restaurant industry in wait time performance. And in a recent Zagat’s restaurant study, Quiznos ranked in the top five in food, facilities, service and overall quality.
Quality Food Has No Place At Quiznos
In his Deposition at a recent trial involving a Q franchisee, Qtard VP Mike Manning said Q serves Cutter quality beef. Below is the list of beef quality, from the top cut to the dog food. Can you guess what grade of meat Quiznos FORCES franchisees to sell? Yup, Q is selling dog food quality "Prime" Rib/Beef to Q franchisees, and at US Prime prices. So it's the franchisees at fault for lousy sales and restaurant closings? The next time Q tries that lie you'll know the truth.
My big question is how a good, "Christian" man like Greg Brennenman can stand idly by while Q franchisees are being forced out of business, losing their homes and live savings, so Q can step in and sell the "assets" to new suckers for pennies on the dollar. Talk about a BIG disappointment. GB should be ashamed of himself for making a deal with the devil.
U.S. Prime - Highest in quality and intramuscular fat, limited supply. Currently, about 2.9% of carcasses grade as Prime.[7]
U.S. Choice - High quality, widely available in foodservice industry and retail markets. Choice carcasses are 53.7% of the fed cattle total.
U.S. Select (formerly "Good") - lowest grade commonly sold at retail, acceptable quality but less juicy and tender due to leanness.
U.S. Standard - Lower quality yet economical, lacking marbling.
U.S. Commercial - Low quality, lacking tenderness, produced from older animals.
U.S. Utility
U.S. Cutter
U.S. Canner
Define Earn
The typical Quiznos franchise is losing money despite 80 hour work weeks. Many are working second jobs to make ends meet. $60,000? I know franchisees who had to close their restaurant and go back to work for the man to make that kind of money again. High food costs, lousy ads, no support. That's why Q has gone from almost 6,000 restaurants to about 3700 in a two year period.
Why Q's Fail - Beyond The Greed
of (p)Rick and Brannanman. It's because the actions the Q needs to take to survive is exactly the opposite of what franchisees need to do. At Quiznos the #1 revenue stream is selling food and supplies to franchisees. So with sales and revenue falling Q raises prices to franchisees, buys cheaper, lower quality product and keeps the price the same to franchisees, increases discounting, and increases the number of inspections to enforce purchasing agreements. To survive franchisees need to cut costs, scale back or eliminate poor selling items, find cheaper food and supply sources, and limit discounting. They can't do that as a Quiznos franchisee. They're stuck with rising wholesale prices, poorer quality, and less sales. They're required to sell every sandwich on the Q menu. The result is the closing of more than 1500 in the last two years with more to come.The Quiznos Store Count Is...
ding ding ding ding 4133 as of June 16th, 2009. Nice job (p)Rick you ding dong.franchise review
I question strongly the reviews of some of the specialists who give news of franchisors. A good one is that Quiznos is helping to renegotiate leases in these hard times, but, yes with a price!! They want a permanent royalty from this service. Yes, they want to receive a percentage of the savings sent to them as an additional fee, monthly. That is truth ! Second, there are not 4,500 Quiznos locations. Third, no one is looking at profitability at the store level. Food costs have gone up, profitability of each sale has dropped down Fourth, There are additional store closings every day, as the ability to withstand "No Profits" combined with the economy has increased the failures and there is no communication from headquarters at Quiznos, or any help at all. Just advertising sandwiches that do not have a profit per se. A majority of the field people representing Quiznos at the store level, have been laid off.Quizno's Lease
Ken writes: "A good one is that Quiznos is helping to renegotiate leases in these hard times, but, yes with a price!! They want a permanent royalty from this service. Yes, they want to receive a percentage of the savings sent to them as an additional fee, monthly. That is truth !"
I am not a fan of Quiznos, but if they are able to knock off 5 points off your lease and want 2 in return, how is that a bad deal? Are you saying that they should have done it for free?
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
quiznos lease renegotiation
Your thought of them putting out the effort to renegotiate should have a renumerance for them. The very fact that they have an income of 7% royalty ;a profit on the food and rebates from everyone including Pepsi - Dhouldn't that be the biggest motivator for them to try to help a store to survive, not necessarily prosper. They are really, in reality protecting their own behinds and their income.
Bfy darn isn't it in their best interests to help renegotiate ? And do it for the sake of the future of their cash cows, the franchisees !!! To receive more, if I can put it into the right group of adjectives- SUCK EVERY PENNY THEY CAN FROM THE HARD EFFORTS OF THE WORKING PEOPLE THAT MAKE THEM THEIR LIVING - They could call it insurance that their income will continue and it should "BE FREE" on their part.
It Can Get Worse At Quiznos - Yes, The Dicks Are Back
Word out of Denver today: Another round of layoffs at Quiznos. No sympathy for any qtard who gets laid off. What goes around comes around. David Dino is out. Dino was the wrong person at the wrong time to lead Quiznos. Being able to read a P&L doesn't mean you can RUN a restaurant or a restaurant chain and Dino proved it. Big (p)Rick is back. Yes, (p)Rick Schaden is back runnning Quiznos. What does that mean for franchisees? Another round of the ol' qscrew. Threats and intimidation. A scorched earth policy toward all franchisees. Losses and closings. Turn out the lights, the party's over.Quinzos Three Weeks Of Advertising
Quiznos will run 3 weeks of advertising in 1st Quarter 2009? What happened to the 4% off the top Quiznos is taking every week for advertising? What is going on in Denver?Another Quiznos Closed Sign, Todays Wall Street Journal, Page A3
Check out page A3 of todays Wall Street Journal, page A3, shows handwritten "Quiznos closed after 10 years sign"...its not all just about the economy in Detroit, baby...Q Franchisees - No Advertising For You
Well, the Qtards have done the Qscrew to Quiznos franchisees again. Despite having an 80 million dollar ad budget and despite an ad blitz by Subway the Quiznos corporate morons have decided NOT to advertise until the end of March. Why? Is it because the stores are selling so much food that they don't need the advertising? Ah, no. Like Crazy Eddie we're GIVING IT ALL AWAY. Of course it could be because of the reimbursements Quiznos paid us to give away the free sandwiches. hahahahahahahahahaha. Could all of our ad money be spent on the free sub coupons that the Qtards have been spitting out? Nah, it just seems like it. That's a hell of a lot of coupons - even for Qtards. Or could it be that they don't feel the latest event is worth advertising? Could be. Black Angus Peppercorn is another loser that shows no originality - just like our advertising - and it has a budget busting food cost - not that the qtards care. Question for The Dicks and bean counter Dino - What happened to our ad money? Question for the rest of you - Do you now understand why ad co-ops run by franchisees are so important in a franchise system? Co-ops, Co-ops, Co-ops. With a few exceptions if a system doesn't have them they than DON'T invest in it. And Q ISN'T one of the exceptions. Question for Darnelle - Can you understand why so many of us are so frustrated? And by the way, the # of operating Quiznos now stands at less than 4250. Quiznos SucksQuiznos - Three Weeks of Advertising In Three Months.
In the first three months of 2009 Quiznos will take 4% of the gross of more than 4,000 restaurants and use it to buy 3 weeks of tv advertising. THREE WEEKS of commercials in three months. What happened to the ad money? No co-op, no accountability. If that doesn't send up the red flags about the Qtards nothing will.Quiznos Corp doesn't have the guts...
Quiznos Corp doesn't have the guts to allow a food co-op, an advertising co-op. The words "accountability" and "Quiznos' should NEVER be used in the same sentence.Fact of life: Big guys can have price advantage
Subway has over 30,000 units. That means that it does not have to be as well run as Quiznos to out compete Quiznos on price. The pressure is on Quiznos to be laser sharp in its operations and management thinking. The biggies are smart to know to move on price pressure during a recession. (I include Quiznos in the club of sub-chain biggies.) The one two slam right now drives competitors out of business. There is also the issue of larger overhead costs of some business models like Quiznos, compared to others.Poorly run chains eventually bump into bad kharma
I thought someone posted here that Quiznos grew in 2008 but you are saying the system is shrinking in sub shops. I'm confused. Please post your sources on how many units Q has at the end of '08. Regarding your comment about good management, how involved is Quiznos senior officers with the front line? Quiznos has no company restaurants. Having only franchises greatly weakens their understanding of knowing operations and pushes them to be just sales people of franchises. Does Deno and other officers spend time every week or month helping to run a store -- like Jim Skinner of McDonald's? How often does Deno spend time eating the sandwiches, mingling with customers and having the owners put them to work sweeping the stores or taking orders (like Ray Kroc used to do)? Finally, Quiznos is but one player. Does anyone know if the sub sandwich sector went up or down in '08?Quiznos
Well as one of the current franchisee of Quiznos, I say strongly that Deno is in DEEP SLEEP. He does not bother even to reply emails of franchisees. He work for Rich and his own pay check, he does not work for franchisees like skinners of Mc Donald's. This is not a restaurant chain but it is a cheating chain. These idiots ( QC Officers) does not understand that subway is pushing QC towrds death. The starting cost & overhead of subway is much much lower than Quiznos. So when Q try to compete Subway on prices, subway will eat up Quiznos. The result has been confirming that more no of Q- locations are shut down in 2008 compare to 2007 and 2006. due to this stupid marketing policy.Check Q's Website
Check their website. Unfortunately what you need to do is go through each state in the store search and add them up because the qtards removed the overall total about a year and a half ago - when the pool of suckers began drying up - and the numbers really began moving south. Once you add them together you'll get a reasonably close amount. Remember this is Quinos - I know of several stores that are listed as open that are now closed so the true number will be lower. As for totals Q will acknowledge - up until this year the Qtards bragged in their Blue Mau Mau ads that they had more than 5,000 restaurants. The most recent Blue Mau Mau ad bragged Q had more than 4,000 restaurants. Truth in advertising. By the way - the real reason Subway's costs are so much lower is that there are FRANCHISEE co-ops buying the food, supplies, and advertising. No one ever said that Subway's management is made up of wonderful human beings or the smartest people in the world. The reality is that franchisee money is being used for what it's supposed to be used for, there is transparency, and the franchisees have a major say in how the system works. The Qtards finance major giveaways without lowering food costs at all and then advertise these giveaways with our advertising money. Kind of like using our knife to cut our collective throats. When was the last time you saw a good Quizos ad? When was the last time the Qtards rolled out a winning sandwich for franchisees? Don't say Prime Rib. That 40% food cost was a real loser. And Brennenman was no savior - things have gotten worse and now that The Dicks are back it'll get even worse. The name of the game is PROFITS. There are no profits owning a loser like Quiznos. That's why it's a loser. And don't expect it to change. The Qtards don't look at franchisees as partners but as golden geese to be fleeced.Re: Check Q's Website
I do own a Quiznos and I have been profitable since my store was opened in 2005. I made sure I had a location with enough business and residential traffic and a good sized parking lot so customers didn't have to waste valuable time at lunch looking for a place to park. For all the naysayers on here, there are quite a few successful Quiznos owners whose voices get drowned out by the same people who would have you believe that no franchisees ever make a profit. Location is always the most important piece of the pie.Profitable Quiznos
Can you please tell me how you have been successful? My husband and I have been doing this for 10 years and it has done nothing but ruin our financial stability. I would love to hear of a way to make it successful.Qtards look at zees as golden geese to be fleeced
So true.The Dicks are back (Quiznos) !!
If so, Dave Deno is weaker than I thought. Look out for more buy one get one coupon marketing to run up the pounds of product (sold and marked up by Qs to the zees). Quiznos is a food distributor, not a restaurant chain.Qtards Declare War On Franchisees
It's worse than that. The Qtards are rolling out a "million sub giveaway". Of course, the giveaway isn't referring to the food sold to franchisees. Those cheap bahstahds will sell franchisees the food at full price and then use our money to pay for the advertising and the free sub coupons. The franchisees will be expected to absorb the cost of this latest giveaway. Does that sound fair to you Darnelle? Does that sound like a company that is simply mismanaged? Or does it sound like a group of scum who will sacrifice their franchisee for the short-term reward. This time we won't take it. This time there WILL BE a lot of stores that tell the Qtards to stick it where the sun don't shine. The Qtards have declared war on their own franchisees and the blood of those franchisees who are forced out of business will be on the hands of The Dicks, Brennanman, and Dino. Quiznos Sucks.Re: Economic Woes Eat Into IHOP and Applebee's Sales
This is about IHOP and Applebees not quiznos. I feel this blog has become a full time blog for Cuppys and Quiznos. Stop being selfish lets hear about some other companies.Mr. MauMau: She's baaack #2
Zor1 has a point. To that I would also note with dismay the return of our "friend" who turns every post into a discussion about "churning."
Perhaps Mr. MauMau could move those comments to the Ranter's Soapbox and allow the rest of us to have rational discussions.
Some people want to barge into every thread and regurgitate the same "churning-SBA/IFA/FTC conspiracy" garbage. My guess is that is not simply because of rudeness, but is because they are incapable of making an intelligent argument on any topic and want to drag down discourse to their Ranter level.
Mr. MauMau should not permit that. Put the nutcases in the rubber room, please.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
Re: Mr. MauMau: She's baaack #2
thanks Paul.AMEN!!
AMEN!!-
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Value Menu Causes Restaurant's Closure
The $5 sub is hurting more than just the sit down chains. Quiznos franchisees are hurting too. The latest Q closing is a restaurant that lasted five weeks. The franchisee invested $360,000 in build out costs and than another $11,000 since openning. The franchisee got hammered with Grand Openning Coupons distributed at the outset and Q's "special" pricing which includes $2 Sammies, $5 smalls, $7 Mediums and $9 larges. The coupons and pricing generated big losses every week despite generating a lot of sales. The franchisee called her area co-ordinator and his advice was to coupon. The area co-ordinator also told her the 2,5,7, and 9 works and it was HER fault she had to close. How much do you want to bet that Quiznos is already preparing to churn that store so the new owner has low enough costs to survive?Sounds like my store
My Store lasted 8 months but when the 5, 7, & 9 pricing was started that was the last nail in the coffin! How can Quiznos keep taking people's monry like this. They have you pay all this money to build the store and then you end up putting up your own money every week just to try to get to the next week. and it is the same story over and over. then Quiznos sits there and says you didnt run the store right. How can that many people NOT run their store right?? Quiznos is a scheme palin and simple!!Quiznos closing
Any franchise owner who closes after only being open five weeks needs to close. There are already enough stupid franchise owners out there. Invest $360k and you can't make it past five weeks. Give me a freakin break. Another sign of stupidity is for any franchise owner to buy a Quiznos. Talk about not doing your due diligence.Re: Quiznos closing
The mere fact that Quiznos uses a banner ad on this very site should be proof enough that sucker buyers remain blind to reality in spite of the most overwhelming alarms and warnings.
Franchisors (with great salesmen) win all day long while due diligence services loose in the same proportion. And, naturally, buyers loose at an even greater rate.
(I, of course, will continue to offer due diligence/insight services, not because I expect them to be profitable, but because there are limited numbers of people that recognize the need and understand that such insurance is a good thing. Plus, with all of my writings against franchise 'brokerage', I have to offer an alternative. However, I repeat, franchise due diligence services will NEVER be a profitable business, and I've sung that song for over ten years.)
The reasons are obvious why 'sales' is the highest paid of all professions - if you are good at it.
So, who's good at sales?
Quiznos
FranCorp
IFA
Cuppy's(?)
..........
..........
fill in your own blank.
Nick Bibby is an international franchise consultant and a program developer dedicated to excellence in entrepreneurship.
Nick Bibby founded BibbyGroup.com, an organization dedicated to franchise and entrepreneurial excellence.
Bad Franchisors Give Franchising A Bad Name Lee
If you google "Quiznos Problems" you'll find a list of thousands of stories and posts on Blue Mau Mau and other sites that outline the many, many problems with Quiznos and the broken lives of former franchisees, forced into bankruptcy or selling their restaurants for pennies on the dollar. One franchisee committed suicide and his story is out there for those who want to read all about it. Many of the new Q franchisees never bother to google, others google, read the Q's Rocky Horror Picture Show and decide incest really is best.Brennenman Is Available
Quiznos turn-around guru is available...if you need a ceo with no imagination and no business acumen. In his 18 months at Quiznos Greg Brennanmen watched while more than 700 restaurants closed, raised food and paper prices for franchisees (35%+ cost today) while simultaneously cutting sub prices by 20%, launched the failed delivery program, and blamed the franchisees for the state of the system. For that record this week he was kicked upstairs and replaced by #2 (and I do mean #2) David Dino, another failure. Quiznos doesn't have a talent pool it has a talent puddle.the Brenneman debacle
....don't forget his weekly "infomercial" where he and his staff tells all the Q FO's that everyone is doing a fabulous job and everything is going great for FO's and how the "failed" delivery program is just stupendous. This makes us Q FO's look around and wonder what kind of drug this man and his team is taking. Here in NE Ohio, roughly 50% and not the advertised 75% of the restaurants deliver and out of the 50% that currently deliver, half of those are now realizing what a mistake it was. The lies and deceit and half-truths continueWhere in NE Ohio
I own one of these dogs in Pa and I work in NE Ohio. Yes, I have full time job and manager. I had to keep paying the payroll somehow. I would love to know where you are as I have probably eaten at your store.Brenneman to Subway
If Brenneman and his team were to go to Subway and "execute" their go forward plan, we Quiznos owners would be sitting in tall cotton.KEEP YOUR MONEY IN THE BANK
As a past franchisee,in the Windsor, Ontario area, my best advice is to keep your money in the bank. There were 13 stores in the area and we all lost money, the ones that sold the last 4 remaining stores at dirt cheap prices will make a few bucks, but then, they have just bought themselves a job.The Q rep for the area was rude and degrading to the franchisee's, as franchisee's lost their 250k and their dignity, and she made a heathly pay check. I am sorry to hear of Bob Baber demise and at some point in this ordeal I felt the same.It's been almost 2 years and I'm still dealing with the problems this has caused to our family.Get A Protected Territory Or End Up Like Quiznos
As a Quiznos franchisee I urge anyone who looks at a franchising opportunity to insist on a protected territory or walk away. Unscrupulous organizations like Quiznos take full advantage of the loophole to put four and five stores within a few miles of each other despite the long-term damage. And even with the greatest chain circumstances change or the franchisor gets bought and the priority changes from long-term to short-term. Competition is rough enough with other chains, why compete against yourself?Quiznos Franchisees Sue Over Franchise Agreement
See news story at Beaver County Times
Editor's note: I have deleted the original posting since it was a copy of the original article. Pasting entire news articles breaks copyright laws and Blue MauMau's posting guidelines. This article has been moved from Mr. Robert Purvin's Best and Worst Franchise Agreements to our long-standing Quiznos forum.
Quiznos Sued Over Franchise Agreement
Story above missed the highlighted claims of the lawsuit. Specifically that Q changes the agreement to the detriment of franchisees. Not mentioned is tje little clause that says Q purchases of food and other supplies will be done for the benefit of franchisees. In return franchisees are forced to buy everything off the truck. Our food costs are 40+%. That benefits me?
THE CLAIMS
Among the claims in the lawsuit:
Quiznos “engages in a policy of fraudulently and deceptively inducing franchisees to purchase Quiznos franchises” as it intentionally misrepresents terms of the franchise contract, changes policies with no warning, and also misrepresents financial predictions and the likelihood a franchise will succeed.
Oversaturates a geographical area with more franchises than the market can support and doesn’t conduct research into whether an area can support even a single franchise.
Forces stores to buy food and supplies at a high price from company-mandated suppliers and won’t allow stores to get cheaper products from other suppliers.
Forces stores to accept coupons for free or discounted food but doesn’t reimburse the stores, cutting into the stores’ profits.
Once a store fails and closes, Quiznos threatens to make franchises liable for royalty payments laid out in a 15-year agreement.
Eat a Great Quiznos Sandwich, Then Buy a Proven Franchise
Despite the lawsuits from angry Quiznos owners, people continue to buy units. Here's a story from Palm Springs about how someone fell in love with the sandwich so they bought the franchise.
Your newest buyers are biting into Quiznos' tasty sandwiches, and then looking for facts to back their decision. Some of Q's newest owners are either oblivious to your complaints or they are ignoring them.
Here's what the new owner expects:
People can be so lazy and dreamy-eyed.
Buy a Q ?
Would it be smart to buy a Q out in central california? What kind of profits should I be expecting? or how can I get more information?Buy a Q
Do not buy or open one! Big mistake. May as well give you money away now.Financial Suicide on The Installment Plan
Oh, my god, has the level of intelligence sunk so low that the math questions are now multiple choice? So, buy a franchise, you may enjoy sharing your misery as you sink deeper in deeper and deeper.Smart to Buy a Quiznos? You betcha!
Sure. Don't bother spending a little time by searching here as all the news is all good. You could probably make 2 to $300,000 per year with even one in a lousy location and that's with you hiring a manager while you spend your time surfing. They practically run themselves. For more good and honest info, call Quiznos and ask them to have a salesman contact you.Let's Upgrade the Conversation
Let's agree to challenge ideas without killing the messenger. I am concerned with the deterioration of the conversation on this forum and the character assassination when thought leaders are in disagreement. I am not immune, I took a cheap shot at Les Stewart last week. Fot that I am sorry.
Les, I apologize.
Joe Mathews
Franchise Performance Group
Co-author Street Smart Franchising
Joe Mathews
Franchise Performance Group
Co-author Street Smart Franchising
No I don't work for Subway
To Mr. Frankman...
I AM a Quiznos employee, and that comment you selected of mine was meant as a JOKE!
It was a parody of Quiznos Q is for Quality motto.
I wasn't trying to discourage prospective buyers....but any potential Quiznos owner should proceed with eyes wide open.
Why, Mr. Blue Mau Mau, the Court Records
I don't understand! Yesterday, you announced the Court Records of a contributing member to this site would be removed -----and you explained your reasons for removing them.
And, today, there still appear under the Quiznos "What's Wrong with This Concept ---Quizno's.
And, additionally, you have announced that yesterday's comments were lost.
What is going on???
Franchisee Beware
The business model that has evolved among many franchisors is one that no longer relies exclusively on royalties from franchisees. In fact, a case can now be made that many companies are more reliant on the food and supplies sold to franchisees and new franchises sold to new owner/operators. The result is what is good for the company in more case than not is NOT good for franchisees.
Suppliers rebate a certain percentage of the price of goods sold to the company that buys them based on bulk. Some franchisors pass the savings directly to the franchisees. In other cases the money is diverted into the franchisor's bank account. Quiznos CEO Greg Brenneman he sees no problem with the latter.
The problem with that kind of model is that unscrupulous execs can milk franchisees for big money if safeguards aren't in place. An example that comes to mind is the flood of predatory coupons that Quiznos released in the spring. Franchisees were forced to eat thousands of dollars in added food costs while the company took in millions in additional revenue. Those franchisees that refused to take the coupons were seen as greedy by customers. The company says that they won't do that again, but what safeguards are in place to make sure that it doesn't?
Franchisees can also pay outrageously high prices for common items. Many routinely complain of paying more for product from suppliers than what they can pay at Sam's or Costco's for the exact same item.
The franchisor can also recommend product pricing that is artificially low. That increases sales of a product but leaves franchisees with little or no profit on the sale. Q came out with a line of products and put out a recommended price that left the food cost at 50%. Since many franchisees will blindly follow the corporate recommendation those who don't see reduced sales and are seen as greedy by the public. The company laughs all the way to the bank.
Many franchisees have formed strong associations to serve as a counter balance to the company interests. Unfortunately the Q franchisees are discouraged by the company - both verbally and by legal actions taken by Q against those who try. The company refuses to even consider a partnership with a franchisee group. Instead, the company has setup a sham committee that has no weight and is routinely ignored by the decision makers.
Finally, some companies try to sell their franchise as a way to own multiple stores - like McDonalds or Burger King. But do the numbers add up? To run a McDonalds it takes a manager, assistant managers, and supervisors. Does the business model give the average owner the kind of return that is necessary to pay people the market rate and provide a fair return? For most, including Q, the answer is a resounding NO.
when lucy met therocket she never knew the reason why
Quiznos Not A Restaurant Company
A company that is owned by a lawyer, run by lawyers, Wall Street and MBA types, and has no corporate stores can't be expected to do what's in the best interest of the restaurants. Hence, Q and UPS are more similar than would appear at first glance. Q policies, like UPS, are designed to maximize profit at the corporate level at the expense of the units themselves. High food costs, predatory coupons financed totally by franchisees, and heavy handed tactics toward franchisees who object bear that out.
True, UPS won't crash and burn if the UPS stores disappear, unlike the Q. However, the business landscape is littered with corporate failures traced to management that lost focus on its core business. Q went from being a restaurant company that franchises to a franchise company that sells restaurants. UPS is a franchisor that sells shipping stores. Same concept, same failed results for investors (franchisees).
when lucy met therocket she never knew the reason why