Quiznos makes a great sub, has over 4,000 store locations worldwide, and is the world’s second largest sub sandwich franchise. But a news report last week entitled What Do Mortgages, Madoff and Quiznos have in Common? warns that although Quiznos’ strong presence puts it on the short list of franchises to consider, it is a pathway to financial distress for middle class Americans.

We know that brokers and banks sold the idea of risk-free mortgage products that ended up bankrupting America and Madoff sold out his family, friends and community in a modern day Ponzi-Scheme.

These deceptive business practices and a lack of efficient regulatory action have startled the US economy. What you don’t know is that Quiznos is selling the American dream through a six-inch toasted sub that is burning franchisees across the country.

The author stresses that in each instance, regulatory measures should have been put in place to prevent these things from happening.

For Madoff, the federal authorities were tipped numerous times, but decided that either Madoff was acting ethically or that the case wasn’t worth investigation.

Similarly, the government stood by as Wall Street began repackaging mortgage securities.

In fact, President Clinton made changes to the Community Reinvestment Act to make mortgages more obtainable for lower and lower-middle class families. And Federal Reserve Guru Alan Greenspan kept rates low making more enticing for people to borrow.

The report then focuses on Quiznos.

Hundreds of Americans chasing the “American dream” often turn to franchising to build their visions. Those who buy into brands that operate like Quiznos are too often led astray from the path to profit and find more trouble than they bargained. 25% default rates? Haven’t we learned enough over the past 5 years? Why hasn’t the government stepped in to protect the interests of Average Joe on Mainstreet? Spending too much time investigating steroids in baseball perhaps?

While we live in a capitalist society where we are required to take ownership for our decisions and investments, regulators need to step in when brands like Quiznos are found treating their “partners” unfairly.

The Federal Trade Commission (FTC) should implement more franchise disclosure laws, or at least fortify preexisting laws. Item 19 in the Franchise Disclosure Document (document given to every franchisee outlining the agreement between the franchisor and franchisee) is optional. Item 19, a relatively recent addition to the FDD, gives the option to a franchisor to provide actual or potential performance data of its existing stores. Should we, the consumer, not be able to see the all the data of all the stores?

The author surmises that while consumers have a responsibility to make informed decisions and understand the American “dream” isn’t achieved overnight, the government shouldn’t have organizations like the SEC or FTC if they aren’t enforcing regulations properly.

Start by having Quiznos clean up their act. That will set an example for other corporates who are consistently profiting through deceitful actions. Fingers crossed until then.

Article: What Do Mortgages Madoff And Quiznos Have In by the Franchise Hound

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