Quiznos: A Tragic Ending to a Franchisee's Plight
The Whittier Daily News in California reported that Bob Baber walked into the restroom of a Quiznos restaurant on November 27, and shot himself three times. A detective on the scene reported that he had this letter in his possession.
The letter is posted below.
Life goes on and we pass through Days of sunlight days of tears It’s the way life comes to you Foolish wasting precious years
I am not a fool. My wife is not a fool
I even refuse to call myself gullible. I am not a gullible. My wife is not a gullibleWe trusted in Quiznos. They promised us success, help and everything else to get us to buy into the “dream” they were selling. They had a private secret unannounced agenda! To trap you and screw you, the franchisee!
We are not fools. But, we have been fooled
We are like so many others who also bought into this dream and lost a substantial portion of their life’s savings.
Countless individuals and families have been destroyed. Even some lives have been lost
I have struggled hard and did the best I could to create a voice for the franchisees in the system and to create a “support system” for the franchisees, which does not exist, and to fight the injustices of this franchise system (Quiznos). Not to bring the system down, but only to make it fair.
I hope my efforts will not go wasted. I hope the government will look into the systematic deceitful business practices of this franchisor. A serious investigation must be undertaken
It’s been a tough battle
I have been dragged through the legal system for over 18 months by the immensely superior financial might of the franchisor, which will continue to keep justice from coming to me, and to the hundreds and thousands of franchisees who are trapped similarly in the system and are slaving for this franchisor, and those who have bought into the franchise agreement, and not yet become store operators
I have spent and sacrificed my time, money, family life. I thought of an option to leave the system quietly and fade away, but now I choose not to do that, and instead let the struggle go on
My struggle will continue after my sacrifice.
Some one must do something about what Quiznos is doing to the trapped franchisees. Everything they do is in their own self interest, with utter disregard for the interests of the franchisees, to who they sold the “dream” and put into business, only to screw them systematically from day one
The press and the media must bring out the atrocities Quiznos is carrying on with.
In this franchise system the Franchisor has all the rights and no duties or obligations, whereas it is just the opposite for the Franchisee, which is the franchisee has no rights, no remedies, only obligations
I have not been able to think well, eat well, for the past one month
My health has been going down very fast
My mental capacity, to think, to work, and carry on my daily activities normally, is severely diminished
I cannot survive like this much longer
Quiznos has killed me. Destroyed my life. Destroyed my family life for the past seven years It has been a harrowing experience. We just could not get out of it. All doors were shut
Can some one stop this?Can the government stop this Quiznos from destroying peoples lives? They have defrauded me and they are defrauding people. See my law suit (complaint) how they defrauded me from the very beginning, and then continued their systematic defrauding through out the period, until we left
They retaliated against me for trying to create a voice for the franchisees in the system We were abused, we were manipulated, we were exploited,
I deeply regret getting in to Quiznos. I wish I had never heard of themCan the media stop this?
CNN we need your help. Nancy Grace, please help! Glora Alred? Who else? KTLA, LA Times, OC Register PleaseHow can a common individual like me and those like me in similar circumstances, there are thousands, with limited resources get justice?
I believe there will be justice. But it will be too late for me.
There are a large and growing number of us who believe, unreservedly, that the handful of people who own and/or otherwise control the Quiznos Corporation should spend the rest of their lives in prison. The Quiznos Corporation is just one of the most egregious in what they do, but the entirety of franchising in America is open to this kind of abuse. The IFA (International Franchise Association) is the umbrella entity that, along with individual Franchisors, has enough money and power to buy the legislation that protects the Franchisor, and exploits the Franchisee. Fair and just legislation, that would level the playing field, never sees the light of day. Senators and Representatives, primarily Republicans, continue to sell hard working Americans down the river. STAY FAR, FAR AWAY FROM THE QUIZNOS CORPORATION. THEY ARE CRIMINAL IN WHAT THEY DO. And treat any Franchise System with deep suspicion
Signed: Bob Baber
These files are on the USB drive
* Read Toasted Subs Franchisee Association's dedicated page to Bob Baber [Editor's note: The dedicated page was pulled off the site.]
Janet Sparks is a freelance reporter who writes about complex issues related to the franchise industry, including the litigation between franchisors and franchisees.She is the former publisher of Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years, and was an independent reporter/columnist for a leading franchise magazine for over 10 years. Sparks is also a Forbes.com contributor to its leadership/franchise section. She can be emailed at jsparks@bluemaumau.org.
Comments
Off the List for failure...
Dear Guest:
Welcome: You must be new to BlueMaumau, although it's hard to tell, the Sir Name of Guest is quite common here in the land of the bluemaumau.
Please allow me to point out that if you'll dig deeper into the Quiznos discussion you'll learn that YES Quiznos is not in the Top 500 but that is only because the person at Quiznos or at the marketing/PR agency associated with Quiznos Failed to return their paperwork to Entrepreneur in the appropriate time frame. Had they done so, they would have most likely remained in the top 5.
Believe & Succeed,FranSynergySynergizing Franchising 1 Franchisee at a time!wwww.fransynergy.com
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Franchise Regulation
You realize, I know, that government regulation of franchises is stacked in favor of the franchisors because government considers "franchising" as good for business and want to encourage this "trickle down" business concept (that resembles indenture) to maintain a viable economy.
The consumer protection laws do not apply to franchisees. Some members of The Congress of the US have tried to get a Bill passed to strengthen protections for franchisees but the franchisors, who have all of the money and the clout, always prevent any effective legislation. The franchisees have a "small voice" when addressing their complaints to the legislatures and the regulators, and the courts protect "public policy" because they tend to interpret franchise agreements strictly under contract law and contract case law.
Some of the states have statutes and laws that give some help to the franchisees but most of the failed franchisees are not in the financial condition to support any kind of arbitration or litigation in the courts.
A Franchisee, like Baber, who is brought to despair and depression and who becomes sick and commits suicide gets very little coverasge in the news and the media -------and no sympathy from his franchisor who will personally attack him in defense of their own ugly practices if the matter ever gets to a court.
The government of the people, for the people, and by the people is infected with the virus of "corporatism" and the worm of "privatization" and our elected officials and government regulators permit the redistribution of wealth at the expense of the "bottom feeder" --the franchisee - who can be sacrificed to the concept of the "public good" - and the "public good" is defined by the large corporations of our nation.
If our elected officials do not care and will not regulate franchisors to protect the franchisees from the greed of the corporations who gain, even while the franchisee is dying and failing, and in the failure itself (because of "fire sales" and "acquisition of the tangible assets", franchisees will continue to be sacrificed for the "public good"!
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Quizno should pay a million dollar to Baber's family.
What kind of a freak are you.
World needs to see what Quizno did to this man, Baber, how he felt and what drove him to take his life.
Do you have any idea what went through his mind before he pulled the trigger, how beautiful life could have been for him, but society and a bad business choice pushed him to do that.
You are a very small person.
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SBA Failure
Hey smart Bob,Did you know that Quiznos and Quiznos Subs are one of the same. Did you not see the 4.93 % failure rate of Quiznos?? Go to BizBuy and look and the volume of pages of Quiznos for sale. Then do a search for Subways. Every Quiznos is for sale out there.
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Franchising
It would take people who have a vested interest in promoting franchising to post pro-Quznos comments here. They know absolutely nothing about the mis-deeds of Quiznos corporation. They have no idea of the lives that have been ruined by this company. Quiznos has been responsible for the break-up of marriages, the elimination of college funds for their kids, bankruptcy, and now suicide. You guys have no idea how evil these guys are!! There is no accountability with the morons who run this company. If only you could walk a mile in our shoes. Quiznos has spent our national advertising money on the corporate jet expenses, bonuses, relocation expenses, etc. There is no shame in what these guys do.
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Quizno's Break-Even
Guest: "There is only about 800 dollar profit I make a month and the rest goes to Quiznos, Quizno's food, Franchise Fee, Muzak, and some to employees (This is the least cost), out of 460K."
That's a pretty tough living -- working for free like that. It sounds like $500k is pretty close to your break-even point, giving yourself a small salary. Do you think that is close to what revenues are for most Quizno's restaurants?
- How long did you own a Quizno's franchise?
- How many other owners in your franchise training class are like you, out of how many?
- How much harder would it be to make $600k? What would it take? And what do you think would be the net?
Frankman
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Fran
Your comment to send condolences to Quiznos Corporate, is quite frankly a slap in the face, coming from a former, Quiznos franchisee, who was actually a small percentage to obtain a living and sell the store for a profit, you have NO IDEA how badly they treat franchisees. So send sympathy to a giant who has ruined so many lives is unconciousable to say the least, Ive watched MANY ruined lives, over the years, Ive watched marketing meetings turn into the likes of the "Jerry Springer Show" because of the anger and outrage at was was being done to franchisees, Ive watched stores on the brink of bankruptcy only to try to be re-sold by Quiznos corporate, for yet another profit for them, the stories are endless. How about going to an annual meeting and having security guards placed at the doors perhaps to remove anyone who dare had an opinion. Im glad that I escaped out of the system, unscaved, but needless to say there is a huge hole in my heart for those who havent, and BELIEVE me, there are plenty, I have yet, to see with my own to eyes more than maybe 5 successful Quiznos franchisees, and this is across the country! Maybe people think it is a matter of opinion, but if you would like, give it a try, and TRY to make a decent living (its almost impossible). Ive felt from day one, that Quiznos corporate treated the franchisees like enemies, and there was nothing in my six years in the system that changed my mind!
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A contact of person who specializes in Quizno's resales
To those who need his services, my friend and colleague Geoff Wilkinson is a business resale consultant who has run point on many difficult Quizno's resales. His phone number is (502) 639-7153.He is a high integrity, stand up guy. He will give franchisees a very clear understanding as to the resale value of their business, timing, as well as expert consulting in how to maximize their resale value.
Joe Mathews
Franchise Performance GroupCo-author Street Smart Franchising
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Quiznos in NY Times
Quizno's article in Saturday (Feb 24, 2007) New York Times, click here for link .
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A contact of person who specializes in Quizno's resales
To those who need his services, my friend and colleague Geoff Wilkinson is a business resale consultant who has run point on many difficult Quizno's resales. His phone number is (502) 639-7153.He is a high integrity, stand up guy. He will give franchisees a very clear understanding as to the resale value of their business, timing, as well as expert consulting in how to maximize their resale value.
Joe Mathews
Franchise Performance GroupCo-author Street Smart Franchising
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Not So Smart Bob
This Bob is not trying to be a smart @$$. Really. I'm one of those guys that lost his shirt in the 2001 stock market slide. Didn't know when to get out. And I'm no stranger to tough breaks. I relate very deeply to this story.
And to prove my first point that this Bob is not so smart, I mixed up the 0.13% charge-off numbers - those numbers of loans that the SBA has to charge-off because they cannot collect the remainder of the loan, with the failure rate percentage.
The failure rate should be 4.93% failures on 1400 loans to Quizno's. And Quiznos Subs has 0% failure rate for 41 loans. No matter how you slice it, to this dim guy those are pretty low failure rates.
In regards to the BizBuy site, I see that 1 of the 8 sponsored ads displayed are for a Quizno's franchise opportunity seminar. What am I missing?
Frankman
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Similar story...
.... but worse. I work my day job M-F that pays some of the bills for the store. I then work Saturday, and Sunday by myself because sales are so bad. Our sales are $350k and falling. I can understand Bob giving up, I would love to sell my store. I can't take it much longer. It has been such a crock. Quizblows dreams up new ways all the time to fine us or make us pay for more and more and more stuff. They send default notices and threaten to close us just for some kid putting a half ounce less than expected meat on a sandwich. It's ridiculous - it's not a partnership at all, it's a dictatorship. You take all the risk, do all the work, and they take any meager money that is left. They keep you enslaved and at the brink of bankruptcy.
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Not so smart Bob
Your facts are incorrect. Your quoted closure rates are incorrect, and you simply... are incorrect.
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10 days is not enough time to really study the FDD
It takes months to understand the FDD. I believe a person needs to study and look for things that are ify. You will see that anything ify will pretain to the zee. Anything concrete will relate to the zor. I laugh at 10 days because it is a joke. Go to Caleasi before you talk to the franchise of your choice. Pay a franchise lawyer to go over it. It takes the average layman a long time to understand the implications of the FDD. Many people don't even know what an addendum is. Unfortunately many people do not know there are franchise lawyers. If you don't understand the FDD than take as long as it takes until you understand what it implies. If they rush you drop the zor. That is a red flag. If you do not understand it do not sign. The consequences is bankruptcy, divorce, living in poverty, begging for money from relatives, depression and possible suicide. Is the consequences enough reason to take the time to understand a Franchise Disclosure Document?
Bob Baber will always be remembered.
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Christ you people are
Christ you people are idiots....no other franchise would allow 1 person working. Do you realize how UNSAFE THAT IS!!!!! That's asking to get robbed, not to mention you can't build sales with one person...you only have 10 people coming in for 5 hours...you picked a bad location. If it's not the location...then you are doing something wrong. People I have run Shlotzky's, Baldinos, and been a partner in Blimpie. I have never run a store that lost money, on average my stores made 8-10 percent in profits. Now it took me working my ass off in some of them, and some not so much. Best case I worked 50 hours a week with 2 days off, worst case I worked closer to 70 with 1 day off a pay period. YOU people on this board have NO BUSINESS running your stores. You would be better off paying someone else and splitting the profits with them. YOU need help!!!!
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Quiznos Problems
I am a current Quiznos Owner in the New York area. I am 26 and got into this business when I was 23. I got out of college at 22 and worked for JP Morgan getting paid very well however, working many hours. I got into Quiznos thinking I would be making the same amount if not more with less time. I was completely WRONG! I work around 80 hours a week without pay and my store doesn't profit more than $500 a month with sales over $8,200 a week. I can't even get married to my girlfriend of six years becasue I have no income or job. It has been the worse three years of my life. Quiznos should lower food cost, and allow owners to get certain cheaper services on there own.
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Make A Difference, Join The TSFA
Or at least feel like you are. The only way to break the death grip (p)Rick has on Q franchisees is to unite. "united we stand, divided we're qscrewed".
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Should I buy A Q Now
I am considering buying a Quiznos from an existing owner. The location is great and the price is $35k. The seller is going to pay for the 4k remodel and the transfer fee.
He said he made about $306k in sales last year. The place is employee run because his health and age.
What should I look for and any suggestions is appreciated. After reviewing the message board about the food cost and the lawsuits I am having 2nd thoughts.
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I feel sorry for
the existing franchisee. But I doubt you are ready for any business if you have to ask this question. Learn how to read first; this is not the only Q blog. Get someone to show you how to find google and then get them to type in Quiznos. If they can do that then I'm sure they can read the hits for you. Perhaps you could get your wife's opinion once she has a read.
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I am not going to buy one
I was looking to buy a q too. The broker said it is doing 380k / year and asking 79k in sales which looked good, but when I read all these horrifying stories, I am not going forward with this.\
The co-ops fees are too high.
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$8.200 week
Can you please tell me your expenses for a month
to make only $500 profit
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Here is the math
Food 34
Paper 2
Labor 24
Royalties 11
Discounts 15
Lease/Rent 12.......
As we are already at 98% you can see the problem. Food can be cut somewhat....at most 4%. Labor can be reduced if you are willing to live at your location but this makes multi unit operations impossible. The constant discounting keeps most in a choke hold and unprofitable.
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Here's my location...gross
Here's my location...gross figures
Food 30
Paper 2
Labor 20 - I nearly live there
Royalties 11
Discounts 11 - My own pricing NOT Quiznos'
Lease/Rent 9.5
Could improve Food & Paper if bought outside of the Quiznos system. Royalities are too high for this Brand's strength (or lack thereof). Quiznos' marketing has pretty much sucked for over 3 years now so discounting is the only way this brand can generate sales. Rent check each month is $3633.
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Question!
Hey! I need advice!... I'm 24 yrs old, and got bachelors with triple major banking/finance/mgmnt. I live in Florida, and there is currently a quiznos franchise for sale. I do not have the money but been thinking about applying for a loan at the bank. The owner of this established franchise is 75,000 and the owner wants 60,000 down which he claims to be VERY reasonable! He says sales are around 200,000 but Im currently waiting on the actual report. If any, can you give me any advice? Anything would help! Thank you!
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Get a job and learn stuff!
You need life experience not a crappy Quizno's.
Owning Quizno's with $200K in sales means? You could be an assistant manager at McDonald's and make more money or better yet get in the Chik-fil-a management to ownership program.
I am perplexed that a graduate with a triple major banking/finance/management would posit a question like yours. What do they teach in people these days? Or are they handing out stupid pills to folks?
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Job and learn stuff
Guest,
Yours is a very wise and genuine contribution.
Kevin O'Leary, the BSer venture capitalist on ABC's Shark Tank (originally CBC's Dragon's Den) told a VC potential "winner":
Congratulations you're grossing $150,000: Welcome to the welfare line.
True stuff slips out every once in a while.
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Job and learn stuff
Guest,
Yours is a very wise and genuine contribution.
Kevin O'Leary, the BSer venture capitalist on ABC's Shark Tank (originally CBC's Dragon's Den) told a VC potential "winner":
Congratulations you're grossing $150,000: Welcome to the welfare line.
True stuff slips out every once in a while.
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A, you get an F for considering a Quiznos
Have you read all the horror stories about Quizno's? Quizno's horror stories are all over the internet. It has been written here on BMM that Quiznos is cheap when it comes to due diligence.
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Smells Like Q Flatulence
$200,000 a year? That's peanuts. You'll find yourself paying everyone but yourself. 11% right off the top for royalties and advertisement money that Q uses to advertise and sell currently closed restaurants. 35% for food and paper, 35% for your employees and a small salary for yourself, rent, electricity at more than a grand a month, taxes, discounts and giveaways designed to make Q money on the extra food sold to you. Quiznos makes its money selling food, paper, and supplies to YOU. Dick Schaden could care less whether you're making a profit or not.
The guy giving you this great "deal" spent $350,000 to buy and build-out his Q. Now he wants to get out with $60,000. Think about why. And don't assume you're that much smarter than the guy who owns it now. Even with great ideas you have very little flexibility when you can only sell what Q authorizes you to sell and can only buy what Quiznos authorizes you to buy, and you're required to staff at the level Q tells you to whether your business justifies it or not.
If you're looking for an opportunity look for a system where franchisees own multiple stores and have their own territory, a system that is expanding. Q has gone from 6,000 restaurants to 3,000 in three years. Try to find a system where franchisees buy the food and advertising through franchisee run co-ops. That's how you minimize costs in a franchisee based system.
Q is a loser run by a flea bitten dog. Don't believe me? Find a good franchisee lawyer and pay the money to talk about Quiznos, franchise agreement, and what you can expect in a long-term relationship with Quiznos. Don't buy yourself a crummy, low paying job.
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No Franchise "tells" you how
No Franchise "tells" you how to staff...they might suggest it, but in 15 years I have never seen that. EVERY franchise has problems with the food distributors, it's inherent in this business. If you have never worked in this business you have no idea what goes into it. If anything Quiznos is guilty of letting people who have no business running stores-do so. The average profit percentage for the quick-service industry is around 5-7 percent...That's all. You WON'T GET RICH WITH ONE STORE!! As a matter of fact the ONLY way to make money is to have multiple stores...on top of that; you must be an owner/operator. No franchise tells you this...but people need to stop thinking running restaurants is easy. IT'S NOT!!!
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multi owner/operator?
How can you be a multi unit owner/operator?
The average profit percentage on most is not 5-7% but 10-15%.
Agree that you can't get rich being a single store operator.
I think that most Quiznos zees would be happy if they could pay their bills and themselves.
I can't remember ever speaking with a zee who thought that the restaurant business was easy.
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answer: google quiznos &
answer: google quiznos & lawsuits
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What is your food cost
What is your food cost percentage???? You should be at 34%, 36% at the highest, any higher than that, and you are wasting, over ordering, or food is "walking out" of your store. You should be ordering weekly, any GM will tell you that, the day before your food order comes in you should be low on everything. If produce is too high, shop around, hell you could even buy things at the farmers markets. (I've never seen a franchise dictate the use of a produce company, so don't give that excuse). With your sales figures you should be making 38 grand PROFIT, you should pay yourself as GM 400-700 a week (which ever to keep your labor in line) at 700 a week you'd be making 70 grand. Now set your store up to run without you and buy another. People this business is not a "get rich quick" business. I'm shocked by how naive people on this board are.
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Who's naive?
You don't really believe that all of us are that stupid......do you?
Why didn't I think of that??????
All I need to do is pay myself 400-700 a week? What if the margins do not allow for that?
Set up the store to run without me and buy another one?
You are a fountain of wisdom.
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At Quiznos The Song Remains The Same
While wholesale prices have stabalized, and in many cases fallen, Q has made an art of lowering quality without lowering prices to franchisees. Now come the price increases - while pushing buy one, get one for a buck. All with the b.s. flowing:
"The following cheese price increase for restaurants is a direct result of the Canadian Dairy Commission (CDC) increase in the support prices for butter and skim milk powder. Support prices are the prices at which the CDC buys and sells butter and skim milk powder to balance seasonal demand changes on the domestic market. Although this CDC price increase came into effect February 1st, the increase has been absorbed by Quiznos for the first 6 months."
For you smart guys buying Smashburger franchises - this is what is in store for you.
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I own a Quiznos owner. The
I own a Quiznos owner. The brand is in ruin across the country. In January of 2009 there were 12 stores in our city. At the end of November 2009 there will be 3. This is common across the country with Quiznos. I recommend strongly that you support the financially ruined owners by purchasing a meal now and then but recommend even more that you tell anyone interested in investing in this brand that they DO NOT DO IT. Add the franchise SMASHBURGER to the avoid at all cost list because it is owned by the same Rick and Dave Shaden that are ruining Quiznos owners. My store closes in November and I cannot wait for that day.
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I wonder how many suicides are connected with Quiznos
We all know about Bob Baber. Does anyone know?
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What to do???????????
I have been looking at purchasing a couple of Quizno’s, and through my due diligence I have found information that some may find helpful.
I owned 8 Subways for around ten years, and when I sold them (don’t ask me why) I was making around $500K per year. Those same stores today, nearly ten years later make around 800K per year. I cannot help but to look at Quiznos through the lens of the experience I had with Subway, as both restaurants compete in the same category.
Subways AUV’s (average unit volumes) are around $9,100.00 weekly. Food Cost is at 30% (actual) Labor 20% (actual). Now I am assuming a quality operator is running the store. At 1500sf and rent of $21.50 psf, plus triple net of $2.50 psf, rent would be $3,000 per month.
Taking these figures into consideration, the store would net a pre-tax income of around $94,000 per year. If the store were to sell, an expected purchase price would be about 3 to 4 times that figure, or 36.55 times weekly sales. If we use 3.5 times net profit the store would sell for approximately $329,000. Some owners would ask more, and anything less would be a solid buy. Believe me I know the numbers.
Conversely, let’s look at Quiznos, and assume a volume of $9,100 for comparison sake (although I don’t know their national AUV, I do know it must be way below this). Although Quiznos will quote a FC of 29%-30%, this is not a true FC, to arrive at the real Food Cost some addition will have to take place. Actual FC usually runs around *36% when all comparable line items are added in, such as; paper costs, waste, spoilage, comp food, promo food, & coupons (this will bring you to an apples to apples comparison with Subway’s food cost). Labor 23%, and at 1,800sf, and rent of $21.50 psf, plus triple net of $2.50 psf, rent would be $3,600 per month.
Taking these figures into consideration, the store would net a pre-tax income of around $63,000 per year. If the store were to sell, an expected purchase price would be about 3 to 4 times that figure, or 24.23 times weekly sales. If we use 3.5 times net profit the store would sell for approximately $220,500. HOWEVER, This needs to be balanced with all the risk factors that Quizno’s presents a franchisee –vs- the risk factors Subway presents a franchisee. A Quizno’s restaurant must surely take a hit here. So, what is a Quiznos really worth? I would suggest a 2.5 multiple of the ACCURATE annual cash flow number, minus a “risk factor” deduction based on a compilation of negatives listed in this blog of $ ___________. (this is where you have to access the risk of owning a Quizno’s, and translate that into a monetary deduction – overall franchisor seems to be a train wreak, loaded with a large appetite for kickbacks rather than a focus on lowering costs). If you have a stomach for risk, and the store is in good condition with current décor and equipment, I might suggest a 2.5 multiple of net sales, or in this scenario a price tag of $157,500 (minus any necessary remodel costs to bring to store into compliance with franchisor) TOPS. The risk will exist that Quizno’s could allow a new store to open in too close of a proximity to your store, after you purchase the store, whereby cannibalizing your sales and profit dollars. That is one of the risk factors you will have to calculate into your purchase price. As an interesting side note, Subway can show that as they penetrate markets more fully with new stores, sales have actually risen. I know that there are exceptions even within their system, and that there are diminishing returns at some point, but overall that has held true for them. But it is a different system with a very sharp leader, even though some franchisees will disagree, I have personally gone over numbers with the guy, and he is flat out intelligent, and has created a business model that has stood the test of time.
Now Based on the preceding scenario, the break even for this Quiznos would be around $6,800 per week in sales. For every dollar sales are lower than B/E you will lose around 45 cents per dollar of sales, and for every dollar sales are higher than B/E you would cash flow 52 cents on every dollar. Example if your sales are $5,800 per week you would lose around $23,000 annually, however, if your sales were $7,800 per week you would make approximately $27,000 annually. I know the ratios are 33/67, however realistically labor can only go so low, without further exacerbating a sales decline.
Quizno’s food cost is probably the single most negative factor on a stores inability to be profitable. For example at $9,100 per week in sales, Quizno’s would spend $28,392 more on food than a comparable Subway. That is a significant number.
Another large factor in profitability is the size of the stores. An average Subway is probably 1,350sf, where an average Quizno’s is probably around 1,850sf, which means the average Quizno’s would spend $12,000 a year more than a comparable Subway. When you add the extra cost of food with the extra cost of rent, you will see that a comparable Subway will cash flow $40,392 more than a Quiznos from these two line items alone. So, the question might be raised – Are Subways really more expensive, or just more valuable?
Note: These scenarios do not take a loan payment into consideration, but are based on a store with no debt. If you have debt, simply reduce the cash flow shown above with the amount of your annual debt service.
*Quizno’s has in the recent past, credited the owner with rebate that could lower the food cost by approximately 1.5%. They may bring this back for a period of time, but I would not count on it in your calculations.
Hope all this helps for those facing a decision of whether to purchase or not. Best Wishes………………..
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Re: What to do???????
Please take this solely as a question and in no way an attempt to disparage: Having been 10 years since you sold those Subways, could the sale price target (multiple of net profit) have changed? My franchise resale is now about 1 to 2 times net profit, whereas, prior to 2008 those same resales were for 1 x gross revenue (even if the site operated at a net loss the resale would be close to 1 x gross). In other words, the resale value has dropped significantly over the last 2 years.
Just curious if you have checked the recent true resale calculation or if you are going by 10 year old information. I am not a Subway franchisee so I honestly do not know.
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Quiznos is a major flop show across the nation!
Quiznos is failing. Not only in Chicago, but all across the nation from CA to NJ to FL to AL.
Ken