Quiznos Bankruptcy Could Have Roots in Franchisee's Suicide
After Quiznos filed for Chapter 11 bankruptcy on March 14, one publication questions if the company’s financial troubles are rooted in a franchisee’s devastating suicide in its community seven years ago.
The Long Beach Post reported last week that while claims of a poor economy and increased competition forced the Denver-based firm to seek protection from its creditors, there are deeper financial issues that may have plagued the company.
In 1998, Bhupinder “Bob” Baber drained his life savings to open and sustain two Quiznos in Long Beach . . . When the company allowed another Quiznos to open nearby in 2004 (against what he said was originally promised) and Baber’s sales dropped, he claimed that he was unable to get help from the company.
The Post explained that by the end of 2004, Baber formed the Quiznos Franchisee Association, “ a group for California franchisees to commiserate and hopefully bring changes to what was felt by some franchisees as unfair practices in the company.” The article further states,
Quiznos responded by terminating both of his franchises, citing customer complaints and failed corporate inspections. Baber felt his cancellation was retaliation for forming his group and responded with his own litigation, which resulted in more than a year of suits and countersuits that drained the franchisee of more than $100,000 in legal fees.
When franchisee Baber received a court ruling that he would have to arbitrate his dispute in Denver, it proved to be too much of a financial strain for him to endure.
A month later, Baber walked into the bathroom at his friend’s Quiznos in Whitter and shot himself in the chest.
A suicide note found on his person pleaded for an investigation into what he called “Quiznos’ criminal activities.” The note was soon posted on the internet by other franchisees who also felt trapped by the franchisor’s pricing and increasing royalty fees.
Following the highly publicized suicide, angry franchisees began filing class action lawsuits in various states against the fast-growing chain. The complaints alleged Quiznos engaged in fraudulent schemes to sell mandated essential goods at inflated prices to its store owners. Claims also included that the franchisor used abusive coupon and discount programs, and unlawful controls over franchisees through a pattern of racketeering activity.
Eventually, many lawsuits were settled, the Post reports.
Eight years after Baber’s suicide, the Long Beach franchisee’s fight for change at Quiznos may finally be seeing results. In a statement announcing the bankruptcy, Quiznos CEO Stuart Mathis said the restructuring will allow the company to follow through on its new business plan which puts more support into its franchisees.