Edgewood Marketing Aka Victory Promotions rip-off! What a joke. I felt as if I had been kidknapped. Chicago & Suburbs Illinois

Women disappear like that. For good.

Look at Natalie in Aruba. Sweet, innocent young girl. Shark food. Sea crabs pulling meat off her face. Bloated body floating around in the ocean somewhere.

Think about what you let yourself get dragged into. Going door-to-door. Nobody knows where you are. Nobody is there to watch over you.

A woman on foot going door-to-door is an easy target for an armed robbery. Or, worse. Much, much worse.

You were d**n lucky. You could've ended up in a dumpster. Under the stinky trash bags.

The MINUTE you get a bad feeling about something, stop, get the hell out while you still have a chance.

Otherwise, you might end up in the ocean too.

Thanks for all the info, Wylie! While it wasn't exactly related, lololol, it WAS extremely interesting! If you are posting this Quiznos info wherever you see the name mentioned, more power to ya! My family is definitely interested in private business opportunities and your information was VERY educational on franchising in general as well as specifically to Quiznos! Thank you!

Sponsors & Vendors
................................
Global Payments Inc
Credit Card Processing @vantage
(TSFA pricing)
............................
(TSFA Pricing 2005)
............................
The American Franchisee Association
Bring Major Marketing Talent to Franchisees!
............................
Franchise Ownership
............................
Lawyers for Franchisees







Related Links

--------------------------------------------------------------------------------
Last Revised on June 27, 2005
What every Potential Quiznos Franchisee MUST know before they purchase a Quiznos franchise...
There are a few, sad cliques' that come to mind when we envision a new, inexperienced franchisee buying their first Quiznos store:
A fool is born everyday
A fool and his money are soon parted
There is a fool around every corner

The reasons for these cliques coming to mind are numerous, and the unfortunate truth of them has left many-a-Quiznos-franchisee wishing they had never heard the name Quiznos. The reasons for these negative impressions, shared by many current and previous Quiznos franchisees, are detailed below. We suggest you read the information here in its entirety. It could save you a ton of future heartache, grief, despair.and money.

The TSFA recommends buying an existing store, (of which there many for sale) if you are intent on owning a Quiznos. Why? Because the entry costs will almost always be much cheaper, and the business is established, which is the hardest part of any new business, especially when working with a company like Quiznos. If you are intent on opening a new store, we recommend you read the following first.

1. The Franchise Agreement:
The stories the TSFA hears over-and-over again is that franchisees aren't aware of the various, insidious, subtle and financially hazardous clauses in their franchise contract before they sign them. Franchisees are not reading their contracts thoroughly enough, are not seeking experienced legal advice, are being pressured by slick Quiznos sales people, and are not talking to enough existing franchisees before signing the franchise contract. This represents a lack of due diligence on the part of the franchisees. The Franchise agreement is a contract, enforceable in court. Know what you are signing.

The reasons we think this occurs is because most people who see a Quiznos only see the flashy logos, colorful decor and the good food, but they fail to understand or find out about the real truth of the grossly-unprofitable underlying business model. They fail to find out that nearly half of the first 1000 stores Quiznos ever opened are now closed. They fail to find out that over half of the franchises that Quiznos has sold as of Jan 2005, are not currently open (and for many good reasons).

The Quiznos Franchise Agreement is quite possibly one of the most one-sided (favoring the franchisor) in the industry today, according to standards set forth by the American Franchisee Association and the opinions of many well-respected franchise attorneys.

Over the years, Quiznos has modified its UFOC annually (sometime more often) to make it more dictatorial and stringent towards the franchisee. In addition, Quiznos has an Operations Manual, which for all intents and purposes, is just an extension of the franchise agreement (except that you don't get to see it until you buy your franchise). Every time that Quiznos wants to change procedures in store operations (which frequently involve costing you more money) they just write a change into the operations manual. When an unsuspecting, potential franchisee signs their agreement, little do they realize that the requirements in the franchise agreement are just the tip-of-the-iceberg.

Quiznos does not consult franchisees on these changes; they just make them. As a franchisee which you are obligated to follow the Operations Manual based on the requirement in the franchise agreement you signed. This is great for the franchisor, but lousy for the franchisee to have no voice about operations in your own business. As Quiznos seems to perceive the situation though, it's their business; you are just there as a tool to facilitate their royalty payments.

Before you consider purchasing a Quiznos franchise, if you are a wise individual and you don't want to see any personal fortune you may have amassed disappear, you should take the following actions and information into full consideration.

Consult an experienced Franchisee Attorney:

As part of due diligence, unless you are a qualified attorney, you should consult your legal counsel before signing the Quiznos franchise agreement. Ideally, this person should be a lawyer familiar with franchise law. In addition, take heed to any and all concerns that your legal counsel may present. Chances are they represent real issues you will have to deal with as a franchisee. In order to see a recent legal review of a 2004 Quiznos UFOC, by a very reputable pro-franchisee legal firm, click here.



2. Franchise Agreement issues favoring the Quiznos Franchisor.

The following is an analysis of some of the items that Quiznos franchise agreements require. By signing a franchise agreement you will be obligated to abide by the requirements of the agreement. It is a binding contract. Please read it carefully. If you don't understand the intent of the wording, consult your lawyer.

Do not rely on the Quiznos franchise salesperson to clarify the wording in the agreement for you. If the sales person tries to restate the franchisee agreement's intent in his own words or in a way that you do not think is accurate, have them put that restatement in writing and have them sign it, as the franchisor's representative. Also, if any Quiznos sales representative makes verbal claims or promises of any sort or if they make any promises to you regarding any manner of your future as a franchisee or your operations, have them put that in writing as well. This will serve you in potential future legal matters. Bottom line...GET IT IN WRITING. If you can't, then do not rely on the information.


A. Accounting and Payroll

- Quiznos currently mandates the accounting and payroll services that must be used by a new franchisee and in most cases these services cost more than the franchisee could negotiate for independently.

Why does it cost more to use a service through Quiznos than what you could negotiate on your own?

Because Quiznos can and does take Rebates (with no limit on the rebate amounts) on every service or product they sell you. It says so in your franchise agreement, and Quiznos doesn't hesitate to do this, even when it is detrimental to the majority of Quiznos franchisees.


B. Rebates

- Quiznos is not prevented from making deals with vendors who sell goods and services to the franchisee that are mandated by the franchisee agreement. Very often these vendors provide rebates, promotional fees and commissions to the franchisor in return for being allowed to sell their products and services to a captive market. Instead of passing these rebates, promotion fees and commissions to the franchisee, these payments are retained by Quiznos Corporate, with no accountability whatsoever to the franchisee for the use of these funds.

What is a rebate? (def. A deduction from an amount to be paid or a return of part of an amount given in payment).

Some people also refer to these rebates as kickbacks. (def. Slang. A return of a percentage of a sum of money already received, typically as a result of pressure, coercion, or a secret agreement.)


C. Franchisor Venue Provisions

- This provision requires franchisee disputes to be litigated or arbitrated in the home state of the franchisor. This increases costs for the franchisee, but also allows the franchisor to litigate, arbitrate or even mediate on its home turf. The Quiznos UFOC currently requires all disputes to be resolved in the state of Colorado. If you think a legal dispute between you and the franchisor will never arise, we can put you in touch with many franchisees that used to feel that way as well. The last thing you want is to have to fight the franchisor in their home state, but it is a very real situation you may find yourself in.

Non-competition (encroachment covenants) Many franchise agreements allow the franchisor to place competing units where ever they want. Quiznos franchise agreement allows them to do this. Quiznos corporate has placed stores right around the corner from other stores in countless cases, creating a severe financial impact on the pre-existing store.

Why would they do this and harm the sales of an existing franchisee?

The answers are simple:

1. Because they can (unless your state laws prevent it) and it usually benefits them (but not you) financially,

2. Because it brings Quiznos more revenues both from sales of the equipment, services, and eventual royalties, while frequently causing a decrease in sales to the surrounding and pre-existing Quiznos stores.

Consider the following scenario (which has occurred in many cases already).

You own a store making $10K per week (better than average for Quiznos). Then Quiznos puts another franchisee store right around the corner from you. This might happen because the Area Director needs to open another store to meet a quota or the local Quiznos rep. is being told to open a store. This new store starts out making $7k a week, but $3K of that comes from your old customers because the store is closer to them. Now we have two stores making $7K a week (not even breaking even for most Quiznos) and yet the corporation is now getting royalties off of $14K instead of $10K. Who wins while both franchisees struggle? The Quiznos Corporation wins of course. Now we have two struggling franchisees who are saddles with large debt payments, and their only choices are to try and increase sales (which usually don't work) or to inject additional funds from any sources available (usually savings) in order to keep the store afloat and hope for better times. The problem is, as many bankrupt, ex-Quiznos franchisees can confirm, those better times never come.


D. Sole Sourcing Requirements

- Many product-oriented franchises like Quiznos require franchisees to purchase products solely from the franchisor or suppliers designated by the franchisor. No allowance is given to purchase from alternative sources even if quality standards are upheld. This leaves the determination of the gross margin achieved by the franchisee solely in the hands of the franchisor. Quiznos requires that you purchase equipment from their supplier, National Restaurant Supply (NRS). NRS is deeply allied with Quiznos Corporate. Quiznos also currently requires that all food supplies, with minor exceptions, be purchased through Multifoods Corporation. Quiznos Corporate receives annual rebates from several of these suppliers for the purchases franchisees make.


E. Lack of Accountability of Advertising Fund


- Although Quiznos charges franchisees up to 5% for advertising use, they do not provide an official, unbiased, accounting to their franchisees for how this money is spent. Nor is what they currently provide in any level of detail to make an accurate assessment that the funds are being spent for their intended purpose. There is documented evidence of past misuse of these funds available from this website.


F. Unilateral Amendments to the franchise Agreement and Operations Manual.


- Quiznos franchise agreement provides that the franchisor can change its "operations manual" or other company policies from time to time without notice or approval of any franchisees. Frequently this means that Quiznos Corporate can try and dictate procedures or requirements (e.g. the operational hours of your store) by making changes to their Operations Manual. Quiznos is also known for not allowing potential franchisees to see their Operations Manual until after purchase of a franchise. Ask to see and read the Operations Manual before you sign your franchise agreement. If they won't show it to you, then this alone should make you war. The franchise agreement (contract) says that you will abide by the requirements in the Operations Manual. We consider it absolutely foolish to agree to abide by something you have never seen or read. It is especially risky given what existing franchisees currently know about Quiznos use of this document as a mechanism for requiring all manner of unreasonable requirements, without any consultation or approval by the franchisees.



G. Lack of Franchisee Representation in Corporate


- Quiznos Corporate has a Franchisee Advisory Council (FAC), created basically to given franchisees the impression that they are responsive to franchisees. The FAC is a franchisor created entity, run entirely by the franchisor, not the franchisees. To date, this small body of franchisees has accomplished absolutely nothing of any significance for franchisees. This is because the Quiznos Corporation holds all the power in negotiations. The FAC asking for changes to be made is like Oliver Twist asking for more pudding please sir?

- The very integrity of the FAC has been questioned by many franchisees, because their poor performance in looking out for franchise interests gives the impression that they are working for the interests of the franchisor, not the franchisee. In effect, Quiznos uses them to try and add a level of legitimacy to many of the egregious policies they impose on existing franchisees. The FAC does not report to the franchisees nor are they held responsible or accountable in any way to the franchisee. In effect, the FAC is merely a facade between the franchisor and the franchisees.



3. The PROFITABILTY aspects of owning a QUIZNOS RESTAURANT:

The TSFA's overall opinion regarding Quiznos is this: Quiznos has great food, but an absolutely horrid business model and even worse franchisee relations.


Click here to see samples of two existing Quiznos stores, from a break-even perspective, and you will quickly understand how the average Quiznos has extreme difficulty being profitable. Please not that these are very conservative examples and in many cases things are worse.



A. Royalties and store profitability (non-profitability)


- Quiznos currently requires a 7% royalty fee, plus a 1% local advertising fee, plus a 3% advertising fund fee. In addition, Quiznos may charge you up to a full 5% for advertising (and does in some areas of the country). As a minimum, you will pay, on average, 11-12% of your weekly gross sales in royalty/advertising fee. This is a cost franchisees find excessive when it is added into the many other additional hidden costs (which we won't go into) that Quiznos imposes on their franchisees.

-There are no provisions contained in the franchise agreement for relief of any of these fees, should you encounter financial difficulties in the operation of your business. Quiznos has not been known to provide any financial relief to franchisees, (although they have stood by idly and watched numerous store owners go into bankruptcy). You have to understand and appreciate that Quiznos is not interested in whether individual stores are profitable, as long as they can continue to get royalty payments from the franchisee. Most franchisees, who aren't profitable, continue to remain open because many have large bank debts associated with excessive build-out or start-up costs, and while they aren't able to make any real profit, at least they can service their debt. The only alternative for most is bankruptcy, so many hang on, injecting much of their life's savings, in hopes that things will get better or they will be able to pay their debts. The sad part is most of these franchisees learn after the second or third year that things don't get any better. This is when many try to sell their store(s), almost always at a loss, just to get out of their situation.

-Quiznos makes a large part of their money from new stores sales (franchisee payments, equipment sales, fees for every aspect of development). It is easier and more cost efficient for Quiznos to find a new franchisee and open another store (thereby immediately increasing revenue) than it is to try and rescue or salvage an existing, struggling store by increasing sales.

-Some of the reasons for this are that:

The Quiznos Corporation owns the businesses that new franchisees are required to buy their equipment from, such as Source One Distribution (recently renamed Ba-Bing!) and Source One Systems (The company you buy your register from).

Quiznos owns Continental Lending Group, a company which tries to manipulate franchisees into expensive lease agreements for equipment or lends money to franchisees at above-average market rates and conditions.

Quiznos owns/and or is affiliated with other companies which are also used as a revenue stream for Quiznos by taking advantage of the requirement in the franchisee agreement that franchisees must use Quiznos approved vendors.


B. Food, Labor, Paper (FLP)

Currently Quiznos averages between 53%-58% nationally for FLP. Although it is unlikely that Quiznos will provide evidence of actual costs and sales in your area, understand that those numbers do exist in and are distributed to all franchisees in a weekly document entitled the BlastFax, and you should ask for them.

Ask your Quiznos salesperson for weekly sales reports from all the stores or near your proposed location. This information is available, and unless there is something to hide, they should show it to you.

With your royalty payments of 11-12%, this represents approximately 64-70% of your income out the door before you pay for items such as:

rent,
common area maintenance (CAM),
insurance,
bank loans / debt service,
taxes,
new equipment or replacements,
facilities maintenance and update costs,
payroll and accounting costs,
office supplies
vendor services such as MUZAK, towel service, rug service
And finally some profit for you. Ask to see a pro-forma and then take that pro-forma to a franchisee(s) in your area, for a reality check. In addition, it is highly recommended that your financial advisor review these figures. Quiznos pro-forma are not guarantees, they are merely estimates, at best.


Finally - Any promises made to you by your franchisee salesperson should be made in writing and incorporated into your franchise agreement. The reason for this is simple. Quiznos currently has a clause in their franchise agreement that basically nullifies everything that may have been verbally promised to you by any of their representatives. It basically states that you are relying only on the information provided in the franchise agreement in making your decision to purchase. By signing the UFOC, you are agreeing to this statement. Therefore, if a Quiznos rep. promises you something (no matter how insignificant it may seem), if it is not something listed in the franchise agreement, make sure you get it in writing and it is singed by you and them, and preferably witnessed or notarized.

Chances are, the Quiznos rep. will not be wiling to sign it, and if so, that should raise all sorts of red flags in anyone's mind.

Don't be afraid to ask for reasonable amendments to the franchise agreement. You may deeply regret later having not asked. Talk to other franchisees in your area and find out their problems and successes or contact the TSFA and let us set up an appointment with you to converse with some existing franchisees. Find out their real sales numbers.



Buy a Pre-existing QUIZNOS Store

-If you are seriously interested in buying a Quiznos, we recommend you buy an Existing Store. A new store can cost upwards of $300,000+. You have to sell a huge amount of sandwiches to ever cover that investment and our estimate is that less than 20% of existing Quiznos could support that initial cost.

-The reasons to buy an existing store rather than a new store are many. Most of the fixed costs of a new store which have no real value, such as fees that Quiznos charges new franchisees for various things to include lease approval or architecture designs, have already been absorbed.

-The headaches involved in getting a store built, and the frequent complaints of non-support from the Quiznos Corporation in this process, have already been overcome. Many franchisees, dissatisfied with Quiznos, are merely looking for a way out, and you can pick up some good deals on existing stores. We have many stores for sale on this website alone. If you search the entire web, you will find many more Quiznos for sale. It is a much cheaper way of entry into the Quiznos market, if your mind is made up about becoming a Quiznos franchisee.

Would you like to speak to one or more existing, independent franchisees to learn what life is really like as a franchisee (to include potential profits and losses)? Click here to learn how!

2002-2005 TSFA - Toasted Subs Franchisee Association
Contact us by email at tsfa@toastedsubs.info or by phone at (254) 618-5417
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Sponsors & Vendors
................................
Global Payments Inc
Credit Card Processing @vantage
(TSFA pricing)
............................
(TSFA Pricing 2005)
............................
The American Franchisee Association
Bring Major Marketing Talent to Franchisees!
............................
Franchise Ownership
............................
Lawyers for Franchisees







Related Links

--------------------------------------------------------------------------------
Last Revised on June 27, 2005
What every Potential Quiznos Franchisee MUST know before they purchase a Quiznos franchise...
There are a few, sad cliques' that come to mind when we envision a new, inexperienced franchisee buying their first Quiznos store:
A fool is born everyday
A fool and his money are soon parted
There is a fool around every corner

The reasons for these cliques coming to mind are numerous, and the unfortunate truth of them has left many-a-Quiznos-franchisee wishing they had never heard the name Quiznos. The reasons for these negative impressions, shared by many current and previous Quiznos franchisees, are detailed below. We suggest you read the information here in its entirety. It could save you a ton of future heartache, grief, despair.and money.

The TSFA recommends buying an existing store, (of which there many for sale) if you are intent on owning a Quiznos. Why? Because the entry costs will almost always be much cheaper, and the business is established, which is the hardest part of any new business, especially when working with a company like Quiznos. If you are intent on opening a new store, we recommend you read the following first.

1. The Franchise Agreement:
The stories the TSFA hears over-and-over again is that franchisees aren't aware of the various, insidious, subtle and financially hazardous clauses in their franchise contract before they sign them. Franchisees are not reading their contracts thoroughly enough, are not seeking experienced legal advice, are being pressured by slick Quiznos sales people, and are not talking to enough existing franchisees before signing the franchise contract. This represents a lack of due diligence on the part of the franchisees. The Franchise agreement is a contract, enforceable in court. Know what you are signing.

The reasons we think this occurs is because most people who see a Quiznos only see the flashy logos, colorful decor and the good food, but they fail to understand or find out about the real truth of the grossly-unprofitable underlying business model. They fail to find out that nearly half of the first 1000 stores Quiznos ever opened are now closed. They fail to find out that over half of the franchises that Quiznos has sold as of Jan 2005, are not currently open (and for many good reasons).

The Quiznos Franchise Agreement is quite possibly one of the most one-sided (favoring the franchisor) in the industry today, according to standards set forth by the American Franchisee Association and the opinions of many well-respected franchise attorneys.

Over the years, Quiznos has modified its UFOC annually (sometime more often) to make it more dictatorial and stringent towards the franchisee. In addition, Quiznos has an Operations Manual, which for all intents and purposes, is just an extension of the franchise agreement (except that you don't get to see it until you buy your franchise). Every time that Quiznos wants to change procedures in store operations (which frequently involve costing you more money) they just write a change into the operations manual. When an unsuspecting, potential franchisee signs their agreement, little do they realize that the requirements in the franchise agreement are just the tip-of-the-iceberg.

Quiznos does not consult franchisees on these changes; they just make them. As a franchisee which you are obligated to follow the Operations Manual based on the requirement in the franchise agreement you signed. This is great for the franchisor, but lousy for the franchisee to have no voice about operations in your own business. As Quiznos seems to perceive the situation though, it's their business; you are just there as a tool to facilitate their royalty payments.

Before you consider purchasing a Quiznos franchise, if you are a wise individual and you don't want to see any personal fortune you may have amassed disappear, you should take the following actions and information into full consideration.

Consult an experienced Franchisee Attorney:

As part of due diligence, unless you are a qualified attorney, you should consult your legal counsel before signing the Quiznos franchise agreement. Ideally, this person should be a lawyer familiar with franchise law. In addition, take heed to any and all concerns that your legal counsel may present. Chances are they represent real issues you will have to deal with as a franchisee. In order to see a recent legal review of a 2004 Quiznos UFOC, by a very reputable pro-franchisee legal firm, click here.



2. Franchise Agreement issues favoring the Quiznos Franchisor.

The following is an analysis of some of the items that Quiznos franchise agreements require. By signing a franchise agreement you will be obligated to abide by the requirements of the agreement. It is a binding contract. Please read it carefully. If you don't understand the intent of the wording, consult your lawyer.

Do not rely on the Quiznos franchise salesperson to clarify the wording in the agreement for you. If the sales person tries to restate the franchisee agreement's intent in his own words or in a way that you do not think is accurate, have them put that restatement in writing and have them sign it, as the franchisor's representative. Also, if any Quiznos sales representative makes verbal claims or promises of any sort or if they make any promises to you regarding any manner of your future as a franchisee or your operations, have them put that in writing as well. This will serve you in potential future legal matters. Bottom line...GET IT IN WRITING. If you can't, then do not rely on the information.


A. Accounting and Payroll

- Quiznos currently mandates the accounting and payroll services that must be used by a new franchisee and in most cases these services cost more than the franchisee could negotiate for independently.

Why does it cost more to use a service through Quiznos than what you could negotiate on your own?

Because Quiznos can and does take Rebates (with no limit on the rebate amounts) on every service or product they sell you. It says so in your franchise agreement, and Quiznos doesn't hesitate to do this, even when it is detrimental to the majority of Quiznos franchisees.


B. Rebates

- Quiznos is not prevented from making deals with vendors who sell goods and services to the franchisee that are mandated by the franchisee agreement. Very often these vendors provide rebates, promotional fees and commissions to the franchisor in return for being allowed to sell their products and services to a captive market. Instead of passing these rebates, promotion fees and commissions to the franchisee, these payments are retained by Quiznos Corporate, with no accountability whatsoever to the franchisee for the use of these funds.

What is a rebate? (def. A deduction from an amount to be paid or a return of part of an amount given in payment).

Some people also refer to these rebates as kickbacks. (def. Slang. A return of a percentage of a sum of money already received, typically as a result of pressure, coercion, or a secret agreement.)


C. Franchisor Venue Provisions

- This provision requires franchisee disputes to be litigated or arbitrated in the home state of the franchisor. This increases costs for the franchisee, but also allows the franchisor to litigate, arbitrate or even mediate on its home turf. The Quiznos UFOC currently requires all disputes to be resolved in the state of Colorado. If you think a legal dispute between you and the franchisor will never arise, we can put you in touch with many franchisees that used to feel that way as well. The last thing you want is to have to fight the franchisor in their home state, but it is a very real situation you may find yourself in.

Non-competition (encroachment covenants) Many franchise agreements allow the franchisor to place competing units where ever they want. Quiznos franchise agreement allows them to do this. Quiznos corporate has placed stores right around the corner from other stores in countless cases, creating a severe financial impact on the pre-existing store.

Why would they do this and harm the sales of an existing franchisee?

The answers are simple:

1. Because they can (unless your state laws prevent it) and it usually benefits them (but not you) financially,

2. Because it brings Quiznos more revenues both from sales of the equipment, services, and eventual royalties, while frequently causing a decrease in sales to the surrounding and pre-existing Quiznos stores.

Consider the following scenario (which has occurred in many cases already).

You own a store making $10K per week (better than average for Quiznos). Then Quiznos puts another franchisee store right around the corner from you. This might happen because the Area Director needs to open another store to meet a quota or the local Quiznos rep. is being told to open a store. This new store starts out making $7k a week, but $3K of that comes from your old customers because the store is closer to them. Now we have two stores making $7K a week (not even breaking even for most Quiznos) and yet the corporation is now getting royalties off of $14K instead of $10K. Who wins while both franchisees struggle? The Quiznos Corporation wins of course. Now we have two struggling franchisees who are saddles with large debt payments, and their only choices are to try and increase sales (which usually don't work) or to inject additional funds from any sources available (usually savings) in order to keep the store afloat and hope for better times. The problem is, as many bankrupt, ex-Quiznos franchisees can confirm, those better times never come.


D. Sole Sourcing Requirements

- Many product-oriented franchises like Quiznos require franchisees to purchase products solely from the franchisor or suppliers designated by the franchisor. No allowance is given to purchase from alternative sources even if quality standards are upheld. This leaves the determination of the gross margin achieved by the franchisee solely in the hands of the franchisor. Quiznos requires that you purchase equipment from their supplier, National Restaurant Supply (NRS). NRS is deeply allied with Quiznos Corporate. Quiznos also currently requires that all food supplies, with minor exceptions, be purchased through Multifoods Corporation. Quiznos Corporate receives annual rebates from several of these suppliers for the purchases franchisees make.


E. Lack of Accountability of Advertising Fund


- Although Quiznos charges franchisees up to 5% for advertising use, they do not provide an official, unbiased, accounting to their franchisees for how this money is spent. Nor is what they currently provide in any level of detail to make an accurate assessment that the funds are being spent for their intended purpose. There is documented evidence of past misuse of these funds available from this website.


F. Unilateral Amendments to the franchise Agreement and Operations Manual.


- Quiznos franchise agreement provides that the franchisor can change its "operations manual" or other company policies from time to time without notice or approval of any franchisees. Frequently this means that Quiznos Corporate can try and dictate procedures or requirements (e.g. the operational hours of your store) by making changes to their Operations Manual. Quiznos is also known for not allowing potential franchisees to see their Operations Manual until after purchase of a franchise. Ask to see and read the Operations Manual before you sign your franchise agreement. If they won't show it to you, then this alone should make you war. The franchise agreement (contract) says that you will abide by the requirements in the Operations Manual. We consider it absolutely foolish to agree to abide by something you have never seen or read. It is especially risky given what existing franchisees currently know about Quiznos use of this document as a mechanism for requiring all manner of unreasonable requirements, without any consultation or approval by the franchisees.



G. Lack of Franchisee Representation in Corporate


- Quiznos Corporate has a Franchisee Advisory Council (FAC), created basically to given franchisees the impression that they are responsive to franchisees. The FAC is a franchisor created entity, run entirely by the franchisor, not the franchisees. To date, this small body of franchisees has accomplished absolutely nothing of any significance for franchisees. This is because the Quiznos Corporation holds all the power in negotiations. The FAC asking for changes to be made is like Oliver Twist asking for more pudding please sir?

- The very integrity of the FAC has been questioned by many franchisees, because their poor performance in looking out for franchise interests gives the impression that they are working for the interests of the franchisor, not the franchisee. In effect, Quiznos uses them to try and add a level of legitimacy to many of the egregious policies they impose on existing franchisees. The FAC does not report to the franchisees nor are they held responsible or accountable in any way to the franchisee. In effect, the FAC is merely a facade between the franchisor and the franchisees.



3. The PROFITABILTY aspects of owning a QUIZNOS RESTAURANT:

The TSFA's overall opinion regarding Quiznos is this: Quiznos has great food, but an absolutely horrid business model and even worse franchisee relations.


Click here to see samples of two existing Quiznos stores, from a break-even perspective, and you will quickly understand how the average Quiznos has extreme difficulty being profitable. Please not that these are very conservative examples and in many cases things are worse.



A. Royalties and store profitability (non-profitability)


- Quiznos currently requires a 7% royalty fee, plus a 1% local advertising fee, plus a 3% advertising fund fee. In addition, Quiznos may charge you up to a full 5% for advertising (and does in some areas of the country). As a minimum, you will pay, on average, 11-12% of your weekly gross sales in royalty/advertising fee. This is a cost franchisees find excessive when it is added into the many other additional hidden costs (which we won't go into) that Quiznos imposes on their franchisees.

-There are no provisions contained in the franchise agreement for relief of any of these fees, should you encounter financial difficulties in the operation of your business. Quiznos has not been known to provide any financial relief to franchisees, (although they have stood by idly and watched numerous store owners go into bankruptcy). You have to understand and appreciate that Quiznos is not interested in whether individual stores are profitable, as long as they can continue to get royalty payments from the franchisee. Most franchisees, who aren't profitable, continue to remain open because many have large bank debts associated with excessive build-out or start-up costs, and while they aren't able to make any real profit, at least they can service their debt. The only alternative for most is bankruptcy, so many hang on, injecting much of their life's savings, in hopes that things will get better or they will be able to pay their debts. The sad part is most of these franchisees learn after the second or third year that things don't get any better. This is when many try to sell their store(s), almost always at a loss, just to get out of their situation.

-Quiznos makes a large part of their money from new stores sales (franchisee payments, equipment sales, fees for every aspect of development). It is easier and more cost efficient for Quiznos to find a new franchisee and open another store (thereby immediately increasing revenue) than it is to try and rescue or salvage an existing, struggling store by increasing sales.

-Some of the reasons for this are that:

The Quiznos Corporation owns the businesses that new franchisees are required to buy their equipment from, such as Source One Distribution (recently renamed Ba-Bing!) and Source One Systems (The company you buy your register from).

Quiznos owns Continental Lending Group, a company which tries to manipulate franchisees into expensive lease agreements for equipment or lends money to franchisees at above-average market rates and conditions.

Quiznos owns/and or is affiliated with other companies which are also used as a revenue stream for Quiznos by taking advantage of the requirement in the franchisee agreement that franchisees must use Quiznos approved vendors.


B. Food, Labor, Paper (FLP)

Currently Quiznos averages between 53%-58% nationally for FLP. Although it is unlikely that Quiznos will provide evidence of actual costs and sales in your area, understand that those numbers do exist in and are distributed to all franchisees in a weekly document entitled the BlastFax, and you should ask for them.

Ask your Quiznos salesperson for weekly sales reports from all the stores or near your proposed location. This information is available, and unless there is something to hide, they should show it to you.

With your royalty payments of 11-12%, this represents approximately 64-70% of your income out the door before you pay for items such as:

rent,
common area maintenance (CAM),
insurance,
bank loans / debt service,
taxes,
new equipment or replacements,
facilities maintenance and update costs,
payroll and accounting costs,
office supplies
vendor services such as MUZAK, towel service, rug service
And finally some profit for you. Ask to see a pro-forma and then take that pro-forma to a franchisee(s) in your area, for a reality check. In addition, it is highly recommended that your financial advisor review these figures. Quiznos pro-forma are not guarantees, they are merely estimates, at best.


Finally - Any promises made to you by your franchisee salesperson should be made in writing and incorporated into your franchise agreement. The reason for this is simple. Quiznos currently has a clause in their franchise agreement that basically nullifies everything that may have been verbally promised to you by any of their representatives. It basically states that you are relying only on the information provided in the franchise agreement in making your decision to purchase. By signing the UFOC, you are agreeing to this statement. Therefore, if a Quiznos rep. promises you something (no matter how insignificant it may seem), if it is not something listed in the franchise agreement, make sure you get it in writing and it is singed by you and them, and preferably witnessed or notarized.

Chances are, the Quiznos rep. will not be wiling to sign it, and if so, that should raise all sorts of red flags in anyone's mind.

Don't be afraid to ask for reasonable amendments to the franchise agreement. You may deeply regret later having not asked. Talk to other franchisees in your area and find out their problems and successes or contact the TSFA and let us set up an appointment with you to converse with some existing franchisees. Find out their real sales numbers.



Buy a Pre-existing QUIZNOS Store

-If you are seriously interested in buying a Quiznos, we recommend you buy an Existing Store. A new store can cost upwards of $300,000+. You have to sell a huge amount of sandwiches to ever cover that investment and our estimate is that less than 20% of existing Quiznos could support that initial cost.

-The reasons to buy an existing store rather than a new store are many. Most of the fixed costs of a new store which have no real value, such as fees that Quiznos charges new franchisees for various things to include lease approval or architecture designs, have already been absorbed.

-The headaches involved in getting a store built, and the frequent complaints of non-support from the Quiznos Corporation in this process, have already been overcome. Many franchisees, dissatisfied with Quiznos, are merely looking for a way out, and you can pick up some good deals on existing stores. We have many stores for sale on this website alone. If you search the entire web, you will find many more Quiznos for sale. It is a much cheaper way of entry into the Quiznos market, if your mind is made up about becoming a Quiznos franchisee.

Would you like to speak to one or more existing, independent franchisees to learn what life is really like as a franchisee (to include potential profits and losses)? Click here to learn how!

2002-2005 TSFA - Toasted Subs Franchisee Association
Contact us by email at tsfa@toastedsubs.info or by phone at (254) 618-5417
Powered by JDoe.com

Sponsors & Vendors
................................
Global Payments Inc
Credit Card Processing @vantage
(TSFA pricing)
............................
(TSFA Pricing 2005)
............................
The American Franchisee Association
Bring Major Marketing Talent to Franchisees!
............................
Franchise Ownership
............................
Lawyers for Franchisees







Related Links

--------------------------------------------------------------------------------
Last Revised on June 27, 2005
What every Potential Quiznos Franchisee MUST know before they purchase a Quiznos franchise...
There are a few, sad cliques' that come to mind when we envision a new, inexperienced franchisee buying their first Quiznos store:
A fool is born everyday
A fool and his money are soon parted
There is a fool around every corner

The reasons for these cliques coming to mind are numerous, and the unfortunate truth of them has left many-a-Quiznos-franchisee wishing they had never heard the name Quiznos. The reasons for these negative impressions, shared by many current and previous Quiznos franchisees, are detailed below. We suggest you read the information here in its entirety. It could save you a ton of future heartache, grief, despair.and money.

The TSFA recommends buying an existing store, (of which there many for sale) if you are intent on owning a Quiznos. Why? Because the entry costs will almost always be much cheaper, and the business is established, which is the hardest part of any new business, especially when working with a company like Quiznos. If you are intent on opening a new store, we recommend you read the following first.

1. The Franchise Agreement:
The stories the TSFA hears over-and-over again is that franchisees aren't aware of the various, insidious, subtle and financially hazardous clauses in their franchise contract before they sign them. Franchisees are not reading their contracts thoroughly enough, are not seeking experienced legal advice, are being pressured by slick Quiznos sales people, and are not talking to enough existing franchisees before signing the franchise contract. This represents a lack of due diligence on the part of the franchisees. The Franchise agreement is a contract, enforceable in court. Know what you are signing.

The reasons we think this occurs is because most people who see a Quiznos only see the flashy logos, colorful decor and the good food, but they fail to understand or find out about the real truth of the grossly-unprofitable underlying business model. They fail to find out that nearly half of the first 1000 stores Quiznos ever opened are now closed. They fail to find out that over half of the franchises that Quiznos has sold as of Jan 2005, are not currently open (and for many good reasons).

The Quiznos Franchise Agreement is quite possibly one of the most one-sided (favoring the franchisor) in the industry today, according to standards set forth by the American Franchisee Association and the opinions of many well-respected franchise attorneys.

Over the years, Quiznos has modified its UFOC annually (sometime more often) to make it more dictatorial and stringent towards the franchisee. In addition, Quiznos has an Operations Manual, which for all intents and purposes, is just an extension of the franchise agreement (except that you don't get to see it until you buy your franchise). Every time that Quiznos wants to change procedures in store operations (which frequently involve costing you more money) they just write a change into the operations manual. When an unsuspecting, potential franchisee signs their agreement, little do they realize that the requirements in the franchise agreement are just the tip-of-the-iceberg.

Quiznos does not consult franchisees on these changes; they just make them. As a franchisee which you are obligated to follow the Operations Manual based on the requirement in the franchise agreement you signed. This is great for the franchisor, but lousy for the franchisee to have no voice about operations in your own business. As Quiznos seems to perceive the situation though, it's their business; you are just there as a tool to facilitate their royalty payments.

Before you consider purchasing a Quiznos franchise, if you are a wise individual and you don't want to see any personal fortune you may have amassed disappear, you should take the following actions and information into full consideration.

Consult an experienced Franchisee Attorney:

As part of due diligence, unless you are a qualified attorney, you should consult your legal counsel before signing the Quiznos franchise agreement. Ideally, this person should be a lawyer familiar with franchise law. In addition, take heed to any and all concerns that your legal counsel may present. Chances are they represent real issues you will have to deal with as a franchisee. In order to see a recent legal review of a 2004 Quiznos UFOC, by a very reputable pro-franchisee legal firm, click here.



2. Franchise Agreement issues favoring the Quiznos Franchisor.

The following is an analysis of some of the items that Quiznos franchise agreements require. By signing a franchise agreement you will be obligated to abide by the requirements of the agreement. It is a binding contract. Please read it carefully. If you don't understand the intent of the wording, consult your lawyer.

Do not rely on the Quiznos franchise salesperson to clarify the wording in the agreement for you. If the sales person tries to restate the franchisee agreement's intent in his own words or in a way that you do not think is accurate, have them put that restatement in writing and have them sign it, as the franchisor's representative. Also, if any Quiznos sales representative makes verbal claims or promises of any sort or if they make any promises to you regarding any manner of your future as a franchisee or your operations, have them put that in writing as well. This will serve you in potential future legal matters. Bottom line...GET IT IN WRITING. If you can't, then do not rely on the information.


A. Accounting and Payroll

- Quiznos currently mandates the accounting and payroll services that must be used by a new franchisee and in most cases these services cost more than the franchisee could negotiate for independently.

Why does it cost more to use a service through Quiznos than what you could negotiate on your own?

Because Quiznos can and does take Rebates (with no limit on the rebate amounts) on every service or product they sell you. It says so in your franchise agreement, and Quiznos doesn't hesitate to do this, even when it is detrimental to the majority of Quiznos franchisees.


B. Rebates

- Quiznos is not prevented from making deals with vendors who sell goods and services to the franchisee that are mandated by the franchisee agreement. Very often these vendors provide rebates, promotional fees and commissions to the franchisor in return for being allowed to sell their products and services to a captive market. Instead of passing these rebates, promotion fees and commissions to the franchisee, these payments are retained by Quiznos Corporate, with no accountability whatsoever to the franchisee for the use of these funds.

What is a rebate? (def. A deduction from an amount to be paid or a return of part of an amount given in payment).

Some people also refer to these rebates as kickbacks. (def. Slang. A return of a percentage of a sum of money already received, typically as a result of pressure, coercion, or a secret agreement.)


C. Franchisor Venue Provisions

- This provision requires franchisee disputes to be litigated or arbitrated in the home state of the franchisor. This increases costs for the franchisee, but also allows the franchisor to litigate, arbitrate or even mediate on its home turf. The Quiznos UFOC currently requires all disputes to be resolved in the state of Colorado. If you think a legal dispute between you and the franchisor will never arise, we can put you in touch with many franchisees that used to feel that way as well. The last thing you want is to have to fight the franchisor in their home state, but it is a very real situation you may find yourself in.

Non-competition (encroachment covenants) Many franchise agreements allow the franchisor to place competing units where ever they want. Quiznos franchise agreement allows them to do this. Quiznos corporate has placed stores right around the corner from other stores in countless cases, creating a severe financial impact on the pre-existing store.

Why would they do this and harm the sales of an existing franchisee?

The answers are simple:

1. Because they can (unless your state laws prevent it) and it usually benefits them (but not you) financially,

2. Because it brings Quiznos more revenues both from sales of the equipment, services, and eventual royalties, while frequently causing a decrease in sales to the surrounding and pre-existing Quiznos stores.

Consider the following scenario (which has occurred in many cases already).

You own a store making $10K per week (better than average for Quiznos). Then Quiznos puts another franchisee store right around the corner from you. This might happen because the Area Director needs to open another store to meet a quota or the local Quiznos rep. is being told to open a store. This new store starts out making $7k a week, but $3K of that comes from your old customers because the store is closer to them. Now we have two stores making $7K a week (not even breaking even for most Quiznos) and yet the corporation is now getting royalties off of $14K instead of $10K. Who wins while both franchisees struggle? The Quiznos Corporation wins of course. Now we have two struggling franchisees who are saddles with large debt payments, and their only choices are to try and increase sales (which usually don't work) or to inject additional funds from any sources available (usually savings) in order to keep the store afloat and hope for better times. The problem is, as many bankrupt, ex-Quiznos franchisees can confirm, those better times never come.


D. Sole Sourcing Requirements

- Many product-oriented franchises like Quiznos require franchisees to purchase products solely from the franchisor or suppliers designated by the franchisor. No allowance is given to purchase from alternative sources even if quality standards are upheld. This leaves the determination of the gross margin achieved by the franchisee solely in the hands of the franchisor. Quiznos requires that you purchase equipment from their supplier, National Restaurant Supply (NRS). NRS is deeply allied with Quiznos Corporate. Quiznos also currently requires that all food supplies, with minor exceptions, be purchased through Multifoods Corporation. Quiznos Corporate receives annual rebates from several of these suppliers for the purchases franchisees make.


E. Lack of Accountability of Advertising Fund


- Although Quiznos charges franchisees up to 5% for advertising use, they do not provide an official, unbiased, accounting to their franchisees for how this money is spent. Nor is what they currently provide in any level of detail to make an accurate assessment that the funds are being spent for their intended purpose. There is documented evidence of past misuse of these funds available from this website.


F. Unilateral Amendments to the franchise Agreement and Operations Manual.


- Quiznos franchise agreement provides that the franchisor can change its "operations manual" or other company policies from time to time without notice or approval of any franchisees. Frequently this means that Quiznos Corporate can try and dictate procedures or requirements (e.g. the operational hours of your store) by making changes to their Operations Manual. Quiznos is also known for not allowing potential franchisees to see their Operations Manual until after purchase of a franchise. Ask to see and read the Operations Manual before you sign your franchise agreement. If they won't show it to you, then this alone should make you war. The franchise agreement (contract) says that you will abide by the requirements in the Operations Manual. We consider it absolutely foolish to agree to abide by something you have never seen or read. It is especially risky given what existing franchisees currently know about Quiznos use of this document as a mechanism for requiring all manner of unreasonable requirements, without any consultation or approval by the franchisees.



G. Lack of Franchisee Representation in Corporate


- Quiznos Corporate has a Franchisee Advisory Council (FAC), created basically to given franchisees the impression that they are responsive to franchisees. The FAC is a franchisor created entity, run entirely by the franchisor, not the franchisees. To date, this small body of franchisees has accomplished absolutely nothing of any significance for franchisees. This is because the Quiznos Corporation holds all the power in negotiations. The FAC asking for changes to be made is like Oliver Twist asking for more pudding please sir?

- The very integrity of the FAC has been questioned by many franchisees, because their poor performance in looking out for franchise interests gives the impression that they are working for the interests of the franchisor, not the franchisee. In effect, Quiznos uses them to try and add a level of legitimacy to many of the egregious policies they impose on existing franchisees. The FAC does not report to the franchisees nor are they held responsible or accountable in any way to the franchisee. In effect, the FAC is merely a facade between the franchisor and the franchisees.



3. The PROFITABILTY aspects of owning a QUIZNOS RESTAURANT:

The TSFA's overall opinion regarding Quiznos is this: Quiznos has great food, but an absolutely horrid business model and even worse franchisee relations.


Click here to see samples of two existing Quiznos stores, from a break-even perspective, and you will quickly understand how the average Quiznos has extreme difficulty being profitable. Please not that these are very conservative examples and in many cases things are worse.



A. Royalties and store profitability (non-profitability)


- Quiznos currently requires a 7% royalty fee, plus a 1% local advertising fee, plus a 3% advertising fund fee. In addition, Quiznos may charge you up to a full 5% for advertising (and does in some areas of the country). As a minimum, you will pay, on average, 11-12% of your weekly gross sales in royalty/advertising fee. This is a cost franchisees find excessive when it is added into the many other additional hidden costs (which we won't go into) that Quiznos imposes on their franchisees.

-There are no provisions contained in the franchise agreement for relief of any of these fees, should you encounter financial difficulties in the operation of your business. Quiznos has not been known to provide any financial relief to franchisees, (although they have stood by idly and watched numerous store owners go into bankruptcy). You have to understand and appreciate that Quiznos is not interested in whether individual stores are profitable, as long as they can continue to get royalty payments from the franchisee. Most franchisees, who aren't profitable, continue to remain open because many have large bank debts associated with excessive build-out or start-up costs, and while they aren't able to make any real profit, at least they can service their debt. The only alternative for most is bankruptcy, so many hang on, injecting much of their life's savings, in hopes that things will get better or they will be able to pay their debts. The sad part is most of these franchisees learn after the second or third year that things don't get any better. This is when many try to sell their store(s), almost always at a loss, just to get out of their situation.

-Quiznos makes a large part of their money from new stores sales (franchisee payments, equipment sales, fees for every aspect of development). It is easier and more cost efficient for Quiznos to find a new franchisee and open another store (thereby immediately increasing revenue) than it is to try and rescue or salvage an existing, struggling store by increasing sales.

-Some of the reasons for this are that:

The Quiznos Corporation owns the businesses that new franchisees are required to buy their equipment from, such as Source One Distribution (recently renamed Ba-Bing!) and Source One Systems (The company you buy your register from).

Quiznos owns Continental Lending Group, a company which tries to manipulate franchisees into expensive lease agreements for equipment or lends money to franchisees at above-average market rates and conditions.

Quiznos owns/and or is affiliated with other companies which are also used as a revenue stream for Quiznos by taking advantage of the requirement in the franchisee agreement that franchisees must use Quiznos approved vendors.


B. Food, Labor, Paper (FLP)

Currently Quiznos averages between 53%-58% nationally for FLP. Although it is unlikely that Quiznos will provide evidence of actual costs and sales in your area, understand that those numbers do exist in and are distributed to all franchisees in a weekly document entitled the BlastFax, and you should ask for them.

Ask your Quiznos salesperson for weekly sales reports from all the stores or near your proposed location. This information is available, and unless there is something to hide, they should show it to you.

With your royalty payments of 11-12%, this represents approximately 64-70% of your income out the door before you pay for items such as:

rent,
common area maintenance (CAM),
insurance,
bank loans / debt service,
taxes,
new equipment or replacements,
facilities maintenance and update costs,
payroll and accounting costs,
office supplies
vendor services such as MUZAK, towel service, rug service
And finally some profit for you. Ask to see a pro-forma and then take that pro-forma to a franchisee(s) in your area, for a reality check. In addition, it is highly recommended that your financial advisor review these figures. Quiznos pro-forma are not guarantees, they are merely estimates, at best.


Finally - Any promises made to you by your franchisee salesperson should be made in writing and incorporated into your franchise agreement. The reason for this is simple. Quiznos currently has a clause in their franchise agreement that basically nullifies everything that may have been verbally promised to you by any of their representatives. It basically states that you are relying only on the information provided in the franchise agreement in making your decision to purchase. By signing the UFOC, you are agreeing to this statement. Therefore, if a Quiznos rep. promises you something (no matter how insignificant it may seem), if it is not something listed in the franchise agreement, make sure you get it in writing and it is singed by you and them, and preferably witnessed or notarized.

Chances are, the Quiznos rep. will not be wiling to sign it, and if so, that should raise all sorts of red flags in anyone's mind.

Don't be afraid to ask for reasonable amendments to the franchise agreement. You may deeply regret later having not asked. Talk to other franchisees in your area and find out their problems and successes or contact the TSFA and let us set up an appointment with you to converse with some existing franchisees. Find out their real sales numbers.



Buy a Pre-existing QUIZNOS Store

-If you are seriously interested in buying a Quiznos, we recommend you buy an Existing Store. A new store can cost upwards of $300,000+. You have to sell a huge amount of sandwiches to ever cover that investment and our estimate is that less than 20% of existing Quiznos could support that initial cost.

-The reasons to buy an existing store rather than a new store are many. Most of the fixed costs of a new store which have no real value, such as fees that Quiznos charges new franchisees for various things to include lease approval or architecture designs, have already been absorbed.

-The headaches involved in getting a store built, and the frequent complaints of non-support from the Quiznos Corporation in this process, have already been overcome. Many franchisees, dissatisfied with Quiznos, are merely looking for a way out, and you can pick up some good deals on existing stores. We have many stores for sale on this website alone. If you search the entire web, you will find many more Quiznos for sale. It is a much cheaper way of entry into the Quiznos market, if your mind is made up about becoming a Quiznos franchisee.

Would you like to speak to one or more existing, independent franchisees to learn what life is really like as a franchisee (to include potential profits and losses)? Click here to learn how!

2002-2005 TSFA - Toasted Subs Franchisee Association
Contact us by email at tsfa@toastedsubs.info or by phone at (254) 618-5417
Powered by JDoe.com

Sponsors & Vendors
................................
Global Payments Inc
Credit Card Processing @vantage
(TSFA pricing)
............................
(TSFA Pricing 2005)
............................
The American Franchisee Association
Bring Major Marketing Talent to Franchisees!
............................
Franchise Ownership
............................
Lawyers for Franchisees







Related Links

--------------------------------------------------------------------------------
Last Revised on June 27, 2005
What every Potential Quiznos Franchisee MUST know before they purchase a Quiznos franchise...
There are a few, sad cliques' that come to mind when we envision a new, inexperienced franchisee buying their first Quiznos store:
A fool is born everyday
A fool and his money are soon parted
There is a fool around every corner

The reasons for these cliques coming to mind are numerous, and the unfortunate truth of them has left many-a-Quiznos-franchisee wishing they had never heard the name Quiznos. The reasons for these negative impressions, shared by many current and previous Quiznos franchisees, are detailed below. We suggest you read the information here in its entirety. It could save you a ton of future heartache, grief, despair.and money.

The TSFA recommends buying an existing store, (of which there many for sale) if you are intent on owning a Quiznos. Why? Because the entry costs will almost always be much cheaper, and the business is established, which is the hardest part of any new business, especially when working with a company like Quiznos. If you are intent on opening a new store, we recommend you read the following first.

1. The Franchise Agreement:
The stories the TSFA hears over-and-over again is that franchisees aren't aware of the various, insidious, subtle and financially hazardous clauses in their franchise contract before they sign them. Franchisees are not reading their contracts thoroughly enough, are not seeking experienced legal advice, are being pressured by slick Quiznos sales people, and are not talking to enough existing franchisees before signing the franchise contract. This represents a lack of due diligence on the part of the franchisees. The Franchise agreement is a contract, enforceable in court. Know what you are signing.

The reasons we think this occurs is because most people who see a Quiznos only see the flashy logos, colorful decor and the good food, but they fail to understand or find out about the real truth of the grossly-unprofitable underlying business model. They fail to find out that nearly half of the first 1000 stores Quiznos ever opened are now closed. They fail to find out that over half of the franchises that Quiznos has sold as of Jan 2005, are not currently open (and for many good reasons).

The Quiznos Franchise Agreement is quite possibly one of the most one-sided (favoring the franchisor) in the industry today, according to standards set forth by the American Franchisee Association and the opinions of many well-respected franchise attorneys.

Over the years, Quiznos has modified its UFOC annually (sometime more often) to make it more dictatorial and stringent towards the franchisee. In addition, Quiznos has an Operations Manual, which for all intents and purposes, is just an extension of the franchise agreement (except that you don't get to see it until you buy your franchise). Every time that Quiznos wants to change procedures in store operations (which frequently involve costing you more money) they just write a change into the operations manual. When an unsuspecting, potential franchisee signs their agreement, little do they realize that the requirements in the franchise agreement are just the tip-of-the-iceberg.

Quiznos does not consult franchisees on these changes; they just make them. As a franchisee which you are obligated to follow the Operations Manual based on the requirement in the franchise agreement you signed. This is great for the franchisor, but lousy for the franchisee to have no voice about operations in your own business. As Quiznos seems to perceive the situation though, it's their business; you are just there as a tool to facilitate their royalty payments.

Before you consider purchasing a Quiznos franchise, if you are a wise individual and you don't want to see any personal fortune you may have amassed disappear, you should take the following actions and information into full consideration.

Consult an experienced Franchisee Attorney:

As part of due diligence, unless you are a qualified attorney, you should consult your legal counsel before signing the Quiznos franchise agreement. Ideally, this person should be a lawyer familiar with franchise law. In addition, take heed to any and all concerns that your legal counsel may present. Chances are they represent real issues you will have to deal with as a franchisee. In order to see a recent legal review of a 2004 Quiznos UFOC, by a very reputable pro-franchisee legal firm, click here.



2. Franchise Agreement issues favoring the Quiznos Franchisor.

The following is an analysis of some of the items that Quiznos franchise agreements require. By signing a franchise agreement you will be obligated to abide by the requirements of the agreement. It is a binding contract. Please read it carefully. If you don't understand the intent of the wording, consult your lawyer.

Do not rely on the Quiznos franchise salesperson to clarify the wording in the agreement for you. If the sales person tries to restate the franchisee agreement's intent in his own words or in a way that you do not think is accurate, have them put that restatement in writing and have them sign it, as the franchisor's representative. Also, if any Quiznos sales representative makes verbal claims or promises of any sort or if they make any promises to you regarding any manner of your future as a franchisee or your operations, have them put that in writing as well. This will serve you in potential future legal matters. Bottom line...GET IT IN WRITING. If you can't, then do not rely on the information.


A. Accounting and Payroll

- Quiznos currently mandates the accounting and payroll services that must be used by a new franchisee and in most cases these services cost more than the franchisee could negotiate for independently.

Why does it cost more to use a service through Quiznos than what you could negotiate on your own?

Because Quiznos can and does take Rebates (with no limit on the rebate amounts) on every service or product they sell you. It says so in your franchise agreement, and Quiznos doesn't hesitate to do this, even when it is detrimental to the majority of Quiznos franchisees.


B. Rebates

- Quiznos is not prevented from making deals with vendors who sell goods and services to the franchisee that are mandated by the franchisee agreement. Very often these vendors provide rebates, promotional fees and commissions to the franchisor in return for being allowed to sell their products and services to a captive market. Instead of passing these rebates, promotion fees and commissions to the franchisee, these payments are retained by Quiznos Corporate, with no accountability whatsoever to the franchisee for the use of these funds.

What is a rebate? (def. A deduction from an amount to be paid or a return of part of an amount given in payment).

Some people also refer to these rebates as kickbacks. (def. Slang. A return of a percentage of a sum of money already received, typically as a result of pressure, coercion, or a secret agreement.)


C. Franchisor Venue Provisions

- This provision requires franchisee disputes to be litigated or arbitrated in the home state of the franchisor. This increases costs for the franchisee, but also allows the franchisor to litigate, arbitrate or even mediate on its home turf. The Quiznos UFOC currently requires all disputes to be resolved in the state of Colorado. If you think a legal dispute between you and the franchisor will never arise, we can put you in touch with many franchisees that used to feel that way as well. The last thing you want is to have to fight the franchisor in their home state, but it is a very real situation you may find yourself in.

Non-competition (encroachment covenants) Many franchise agreements allow the franchisor to place competing units where ever they want. Quiznos franchise agreement allows them to do this. Quiznos corporate has placed stores right around the corner from other stores in countless cases, creating a severe financial impact on the pre-existing store.

Why would they do this and harm the sales of an existing franchisee?

The answers are simple:

1. Because they can (unless your state laws prevent it) and it usually benefits them (but not you) financially,

2. Because it brings Quiznos more revenues both from sales of the equipment, services, and eventual royalties, while frequently causing a decrease in sales to the surrounding and pre-existing Quiznos stores.

Consider the following scenario (which has occurred in many cases already).

You own a store making $10K per week (better than average for Quiznos). Then Quiznos puts another franchisee store right around the corner from you. This might happen because the Area Director needs to open another store to meet a quota or the local Quiznos rep. is being told to open a store. This new store starts out making $7k a week, but $3K of that comes from your old customers because the store is closer to them. Now we have two stores making $7K a week (not even breaking even for most Quiznos) and yet the corporation is now getting royalties off of $14K instead of $10K. Who wins while both franchisees struggle? The Quiznos Corporation wins of course. Now we have two struggling franchisees who are saddles with large debt payments, and their only choices are to try and increase sales (which usually don't work) or to inject additional funds from any sources available (usually savings) in order to keep the store afloat and hope for better times. The problem is, as many bankrupt, ex-Quiznos franchisees can confirm, those better times never come.


D. Sole Sourcing Requirements

- Many product-oriented franchises like Quiznos require franchisees to purchase products solely from the franchisor or suppliers designated by the franchisor. No allowance is given to purchase from alternative sources even if quality standards are upheld. This leaves the determination of the gross margin achieved by the franchisee solely in the hands of the franchisor. Quiznos requires that you purchase equipment from their supplier, National Restaurant Supply (NRS). NRS is deeply allied with Quiznos Corporate. Quiznos also currently requires that all food supplies, with minor exceptions, be purchased through Multifoods Corporation. Quiznos Corporate receives annual rebates from several of these suppliers for the purchases franchisees make.


E. Lack of Accountability of Advertising Fund


- Although Quiznos charges franchisees up to 5% for advertising use, they do not provide an official, unbiased, accounting to their franchisees for how this money is spent. Nor is what they currently provide in any level of detail to make an accurate assessment that the funds are being spent for their intended purpose. There is documented evidence of past misuse of these funds available from this website.


F. Unilateral Amendments to the franchise Agreement and Operations Manual.


- Quiznos franchise agreement provides that the franchisor can change its "operations manual" or other company policies from time to time without notice or approval of any franchisees. Frequently this means that Quiznos Corporate can try and dictate procedures or requirements (e.g. the operational hours of your store) by making changes to their Operations Manual. Quiznos is also known for not allowing potential franchisees to see their Operations Manual until after purchase of a franchise. Ask to see and read the Operations Manual before you sign your franchise agreement. If they won't show it to you, then this alone should make you war. The franchise agreement (contract) says that you will abide by the requirements in the Operations Manual. We consider it absolutely foolish to agree to abide by something you have never seen or read. It is especially risky given what existing franchisees currently know about Quiznos use of this document as a mechanism for requiring all manner of unreasonable requirements, without any consultation or approval by the franchisees.



G. Lack of Franchisee Representation in Corporate


- Quiznos Corporate has a Franchisee Advisory Council (FAC), created basically to given franchisees the impression that they are responsive to franchisees. The FAC is a franchisor created entity, run entirely by the franchisor, not the franchisees. To date, this small body of franchisees has accomplished absolutely nothing of any significance for franchisees. This is because the Quiznos Corporation holds all the power in negotiations. The FAC asking for changes to be made is like Oliver Twist asking for more pudding please sir?

- The very integrity of the FAC has been questioned by many franchisees, because their poor performance in looking out for franchise interests gives the impression that they are working for the interests of the franchisor, not the franchisee. In effect, Quiznos uses them to try and add a level of legitimacy to many of the egregious policies they impose on existing franchisees. The FAC does not report to the franchisees nor are they held responsible or accountable in any way to the franchisee. In effect, the FAC is merely a facade between the franchisor and the franchisees.



3. The PROFITABILTY aspects of owning a QUIZNOS RESTAURANT:

The TSFA's overall opinion regarding Quiznos is this: Quiznos has great food, but an absolutely horrid business model and even worse franchisee relations.


Click here to see samples of two existing Quiznos stores, from a break-even perspective, and you will quickly understand how the average Quiznos has extreme difficulty being profitable. Please not that these are very conservative examples and in many cases things are worse.



A. Royalties and store profitability (non-profitability)


- Quiznos currently requires a 7% royalty fee, plus a 1% local advertising fee, plus a 3% advertising fund fee. In addition, Quiznos may charge you up to a full 5% for advertising (and does in some areas of the country). As a minimum, you will pay, on average, 11-12% of your weekly gross sales in royalty/advertising fee. This is a cost franchisees find excessive when it is added into the many other additional hidden costs (which we won't go into) that Quiznos imposes on their franchisees.

-There are no provisions contained in the franchise agreement for relief of any of these fees, should you encounter financial difficulties in the operation of your business. Quiznos has not been known to provide any financial relief to franchisees, (although they have stood by idly and watched numerous store owners go into bankruptcy). You have to understand and appreciate that Quiznos is not interested in whether individual stores are profitable, as long as they can continue to get royalty payments from the franchisee. Most franchisees, who aren't profitable, continue to remain open because many have large bank debts associated with excessive build-out or start-up costs, and while they aren't able to make any real profit, at least they can service their debt. The only alternative for most is bankruptcy, so many hang on, injecting much of their life's savings, in hopes that things will get better or they will be able to pay their debts. The sad part is most of these franchisees learn after the second or third year that things don't get any better. This is when many try to sell their store(s), almost always at a loss, just to get out of their situation.

-Quiznos makes a large part of their money from new stores sales (franchisee payments, equipment sales, fees for every aspect of development). It is easier and more cost efficient for Quiznos to find a new franchisee and open another store (thereby immediately increasing revenue) than it is to try and rescue or salvage an existing, struggling store by increasing sales.

-Some of the reasons for this are that:

The Quiznos Corporation owns the businesses that new franchisees are required to buy their equipment from, such as Source One Distribution (recently renamed Ba-Bing!) and Source One Systems (The company you buy your register from).

Quiznos owns Continental Lending Group, a company which tries to manipulate franchisees into expensive lease agreements for equipment or lends money to franchisees at above-average market rates and conditions.

Quiznos owns/and or is affiliated with other companies which are also used as a revenue stream for Quiznos by taking advantage of the requirement in the franchisee agreement that franchisees must use Quiznos approved vendors.


B. Food, Labor, Paper (FLP)

Currently Quiznos averages between 53%-58% nationally for FLP. Although it is unlikely that Quiznos will provide evidence of actual costs and sales in your area, understand that those numbers do exist in and are distributed to all franchisees in a weekly document entitled the BlastFax, and you should ask for them.

Ask your Quiznos salesperson for weekly sales reports from all the stores or near your proposed location. This information is available, and unless there is something to hide, they should show it to you.

With your royalty payments of 11-12%, this represents approximately 64-70% of your income out the door before you pay for items such as:

rent,
common area maintenance (CAM),
insurance,
bank loans / debt service,
taxes,
new equipment or replacements,
facilities maintenance and update costs,
payroll and accounting costs,
office supplies
vendor services such as MUZAK, towel service, rug service
And finally some profit for you. Ask to see a pro-forma and then take that pro-forma to a franchisee(s) in your area, for a reality check. In addition, it is highly recommended that your financial advisor review these figures. Quiznos pro-forma are not guarantees, they are merely estimates, at best.


Finally - Any promises made to you by your franchisee salesperson should be made in writing and incorporated into your franchise agreement. The reason for this is simple. Quiznos currently has a clause in their franchise agreement that basically nullifies everything that may have been verbally promised to you by any of their representatives. It basically states that you are relying only on the information provided in the franchise agreement in making your decision to purchase. By signing the UFOC, you are agreeing to this statement. Therefore, if a Quiznos rep. promises you something (no matter how insignificant it may seem), if it is not something listed in the franchise agreement, make sure you get it in writing and it is singed by you and them, and preferably witnessed or notarized.

Chances are, the Quiznos rep. will not be wiling to sign it, and if so, that should raise all sorts of red flags in anyone's mind.

Don't be afraid to ask for reasonable amendments to the franchise agreement. You may deeply regret later having not asked. Talk to other franchisees in your area and find out their problems and successes or contact the TSFA and let us set up an appointment with you to converse with some existing franchisees. Find out their real sales numbers.



Buy a Pre-existing QUIZNOS Store

-If you are seriously interested in buying a Quiznos, we recommend you buy an Existing Store. A new store can cost upwards of $300,000+. You have to sell a huge amount of sandwiches to ever cover that investment and our estimate is that less than 20% of existing Quiznos could support that initial cost.

-The reasons to buy an existing store rather than a new store are many. Most of the fixed costs of a new store which have no real value, such as fees that Quiznos charges new franchisees for various things to include lease approval or architecture designs, have already been absorbed.

-The headaches involved in getting a store built, and the frequent complaints of non-support from the Quiznos Corporation in this process, have already been overcome. Many franchisees, dissatisfied with Quiznos, are merely looking for a way out, and you can pick up some good deals on existing stores. We have many stores for sale on this website alone. If you search the entire web, you will find many more Quiznos for sale. It is a much cheaper way of entry into the Quiznos market, if your mind is made up about becoming a Quiznos franchisee.

Would you like to speak to one or more existing, independent franchisees to learn what life is really like as a franchisee (to include potential profits and losses)? Click here to learn how!

2002-2005 TSFA - Toasted Subs Franchisee Association
Contact us by email at tsfa@toastedsubs.info or by phone at (254) 618-5417
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