Along with Quiznos’s dramatic unit growth (23 percent) in 2005 came disgruntled franchisees and lawsuits. As of press time, two proposed class-action suits related to site selection are pending against the company. The first, filed in December 2005 on behalf of almost 200 Ontario, Canada, franchisees, is framed around Canadian franchise disclosure laws. The second was filed in New Jersey in February 2006 and centers on consumer fraud. In August 2005, a Denver judge threw out two other proposed class-action suits filed on behalf of franchisee groups in Colorado and Arizona. Those suits were focused on encroachment, food costs, and ad spends.
Increasingly, it seems, disgruntled Quiznos franchisees are getting organized and getting active. Take Chris Bray and the Toasted Subs Franchisee Association, for example.
Bray is a former Quiznos franchisee and president of the Toasted Subs Franchisee Association (tfsa). His group runs www.toastedsubs.info, a web site where unhappy franchisees can voice their displeasure and connect with others who feel the same. The general tone of the site is positive towards Quiznos as a brand and negative towards the brand’s leadership. Established franchisees are struggling—and complaining—claims the TFSA because of several issues. Food costs is the one Bray is most vocal about. He accuses the brand of “price gouging” and contends that the discount prices Quiznos receives for its bulk purchases are not being passed along to its operators. “The Muzak is marked up 50 percent,’’ Bray alleges. He also takes issue with the fact that franchisees are required to do business with Quiznos-owned vendors.
Quiznos does require franchisees to purchase supplies from approved vendors, as do many other systems, and some vendors are, in fact, subsidiaries of Quiznos. However, the company rejects Bray’s charge of “price gouging” and questions whether the TFSA does indeed represent the bulk of its franchisees. According to Quiznos’s estimates, TFSA has less than 250 members, which “accounts for less than 6 percent of the total number of restaurants that were opened in 2005 and less than 4 percent of all Quiznos franchisees,” says Quiznos spokeswoman Bonnie Warschauer. As such, Quiznos does not officially recognize the TFSA or its platform of concerns.