Quiznos Makes Chapter 11 Bankruptcy Official, Must Win Back Customers And Franchisees

Quiznos announced today that, as we reported a few weeks ago, the company will be filing for Chapter 11 bankruptcy protection, a move that will let the chain cut its debt load by about 2/3. That’s great news for the corporate headquarters, but will dissatisfied franchisees be happy with the plan?

Franchisees blame the company for charging too much for supplies that they could buy for less elsewhere. In their bankruptcy filing, meanwhile, Quiznos turned around and blamed some franchisees. Their argument:  inexperienced restaurant operators who opened new outposts during the company’s recent expansion have hurt the brand due to their lack of experience in the quick-serve biz.

Quiznos has about 2,100 restaurants left, most of which are franchises. Owners complain that the cost of running a Quizno’s is too high, making it difficult to compete with other fast-food and quick-serve restaurants.

In the Consumerist archives, we can see some of the problems that Quiznos cites: poorly run restaurants where small children make the sandwiches, you’re not allowed to have a sandwich without meat on it, employees were rude to the elderly, and they served up whatever the hell this is.

From our perch watching over Consumerland, the biggest problem for Quiznos in recent years has been that longtime conflict with franchisees. Specifically, the problem where Corporate would issue coupons and promotions, and franchisees would refuse to participate.

Sometimes there were good reasons. The Million-Sub Giveaway was a big promotion where the chain, well, gave away a million subs. According to a tipster who contacted Consumerist back in 2009, the problem was that Quiznos designed the promotion, then wanted franchisees to bear the entire cost of giving away all of those subs. Readers reported that they had trouble redeeming the free sub coupons, since franchisees found the money-losing promo to be a bad deal.

Quiznos will need to mend their relationships with franchise owners, the brand’s relationship with consumers, and then also somehow patch up the relationship on the ground and in the strip malls between franchise owners and their customers. We like hot sandwiches, so we hope they succeed.

Quiznos Files Pre-Packaged Chapter 11 Plan After Debt Deal [Wall Street Journal]

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  1. mongo says:

    I think Quiznos franchisees should give Quiznos the same response that Quiznos gave them:
    “OTHER restaurant franchises are making lots of money. You’re the only one that’s complaining. Maybe YOU should be working harder.”

  2. CommonC3nts says:

    I want to know why the Quizzno’s corporate loses/spends so much money.
    They force the franchises to buy the ingredients from them at triple the price of just going to a local restaurant supply store for the exact same brand name ingredients.

    If a quizzno’s store was allowed to buy from a local store instead of quizzno’s corporate they could cut their prices in half and be profitable again.
    I just dont get what the corporate does with all the free money the franchises give them.

    • ophmarketing says:

      I presume that policy is in place in the interest of quality control–ensuring that some franchises aren’t cutting corners and offering lower-quality items.

      • C0Y0TY says:

        It might be for quality control, or it might be the business model is to make money off the franchises and not the customers. It seems like multi-level marketing with a few levels missing.

  3. Cara says:

    Absolutely all of the Quiznos here have closed down and reopened as part of Hess gas stations, so I’ve lost interest in actually going to them. It’s sad because they used to be really great.

    If Subway or Quiznos would actually implement a drive thru option, they would probably do a lot more business. I’d love the option of a healthier/non-fried lunch without needing to go inside, which is often way too much work when I’ve got two younger kids in the vehicle as well. I know there’s some random locations that do have drive thrus, but it’s not very consistent and it tends to be because they bought a building already equipped with one.

  4. HESpencer says:

    I’m surprised it’s taken them this long to file. They’ve had one of the highest franchisee failure rates for years.

  5. KevinBlah says:

    “Quiznos turned around and blamed some franchisees. Their argument: inexperienced restaurant operators who opened new outposts during the company’s recent expansion have hurt the brand due to their lack of experience in the quick-serve biz.”

    Well, whose fault is it for letting these “inexperienced restaurant operators” have a franchise?

  6. MarthaGaill says:

    I’ve never been to a Quiznos where the quality wasn’t absolutely terrible or the service wasn’t abysmal or some terrible combination of both. If they want to blame the franchisees, they should have had some kind of quality control monitors in place that made sure they were staying within company guidelines. That way the franchises could purchase ingredients at a reasonable price and restaurant quality would be better.

    I would love a good vegetarian sandwich option and as it stands, if Quiznos were to shut down tomorrow, it wouldn’t make a difference to me.

  7. JustPassingBy says:

    The only Quiznos in my area was open maybe 3 years then suddenly closed. Went there twice and food portions small, terrible taste, employees rude. Actually witnessed employees go across the parking lot to get their lunches from another sub shop. When I asked why they said manager will not give them discounts.