The Franchise That’s Too Good to be True: Quiznos!
December 14, 2006 by FranWorst
While other chains waste valuable homepage real estate promoting their products to consumers, the Quiznos website puts their franchise information right up front, for your convenience:
“Realize your dream of owning your own business and start controlling your financial future by joining the fastest growing restaurant chain in the nation. The Quiznos franchise program gives you the tools needed to help you succeed:
* An excellent product * Strategic location assistance * Strong advertising
* A comprehensive training program * Ongoing local support
* A proven business model - simple and rewarding”
Everybody’s crazy about the Quiznos franchise! The awards are piling up!
#1 Restaurant Chain, Nation’s Restaurant News, June 2006, Growth in Number of U.S. Units - Top 100, Ranked #1 Five Years in a Row!
#2 Best Overall Franchise, Entrepreneur Magazine, January 2006, 27th Annual Top Franchise 500
#3 Top 50 Chains, QSR Magazine, August 2005, By Change in Systemwide Sales
Why does Quiznos stand out from its slow-growing competitors? No, it’s not their toasty bread, delicious meats, or plastic Q-shaped dishes. It’s not their demon-possessed baby spokesman, or the fact that they buy-one-get-one their franchisees to death to pass the savings on to you, the consumer. No, the secret to their amazing growth is their tough, determined leadership.
That’s right. Their lawyers and their tough, determined leadership.
While lesser chains might buckle under to the whining, pleas and death gasps of their desperate franchisees by actually listening, caring or wasting precious resources on assisting them, Quiznos keeps the wheels of progress grinding and crunching forward.
Weak, wimpy franchise chains might be intimidated by, or even try to avoid, the mounting lawsuits being waged against them by individuals who realized their dreams of business ownership and controlling their financial futures by joining the fastest growing restaurant chain in the nation, but not Quiznos. Quiznos knows they will never become #1 in litigation spending by being intimidated by malcontents. (Watch out, Fred DeLuca!)
So God bless Quiznos! God bless those award-givers and publishers of positive press! God bless the industry leaders, the associations and the government agencies that remain silent in the presence of such greatness!
It is success stories like Quiznos that inspire America, and account for the wonderful reputation franchising enjoys in American business!
See you on the veranda!
Millionaire Richard Quick, Esq.
Want to make the FranWorst Hall of Shame? Read up on Quiznos and learn from the best:
TSFA post on the passing of Quiznos franchisee Bob Baber
Alleged suicide note/letter by Quiznos franchisee Bob Baber
Tampa Tribune story on Quiznos
Discussion of Quiznos on Blue Mau Mau
Janet Sparks’ commentary on Quiznos franchise terminations
Quiznos memo regarding suicide of their franchisee (Blue Mau Mau)
Quiznos Termination notices for TSFA Board Members (Blue Mau Mau)
Toasted Subs Franchisee Association
The Franchise That’s Too Good to be True: Quiznos!…
re: The Franchise That's Too Good to be True: Quiznos! Now I'm new here and haven't really looked at the site. Actually, I'm not really here at all. At the moment, I'm probably deep sea fishing or sipping cha…
[...] Start with the satirical Franworst.Com article that awarded Quiznos its first Franchising Hall of Shame award! [...]
Everything these poor people are saying is correct.I was one of the lucky few to see the writing on the wall and actually sold for a profit.My heart goes out to these guys.They suck!!!!!!!!!!!
Elizabeth
Mar 14, 2008 at 6:44 pm
A costly lesson:
Submitted by Guest on Fri, 2008/03/14 - 17:52.
Elizabeth
Mar 14, 2008 at 5:38 pm
A costly lesson
on Mar 14th, 2008 at 2:08 pm
Prospective Quiznos buyers please read this carefully. I have always prided myself in that fact that I try to make good decisions. Yet, the decision of my husband and myself to purchase a Quizno’s restaurant is one decision that has been anything but positive. Please take your time reading my story because it may help you to avoid making a terrible mistake. I am hoping that by sharing my experience the information may save your family, finances, sanity and future.
We transfered our Quiznos over 23 months ago. Our weekly labor ranges between 22% to 25% - the goal is 20%. Average food costs range between 30% to 33% the goal is 30%. Not only have we not made money, but we have lost over $45,000 in the last twelve months in addition to $34,000 during the first 11 months. Additionally, another Quiznos near my location is also showing similar dollar losses based upon information that the owner has shared. I realize that there are poor stores in the system. It is unrealistic to assume that every owner runs a great operation. However, our store has one of the highest customer approval ratings in the area. In addition, our location regularly appears on the top half of page two of the weekly blast fax. The blast fax is an intra-company sales reporting tool utilized by owners in order to compare their store statistics to a large grouping within a certain geographic region. It is of great concern that our business is making more than 2/3 of our geographic region and yet we are not even breaking even. One wonders how the stores that are producing less volume than ours manage to survive? The fact is that most do not for long. The owners eventually become disappointed with this company and are either forced to sell or walk away because they can not find a buyer. Despite working as an unpaid “volunteer” at our location for the past 22 months I have never sacrificed quality or service. We have never skimped on labor in order to squeeze more money out of the bottom line. Our store is meticulously clean and the employees are well trained. Yet, despite all of our efforts, we have lost a lot of money. Yes, we conduct local marketing weekly in addition to other strategies that the company suggests to increase revenue - but to no avail. There are a fortunate few that are doing well, however, this is a rare exception. I too have a friend that is profitable. Her location is in a busy commercial district with plenty of daytime professional traffic in addition to evening residents as well. She is one of the fortunate stores that appear regularly on the top of the first page of the blast fax. Yet, despite the fact that her store is one of the more frequented locations, she has remarked that because her business is one of the highest grossing stores in the region, she is frankly surprised that she is not making a greater profit. She, like I, works her business diligently both in front and behind the scenes. She is also one of the fortunate few.
In our case, the fact that the company put not one - but three - new Quiznos extremely close to our existing store has been but one of several factors for our lack of profit. Even our customers remark that they are surprised that the company places stores in such close proximity. Our restaurant, once grossed between $9,000 to $11,000 average per week before we bought it. The addition of the other stores dramatically cut into our customer base. Currently, a $9,000 week is the rare exception. After paying over $320,000 for this store, we expected to at least net $70,000 per year. We would settle for breaking even at this point. We still have customers that make the extra trip to patronize our store because we offer the best service and most pleasant environment of the other Quiznos in the immediate vicinity. Yet, that is not enough to help our bottom line.
We realized that we were not going to make money two months into our venture. We put our store on the market right away. Today, almost two years later, we have been forced due to financial constraints to give it away. Another owner has offered us $90,000 and we are finally getting out. He knows that he will make a profit because at $90,000 it is a positive net sum gain for him. A store can not even be constructed for $90,000. He has said that based upon our P&L and the price that he is paying, he will probably make about $30,000 - perhaps $35,000 per year at our location. The key to profitability according to our buyer, is owning several locations that can be purchased for very little and planning to make about $30 - $50K per location based upon the traffic flow of each individual store. The key is to pay as low as possible for a store in order to squeeze out a small profit from each location.
One might ask why do so many franchisees fail to make a profit and so few do?
The answers are:
1) The profitable stores are located in areas with significant traffic flow to offset the high costs associated with operating one of these stores.
2) Non profitable stores (poor operations excluded) have been canabalized by our very own franchisor. It is apparent that none of the company’s decision makers understand the franchisor’s own required reading of “Behind the Golden Arches, The Ray Croc Story”. If they understood the symbiotic relationship that exists between corporate and its franchisees, then they would realize that the franchisee is the life blood of the company and it is not in anyone’s best interest to undermine the very people that make the system operate.
3) A store’s location is not sufficient to produce the high traffic necessary to cover its numerous expenses.
4) In regard to expenses, the franchisor has a monopoly upon most services, food and equipment necessary for us to operate. There are simply too many hands in the till for profit to filter down to the bottom line - the franchisee. There is something very wrong when a person can go to their local Restaurant Depot and find the same exact product made by the same manufacturer, same weight and ingredients but pay half the price of the same item sold by our required distributor. Many of my fellow owners have found this to be true regarding food and equipment time and time again. Other franchises that have a “franchisee consortium” responsible for monitoring and regulating costs of the goods and services utilized by franchisees have not only a higher satisfaction rate but are profitable as well. - (Source QSR magazine.) Of course there are always problems even in the best of systems, yet the bottom line is profitability. No one buys a business because they “like” the product. Investors purchase businesses in order to make money. In addition, there is no transparency within the company despite the fact that our franchisee’s pay extremely high royalties. Where there are royalties there should be total transparency. These restaurants are a long shot in the very best case. Yes, there are those who will sing the praises of the franchisor, but the extreme and vast majority will say that it is simply not worth the time or investment.
5) The existing business model is fatally flawed and operates for the sole purpose of making money for corporate as well as their investors.
6) Many of us have paid too much for our stores.
7) The costs keep creeping back up from the reductions announced by last year’s new administration while the suggested retail prices have either fallen or remained the same.
Our broker has decided not to sell any future Quiznos until the company changes its entire business model. Ours will be the last that he will handle until the tide truly turns.
It has been predicted by the new administration that the future for Quiznos is “bright” and that eventually there will be more “positive” stories rather than negative ones such as ours. It is a known fact that there are at least 450 Quiznos for sale on a well known web based real estate site versus only 24 Subways. Why do you think that is the case? Stories just like ours have played out and are occurring every day. Of course, Subway has its share of difficulties as well, but one thing is undeniable, a Subway does not stay on the market very long before it sells, whereas it is almost impossible to sell a Quiznos - let alone give them away as lease assumption only. Someone must be making something worthwhile at our competitor’s stores otherwise they would not be in such high demand. It is widely viewed that the “happy” owners of the future will be the ones that are either the second or third generation franchisees. When those of us who have over paid and are not able to financially continue on at our Quizno’s “volunteer” jobs have either had enough and sold for pennies on the dollar or “gone dark” the next generation - the future “happy” ones - will take over what we have built with our blood, sweat, tears and cold hard cash.
So yes, the company is accurate on one point: There will eventually be many more positive stories about which the company will boast. Those stories will come from the new owners who have purchased the deal of a lifetime and will ultimately profit from our failed investments. At the price that most of us are either walking away from or giving them away for in order to extricate ourselves from this financial nightmare called Quiznos, the next owners will actually be able to make a living from one of these stores. It is called “churning” and I firmly believe that this is an integral strategy to the corporation’s plan to make their restaurants a worthwhile investment in the future. It is simply a matter of time before we all cry “uncle” and corporate knows it.
And yes, then the next generation will truly be “happy”. Please think carefully before you invest in ANY business. Perform due diligence, talk to other owners, read comments posted on the internet, read trade magazines - anything that will help you to make an informed and objective decision. I only wish that we had known about this web site as well as the many others that I have since found in our familie’s nightmare odessy. Perhaps things would be different and life would actually be “normal”. This was a very costly lesson. Our lives, my children’s sense of security and future has been devastated by this experience. We are struggling just to survive at this point. I hope that you can learn from our mistake.