Why quiznos failed

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Get the Insider App. Click here to learn more. A leading-edge research firm focused on digital transformation. Good Subscriber Account active since Shortcuts. Account icon An icon in the shape of a person's head and shoulders. It often indicates a user profile. That's crippling to a business, and it's a business model franchisees have been laboring under for years.

Quiznos was founded in , and grew to 18 locations before the whole company was sold to one of their franchisees, Rick Schaden. Forbes says he's the one that came up with the bizarre business plan, and it ended up breaking the franchise owners they should have been helping. Quiznos restrictive business practices didn't go unnoticed, and in , around 10, franchise owners took corporate to court with a class action lawsuit. According to Forbes , they claimed corporate was essentially making them what's termed "captive customers" and forcing them to buy supplies at grossly inflated prices that made it nearly impossible for them to be successful.

Schaden denied any wrongdoing, saying that Quiznos was simply passing market costs on to their franchisees. In , Quiznos board chairman, Doug Benham, called past lawsuits " Other franchisees sued separately, and at the same time Quiznos was fighting on that front, 6, franchisees in Colorado, Illinois, and Wisconsin filed a similar suit. In , The Denver Post was reporting on another set of lawsuits, which basically stated Quiznos was still overcharging franchisees for the products they were forced to buy through corporate.

There was another part to these lawsuits, too. Individual stores were claiming corporate was now forcing them to participate in promotions and other sales, while not reimbursing them for the money they were losing in the process. Quiznos denied any wrongdoing, and in November both the franchisee leading the suit and Quiznos reached a settlement that didn't end with anyone handing over any cash.

Franchise Times says their attempts at getting more information just ended with everyone declining to make a statement, but the rest of the owners weren't done yet. The next spring, The Denver Post was reporting the 12 remaining franchisees had refused the settlement and continued the fight. Quiznos didn't earn themselves any good will when they countersued the defunct franchisees for breach of contract, and the whole mess ended with an undisclosed settlement.

Amid all the lawsuits, the story of one franchise owner brought the conflict between owners and corporate into sharp focus. Bhupinder Baber owned two locations in Long Beach, and when another franchisee opened nearby, his sales plummeted.

Getting no response from the corporate offices who had promised him no one would be opening nearby, he organized the Quiznos Franchisee Association in hopes of helping other owners fight against what they deemed unfair business practices.

That was in , and according to the Long Beach Post , that was when Quiznos ended Baber's franchisee agreement. By , Baber was slated to go to Denver to argue his claims. Fearing the trip was going to cost him too much and he would lose what little he had left, he walked into a Quiznos bathroom and killed himself.

He left behind a note calling for an investigation into Quiznos and their business practices, and that note was released to the public.