March 10, 2014
Quiznos has been trying for over two years now to turnaround the company. They have tried a major management shake-up but haven’t been able to make much progress.
The franchise owners have continuously complained that it is impossible to make money with the contract Quiznos has set up with owners.
When over half the chain is “financially distressed”, maybe Quiznos should have changed their business model and they would not have faced bankruptcy.
It is important to be careful when you want to get involved in a franchise.
Franchisees often believe they have a right to terminate their franchise agreement where a franchisor goes into liquidation – that is not the case.
The franchisee has no right to terminate the Franchise Agreement unless the agreement includes an express right for the franchisee to do so, which is unlikely.
The liquidator takes control of the franchisor company and can enforce the rights against franchisees. The franchisee must continue to pay royalties and adhere to the franchise system.
Franchise successor and financial status affects more than just the company.