66 East Main Street, 3rd Floor Little Falls, NJ 07424

Quiznos “Gets Toasty”: Damaged Relationships with Franchise Owners and Bankruptcy

Share on facebook
Share on linkedin

Things get “Toasty” for Quiznos.   They have $570 million in Debt and Quiznos been negotiating with creditors to try to stay alive to make those toasty sandwiches.

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.