The drama is finally over for Quiznos and now they can get back to doing what they should be doing – selling sandwiches to hungry customers instead of squabbling with current and former franchise owners (as they have been for some time now).
Franchisees vs. Quiznos: The Lawsuit
The complaints against Quiznos were numerous and far reaching. In a nutshell, the franchise owners claimed that corporate was treating them in an unfair manner, requiring them to overpay on supplies and franchise fees. In addition, Quiznos franchise owners were asked to pay extra for marketing that they claimed should have been included in the basic franchise fees.
The settlement brings to a close four separate class action law suits and will cost the company a total of $206 million. In exchange for the settlement, which a federal judge has recently ruled is acceptable, Quiznos will admit no fault in any of the charges against them. However, the company has agreed to several make changes in addition to the cash payments that they have agreed to make to the plaintiffs.
Positive Changes Ahead for Quiznos Franchise Owners
Among the changes being made are discounts for the franchise owners, debt forgiveness for some outstanding debt that the franchise owners claimed they should never have been required to pay, and the appointment by the parent company of an independent franchisee association.
This more than anything was considered a victory by the plaintiffs who charged that corporate headquarters had failed to heed their complaints in the first place. Their contention is that having a completely independent franchisee association will protect the owners from future problems with the chain.
In addition to these, the settlement requires the Quiznos chain to:
• Offer new annual pricing. This is intended to help the franchisees to have a better handle on their positions in the market.
• Create a program for the franchise owners to receive waivers of the maximum price ceilings, where appropriate for their markets
Finally: Resolution!
The settlement had been entered in court nearly a year ago in November, 2009, but was held up because a lone franchisee had been unwilling to accept the settlement. The judge finally brushed aside the complaints, saying that the owner in question had the right to back out of the settlement but chose not to do so, instead signing on and then protesting.
Jim Balis' Blog 