Quiznos Makes Chapter 11 Bankruptcy Official, Must Win Back Customers And Franchisees

(zyphbear)

The truth is out, and the sandwich is toasted: Quiznos announced today that it will be filing for Chapter 11 bankruptcy protection, a move that will let the chain cut its debt load by about 2/3. That’s great news for the corporate headquarters, but will dissatisfied franchisees be happy with the plan?

Franchisees blame the company for charging too much for supplies that they could buy for less elsewhere. In their bankruptcy filing, meanwhile, Quiznos turned around and blamed some franchisees, saying that inexperienced restaurant operators that opened new outposts the company’s recent expansion have hurt the brand due to their lack of experience in the quick-serve biz.

Quiznos has about 2,100 restaurants left, most of which are franchises. Owners complain that the cost of running a Quizno’s is too high, making it difficult to compete with other fast-food and quick-serve restaurants.

In the Consumerist archives, we can see some of the problems that Quiznos cites: poorly run restaurants where small children make the sandwiches, you’re not allowed to have a sandwich without meat on it, employees were rude to the elderly, and they served up whatever the hell this is.

From our perch watching over Consumerland, the biggest problem for Quiznos in recent years has been that longtime conflict with franchisees. Specifically, the problem where Corporate would issue coupons and promotions, and franchisees would refuse to participate.

Sometimes there were good reasons. The Million-Sub Giveaway was a big promotion where the chain, well, gave away a million subs. According to a tipster who contacted Consumerist back in 2009, the problem was that Quiznos designed the promotion, then wanted franchisees to bear the entire cost of giving away all of those subs. Readers reported that they had trouble redeeming the free sub coupons, since franchisees found the money-losing promo to be a bad deal.

Quiznos will need to mend their relationships with franchise owners, the brand’s relationship with consumers, and then also somehow patch up the relationship on the ground and in the strip malls between franchise owners and their customers. We like hot sandwiches, so we hope they succeed.

Quiznos Files Pre-Packaged Chapter 11 Plan After Debt Deal [Wall Street Journal]

by Laura Northrup via Consumerist