Bankrupt Quiznos Settles With Franchisees in Cost Dispute
Quiznos may still be bankrupt, but its ongoing battle with franchisees is coming to a close.
Quiznos has reportedly reached a settlement with 12 defunct franchisees who alleged the Denver-based sandwich chain cost them millions of dollars through hidden markups on food and supplies.
The franchisees were suing Quiznos for more than $40 million total. Quiznos countersued the franchisees for $3 million, claiming the owners had breached their contracts by abandoning their stores and by halting royalty payments and advertising contributions, according to The Denver Post.
The lawsuits are reminiscent of a number of other franchisee lawsuits against the chain. The biggest suit resulted in a multimillion settlement in 2009 settlement, in which Quiznos forked over $95 million in a class-action lawsuit that covered 6,900 franchisees.
With Quiznos declaring bankruptcy in February, franchisees expressed hope that the restructuring would serve as an opportunity to progress on proposed changes to the chain's business model.
“The [Quiznos franchise association] Board has made recommendations to the Quiznos management team on changes to the business model that need to be made as part of this restructure to help struggling franchisees and stop store closures by increasing franchisee profitability,” the board said in a statement following reports of the franchisor preparing to file for Chapter 11 bankruptcy protection.
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.