Five Phoenix-area franchisees sue Quiznos

…the franchisees claim Quiznos reneged on promises that sandwich shops wouldn't be placed close to each other, that marketing and advertising fees would be used to promote their stores, and that the company would negotiate best prices with suppliers and pass on volume discounts and rebates.

The Phoenix Star
June 10, 2004

Five Phoenix-area franchisees sue Quiznos
Steve McMillan

Five operators of Quiznos sandwich shops in the Phoenix area have sued the restaurant chain, claiming deceptive trade practices, breach of contract and fraud.

The claims by the franchisees - C.K.H. LLC, Lunch at the Turn LLC, Scott Chamberlain, Intrepid LLC and Taylor Restaurant Holdings LLC - are related to Denver-based Quiznos' expansion in the Arizona market beginning in 1999.

In their suit filed Tuesday in U.S. District Court in Denver, the franchisees claim Quiznos reneged on promises that sandwich shops wouldn't be placed close to each other, that marketing and advertising fees would be used to promote their stores, and that the company would negotiate best prices with suppliers and pass on volume discounts and rebates.

The suit also contends that Quiznos did not honor commitments made to several of the franchisees to allow them to become one of no more than four franchise operators in the state.

No one from Quiznos was available to comment on the suit Wednesday.

Quiznos has 2,500 restaurants throughout the U.S. and 13 foreign countries. Its website says that a new restaurant opens every 16 hours and that Quiznos was one of the fastest-growing sandwich chains in 2003.

Once publicly traded, the chain faced a series of lawsuits after it went private in 2001. Shareholders claimed the chain didn't pay a fair market value for public shares when its majority owners took it private.

In the franchisee suit, restaurant operators are asking for recision of their franchise agreements and full restitution, triple damages and attorney fees.

The lead party in the suit, C.K.H. LLC, owned by Charles and Kathy Harris, said Quiznos provided information that it wouldn't locate stores within 2 miles of one another, but it sold another franchisee a shop only a mile away from one of its stores.

The suit said sales at C.K.H.'s restaurant were hurt, dropping $19,492 per month.

As of May 10, in one area of Phoenix, there were 16 stores within a 5-mile radius of a store owned by another plaintiff, according to the suit.

Staff writer Steve McMillan can be reached at 303-820-1695 or moc.tsoprevned|nallimcms#moc.tsoprevned|nallimcms


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Risks: Encroachment (too many outlets in area), Ineffective marketing, Raining litigation, Rescission, Gouging on supplies, Secret kickbacks and rebates, Opportunism (self-interest with deceit), United States, 20040610 Five Phoenix-area

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