Judge awards Coopersburg Quiznos franchisee $350,000

The judge called the company's actions ''a charade driven not by Quiznos' genuine concern about whether its franchisees were making sandwiches to spec, but rather its overriding public relations desire to be able to proceed with its national advertising campaign targeting Subway.'' He ruled Quiznos owes Piotrowski and Blickman nearly $350,000 in damages plus legal fees for driving them out of business.

http://www.mcall.com
January 14, 2009

Judge awards Coopersburg Quiznos franchisee $350,000
Calls shutdown of store and lawsuit against owners a 'charade'
Kevin Amerman

The Allentown couple were about to begin another 10- to 12-hour day at their franchise sandwich shop when they got a puzzling letter from Quiznos corporate headquarters one day in October 2006. A secret test showed they hadn't put enough meat on a sandwich, so they had to shut down — permanently.

Quiznos claimed the couple had placed only four ounces of prime rib on one small sandwich instead of the required five ounces.

It was a stunning blow to Rich Piotrowski, 49, who had come to the Lehigh Valley from New York with the dream of owning a restaurant. He and his wife, Ellen Blickman, 51, had invested their life savings to buy the Quiznos franchise in Coopersburg — one of a half-dozen Quiznos shops in the Lehigh Valley. They'd only been running the business for seven months.

Believing the letter was a mistake, they held off opening their restaurant's door and claim they made at least 20 calls to the corporate office, hoping for an explanation.

That's when things turned ugly.

''Our livelihood was snatched away by that letter, and they wouldn't return the phone calls,'' Piotrowski said.

The couple opened the shop at 11:30 a.m. despite the termination notice, but kept trying to reach someone at the company, they say.

Frustrated after about eight hours with no response, Piotrowski said he left a voice mail message with Quiznos saying he planned to call a news conference to complain about how they were treated.

Finally, the couple heard from someone at ''corporate'' — a lawyer named Michael Daigle, who told Piotrowski he wouldn't tolerate ''any defamation or other harm,'' according to court documents. If Piotrowski had just e-mailed him, and the shop has passed a second inspection, the matter would have been resolved, Daigle told them.

But because of the news conference threat, Piotrowski and Blickman say, Quiznos moved ahead to drop the couple's franchise and sued them two days later for breach of contract, saying they hadn't dealt with the company in good faith.

The company also claimed they ''materially harmed'' Quiznos by posting disparaging comments about the company on the Internet.

The couple claimed Quiznos had bullied them, saying they were victims of Quiznos' aggressive campaign against another national sub shop, Subway, which ended up pitting Quiznos against its own franchisees.

A Colorado judge in Denver, Quiznos' corporate home, heard the case last month in a five-day nonjury trial and issued a blistering opinion on New Year's Eve.

Calling Quiznos' actions a ''charade,'' District Judge Morris B. Hoffman said the secret tests of franchise owners were ''preposterous'' and ''laughably unreliable'' and agreed with Piotrowski and Blickman that the company had mistreated them.

Quiznos performed the tests in 2006 during its national campaign against Subway, in which Quiznos claimed its sandwiches had double the amount of meat, according to testimony.

''Mystery shoppers'' were dispatched to all 4,000 Quiznos locations in the country and after buying one small Prime Rib Cheesesteak in each restaurant, they took it out of the shop, picked the sandwich apart and weighed the meat.

Hoffman said the meat test was unreliable because it didn't take into account how the prime rib could have shrunk after being weighed and cooked in meat juices, then heated again when the sandwich was toasted. He also couldn't believe that mystery shoppers could properly peel off onions and melted cheese and accurately say how much the meat weighed.

The company sent termination notices to about 300 franchise owners, saying they would lose their franchises for failing the test.

According to testimony, the company never actually intended to terminate the franchises. The judge agreed with Piotrowski and Blickman that the letters were sent to protect Quiznos from potential lawsuits from Subway, which could have challenged Quiznos' claim that its sandwich had twice the meat of its competitor's sandwich.

The judge noted that Piotrowski and Blickman were the only franchise owners who responded to the letter and lost their franchise. One or two other franchisees who didn't respond were also terminated, the judge said.

Hoffman said he asked Daigle why he treated the couple differently and Daigle responded he ''was done with Mr. Piotrowski'' and didn't know why the couple didn't get the same opportunity as everyone else to take a second test.

The judge called the company's actions ''a charade driven not by Quiznos' genuine concern about whether its franchisees were making sandwiches to spec, but rather its overriding public relations desire to be able to proceed with its national advertising campaign targeting Subway.''

He ruled Quiznos owes Piotrowski and Blickman nearly $350,000 in damages plus legal fees for driving them out of business.

''This one ounce of meat will probably cost Quiznos $1 million,'' said Blickman.

Quiznos released a statement on Monday from President and Chief Executive Officer Dave Deno.

''While we know Judge Hoffman to be a fair and balanced representative of the judicial system, we respectfully disagree with his opinion in this case,'' Deno said.

''Regardless of the outcome, it is important to be very clear — my management team and I are diligently focused on building a positive partnership with our franchisees and have instituted a number of new programs to that end. That's not to say there won't be challenges, but it is certainly not our desire to engage in litigation with our franchisees.''

A spokesman for the company, Joe Hodas, said Quiznos hasn't decided if it will appeal.

Daigle wouldn't comment when contacted last week, only saying he no longer works for Quiznos. Quiznos wouldn't say why he isn't employed by the company.

While battling Quiznos in court, Piotrowski and Blickman reopened their shop in the Fairmont Village Shopping Center on Route 309 for 14 months until December 2007 as a Quiznos, under an odd agreement with the company.

Quiznos allowed them to sell sandwiches, but it cut them off from any franchise support — even physically barring the couple from attending a marketing meeting and removing their store from the company's online locator, court documents say. The Allentown couple ended the arrangement, they said, because Quiznos allegedly failed to alert them to recalls of tomatoes and potato chips.

Piotrowski and Blickman remodeled the store and reopened last May as the American Sub Sandwich Shop under their own company, Zig Zag Restaurant Group. But they closed three months later — in part, they said, because of the demands of their court battle with Quiznos.

The couple said they might serve food at the location again, but aren't enthusiastic about being part of a chain again after what they've been through.

''It certainly has soured us on the idea of opening a franchise,'' Blickman said.


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