Risk Score
Pending analysis
Investment Range
$220,600 - $611,000
Franchise Fee
$5,000
Total US Locations
157
Business Summary
Quiznos Restaurants serve submarine and other sandwiches, salads, soups, soft drinks, and related food products. These restaurants can operate from traditional in-line commercial spaces, standalone buildings, or non-traditional locations like malls, transportation centers, or school campuses.
Corporate History
Quiz Holdings, LLC was organized in Delaware on January 22, 2018. The company's sole business activity is franchising Quiznos Restaurants. In June 2018, its parent company, Quiz Franchisor, LLC, acquired substantially all assets of the Quiznos franchise system, including trademarks and existing franchise agreements, from QCE LLC and its affiliates. Quiz Holdings, LLC then became the franchisor of the Quiznos system and started offering new franchises for Quiznos Restaurants in September 2018. However, the Quiznos brand and its predecessors, including QFA Royalties LLC (from 2008-2018) and Quizno's Franchising II LLC (from 2005-2008), began offering Quiznos franchises as early as 1991. These predecessors also offered other types of development agreements, such as for Area Directors and Small/Middle Market Area Directors, which are not currently offered by Quiz Holdings, LLC.
Financial Overview
Investment Range
$220,600 - $611,000
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$5,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$145,500
Equipment Costs (High)
$512,500
Working Capital
$37,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
The auditor's report on Quiznos' financial statements expresses substantial doubt about the company's ability to continue operating as a going concern. This indicates that Quiznos may not have the necessary financial resources to provide franchisees with services and support.
Financing Details
Quiznos does not offer any direct or indirect financing to franchisees, nor does it guarantee any franchisee notes, leases, or obligations. Franchisees must secure their own financing.
Performance Metrics
Total US Locations
157
Franchised Units
156
Corporate Units
1
Avg Square Footage
1,075
Franchising Since
1991
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
Yes
Litigation Count
17
Litigation Summary
Quiz Holdings, LLC itself reports no litigation. However, Item 3 discloses historical litigation involving its predecessors. For example, Quizno's Franchising LLC and Quizno's Franchising II LLC (predecessors) settled an administrative proceeding with the Maryland Securities Commissioner in 2006 for $5,000 concerning escrow obligations. Between 2012 and 2014, a total of 13 separate lawsuits were filed by former Quiznos franchisees and owners against QFA Royalties LLC (another predecessor) and its affiliates. These lawsuits alleged fraudulent schemes involving inflated product prices, abusive couponing, and unlawful control. Most of these cases settled by March 2014, with some defendants paying an aggregate of $2.5 million. Additionally, in 2013, a trustee for a bankrupt Quiznos franchisee filed a claim against a predecessor, which was settled in 2014 for $2,000 from the Quiznos parties and $15,000 from other parties. In 2014, a court judgment of $1,677,388 was entered against QFA and affiliates for breaching fiduciary duty to a minority shareholder. Another 2014 lawsuit by a former franchisee settled in 2015, resulting in a payment of $22,131.44 from QFA's bankruptcy proceedings. All disclosed litigation against predecessors concluded prior to December 2015, making them older than three years from the FDD's issuance date.
Bankruptcy History
Quiz Holdings, LLC itself has no bankruptcy history to disclose. However, its predecessor, QFA Royalties LLC, along with QFA's parent company and various affiliates, filed for Chapter 11 bankruptcy reorganization in March 2014. This was a "Debtor's Joint Prepackaged Chapter 11 Plan of Reorganization." The plan was approved by the U.S. Bankruptcy Court for the District of Delaware in May 2014, and the entities emerged from bankruptcy in June 2014. The court officially closed the bankruptcy matter in December 2015.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Quiznos franchise, franchisees must provide written notice between 180 days and one year before their initial term expires. Franchisees must not be in default of their agreement and must have been in compliance with all provisions, meaning they should not have received more than four default notices during the initial term. Additionally, they must meet all of Quiznos' then-current criteria for new franchisees. Upon renewal, franchisees are required to pay a $5,000 successor fee, sign a general release of claims against Quiznos and its affiliates, complete any new training requirements for their staff, and make all necessary capital expenditures to remodel their restaurant to meet Quiznos' then-current brand standards and Operations Manual requirements. The new Successor Franchise Agreement may include materially different terms and conditions, including changes to royalty and other fee amounts.
Training & Support Program
Franchisor Assistance
Before a Quiznos Restaurant opens, Quiznos provides franchisees with site selection specifications and advice, guidance on the build-out, interior design, and layout, and standards for equipment, supplies, and menu items. Quiznos also trains the franchisee or their designated operating partner and general manager. Franchisees receive access to an electronic Operations Manual and remote opening assistance, along with guidance on advertising, marketing, operating procedures, and accounting. Ongoing support during operation includes telephone consultation on management, product quality, menu items, and customer relations. Quiznos also grants access to advertising and promotional materials, provides updates on menu items and System standards, and offers training for replacement or additional managers, though fees may apply for these.
Initial Training Hours
174
Training Location
Training is conducted through a mix of paper-based and digital tools, e-learning platforms, virtual and traditional classrooms. In-person training occurs at a designated Quiznos Restaurant, which could be operated by Quiznos or an affiliate, or at Quiznos' offices in Denver, Colorado.
Ongoing Support
Quiznos provides ongoing support that includes telephone consultations on continued operations, management, product quality, menu items, and customer relations. Franchisees receive access to advertising and promotional materials and ongoing updates on menu items, business practices, and new services or products for the Quiznos System. Training for replacement or additional managers is also available, although tuition fees may apply. Additionally, Quiznos offers guidance and consultation for bookkeeping services and requires attendance at periodic market meetings.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
Quiznos franchisees will receive a Protected Area defined as a 1/10th of a mile radius around their specific franchised location. However, this is not an exclusive or protected territory, and franchisees may face competition from other Quiznos franchisees or company-owned restaurants within or outside this radius.
Staffing Notes
Quiznos franchisees are solely and fully responsible for all decisions related to their employees, agents, and independent contractors, including recruiting, hiring, firing, training, compensation, work hours, and supervision. Franchisees must manage employment functions in compliance with all federal, state, and local employment laws. The franchise agreement requires that either the franchisee (or a managing owner) or a designated manager must devote full time to managing and operating the Quiznos Restaurant.