Quiznos Corp.'s March 14 declaration that it has filed for bankruptcy protection is a sad consequence that stems from "greed" and not giving franchisees sufficient leeway to make profit, according to the man who opened the first international Quisnos franchise.
"After they got really big, they got greedy," Alvin Blais told Business in Vancouver after he was told of the bankruptcy protection filing.
He explained that the ownership set up a separate company that bought and then marked up goods that franchisees were required to buy.
Indeed, several years ago, Quiznos agreed to a US$95 million out-of-court settlement with 6,900 class-action franchisees who said the company overcharged them for supplies and failed to provide sufficient marketing support.
Blais believes those actions killed what was a great sandwich chain.
He and Chris Moradian opened the chain's first international location in 1996 – on West Broadway at Heather Street in Vancouver. That was long before Quiznos' U.S. owners faced any accusations of overcharging for supplies.
Blais and Moradian bought Canadian master franchise rights in January 1998 and soon projected that Quiznos would operate 650 locations Canada-wide by 2008. He resold master franchise rights to partners in 2001 and the rights eventually reverted to the U.S. owner.
When Blais sold his stake, he had built the chain to 138 stores in Canada, including 82 in B.C., and more than 300 were in development.
Quiznos listed that it had more than US$500 million in debt in Chapter 11 documents filed in U.S. Bankruptcy Court March 14. It seeks a reorganization that would slice US$400 million off that debt. It also wants the court to approve a US$15 million loan to continue operations.
All except seven of its nearly 2,100 restaurants are independently owned and operated by franchisees and will not be affected by the bankruptcy, the company said in a statement.
Blais pointed to Subway as an example of a franchisor that did things right.
Subway was founded in 1965 and has stayed true to the model of that time, Blais said.
Subway is now the largest single-brand restaurant chain in the world. Its website noted that it had 40,855 restaurants in 105 countries and territories at the beginning of 2014.
