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No Comments [ Add Comment ]Ogden Quiznos shuts down
By Marshall ThompsonCorporation's prices squeeze franchises, local owner says
OGDEN -- Hungry people seeking a toasted Quiznos sub at the corner of Washington Boulevard and 12th Street found only a locked door and a handwritten sign: "Due to rising costs, we are no longer open for business. Thanks, Management."
The owner of the private franchise couldn't discuss the increased costs that forced him to shut his store down because of a nondisclosure agreement he signed with Quiznos corporate.
The cost of supplies and food, however, is the subject of several class action lawsuits filed against Quiznos corporate by franchise owners in America, Canada and Australia, said Danny Kessels, president of the Toasted Subs Franchisee Association, comprising more than 500 Quiznos store owners in the United States.
"Everybody's suing them," Kessels said. "Nobody is jumping up and down right now because they own a Quiznos."
Franchises sign contracts to get all their food and supplies from Quiznos corporate under the impression that the combined purchasing power will drive down prices, Kessels said, but that's not how it turns out.
"Supplies of essentials are at prices that franchisees disagree with because there is a spread between what they pay and what Quiznos pays, such that Quiznos is making a profit off the supplies of the product on top of what franchisees pay in franchise fees," said Ted Bendelow, a Denver-based attorney who represents several franchises currently in arbitration with Quiznos.
A spokeswoman for the corporation, Jessica Beffa, said it was unlikely the cost of food had anything to do with the closure of the Ogden store.
"It is important to note that in the past year, Quiznos has taken significant steps toward improving franchise owner profitability, bringing food costs down by approximately4 percent of revenue (over 10 percent for just food costs) for our stores," Beffa wrote in an e-mail to the Standard-Examiner.
During a telephone interview, Beffa suggested that the 12th Street Quiznos, one of five Quiznos restaurants in Ogden, may have been putting too much meat on their sandwiches, thereby destroying their profit margins.
Kessels, who owns a profitable Quiznos in Colorado, said the food prices are still too high.
"Quiznos picks the price and we are forced to pay it," he said. "They can charge $20 for a gallon of ranch dressing if they want, and there's nothing we can do about it."
Four Quiznos restaurants are currently for sale in Utah, asking between $50,000 and $185,000, according to www.bizbuysell.com. Kessels said he bought his store for about $240,000.
Nationwide, 343 Quiznos stores are for sale, some for as little as $26,000, compared to 66 Subway restaurants, the cheapest of which is going for $59,000, according to the same Web site.
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