For a time, Quiznos presented themselves as an alternative to Subway, but you probably haven't heard much from the toasted sub shop in recent years. There are a lot of reasons for this, and it's a whole lot more than them not being able to beat Subway. The company's business model was absolutely disastrous — and maybe illegal — and it led to many of their franchisees bringing legal action against them. They have tried to turn things around in recent years, but it really hasn't done a lot of good. Let's take a look at why you don't see too many Quiznos around anymore.
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00:00It wasn't long ago that Quiznos was a pretty big deal.
00:04But it turns out those tasty toasted rolls weren't enough to keep them on top of the
00:08food chain when it comes to fast food sub shops.
00:11They've closed more than 90 percent of their stores in the last decade, and here's why.
00:16No chain survives without the support of their franchisees.
00:18But Quiznos corporate has made it incredibly difficult for stores to turn a profit, problems
00:23that start with their supply chain.
00:25Most fast food franchises negotiate with vendors who then supply locations directly and at
00:29a reduced cost, since they're buying in bulk.
00:32But Quiznos corporate buys all supplies from vendors, then turns around and sells them
00:36to franchisees.
00:37While most restaurants ideally operate with a food cost of 30 percent, Quiznos forces
00:41their franchisees to start with a cost of up to 39 percent.
00:45That means a Quiznos location needs to sell a lot more than a comparable subway before
00:49they even break even.
00:51That backwards business plan has ended up breaking the franchise owners they should
00:54have been helping, and it's cost them.
00:57In 2006, around 10,000 franchise owners took corporate to court with a class action lawsuit.
01:03According to Forbes, they claimed corporate was essentially making them what's termed
01:06captive customers, and forced them to buy supplies at grossly inflated prices that made
01:11it nearly impossible for them to be successful.
01:13Quiznos argued that they were simply passing market costs on down the line, but they were
01:17forced to settle the lawsuit and pay out a whopping $206 million to their franchisees.
01:23And that was just the start.
01:24Other franchisees sued separately, and at the same time Quiznos was fighting on that
01:28front, 6,900 franchisees in Colorado, Illinois, and Wisconsin filed a similar suit.
01:34They won $95 million, with a huge chunk of that going to franchisees who paid their fees
01:39but were never allowed to even open a restaurant, because of ongoing location disputes.
01:44The entire point of an advertising campaign is to get people to buy a product, not make
01:48them undeniably uncomfortable.
01:50Quiznos missed that day in advertising school, and Business Insider called the creepy sponge
01:55monkeys from Quiznos one of the 10 worst ad campaigns of all time.
01:59"'The Quiznos sobs!
02:00They are so good, we need them raw, but eating raw sobs is barbaric!"
02:07Customers agreed.
02:08The sponge monkeys were all over Quiznos advertising from February 2004 until August of the same
02:13year, and if it feels like you were tortured by them for a lot longer than that, well,
02:17that just shows how much damage they did.
02:19They were so maligned that some stores took to posting signage apologizing for them, and
02:23in the first week, Quiznos Denver headquarters got around 30,000 phone calls from people
02:27wondering what the heck was going on.
02:29"'I thought we were all good people here.'"
02:32That's not the only time Quiznos missed big with a marketing campaign, and ended up pushing
02:36customers away.
02:37In 2009, their uncomfortable attempt at making a sexually aggressive toaster oven hilarious
02:42once again fell short and did more harm than good.
02:45"'Scott, I want you to do something.'"
02:47"'I'm doing that again.
02:48I burned.'"
02:49"'We both enjoyed that.'"
02:50In 2009, Quiznos tried to get some serious goodwill with coupons for free sandwiches,
02:56but it wasn't long before customers were getting denied their sobs.
02:59Some locations didn't honor the coupons at all, others only accepted them if customers
03:02bought something else, and needless to say, people were not happy.
03:06Consumerist found that franchisees had a very good reason for not accepting the coupons
03:10— they weren't being compensated by corporate, and instead were expected to eat the cost
03:14of the free sobs.
03:15A few days after the promotion started, an internal memo suggested corporate was going
03:19to start helping with the costs of the promotion, and at the time, they said they'd already
03:22had nearly 200,000 coupons printed.
03:25That's a ton of sobs that could cripple already-struggling franchises, and while Quiznos promised to
03:29make it right, that's not the kind of slap in the face that people forget.
03:33The very heart of Quiznos' problem has been the relationship between corporate offices
03:37and their franchisees.
03:38The two sides formed into very distinct groups that drove lawsuits forward thanks to the
03:43work of franchise owner Bupinder Baber, whose tragic story led to chain-wide recognition
03:47of owners' problems.
03:49Baber owned two locations in Long Beach, California, and when Quiznos allowed another franchisee
03:53to open nearby, his sales plummeted.
03:56Getting no response from the corporate offices who had promised him no one would be opening
03:59nearby, he organized other struggling franchisees into the Quiznos Franchisee Association.
04:05That was in 2004, and according to the Long Beach Post, that was when Quiznos ended Baber's
04:09franchisee agreement.
04:10By 2005, Baber was slated to go to the Denver headquarters to argue his claims.
04:15Fearing the trip was going to cost him too much and he would lose what little he had,
04:18he walked into a Quiznos bathroom and killed himself.
04:21He left behind a note calling for an investigation into Quiznos and their business practices,
04:25and that note was released to the public.
04:27The Post says the nightmarish tangle of lawsuits Quiznos and their franchisees were embroiled
04:32in for years has roots in Baber's franchisee organization, and that's the sort of thing
04:36no one can ignore.
04:37If you or anyone you know is having suicidal thoughts, please call the National Suicide
04:42Prevention Lifeline at 1-800-273-8255.