National Class Action Filed by Franchisees Against Quiznos Sub

Among other things, the lawsuit contends that the company forces franchisees to buy food, supplies, and services from Quiznos or its affiliates at drastically inflated prices while concurrently setting artificially low retail prices for its products--in many instances, making the stores unprofitable for the franchisees. In addition, the franchisees allege that the company unlawfully participates in a scheme to sell the franchises by omitting or otherwise misrepresenting key facts about Quiznos' business operations. In seeking damages for lost investments as well as injunctive relief, the suit alleges, among other things, statutory and common law fraud, violations of federal and state antitrust laws, violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, breach of contract, and violations of Colorado franchise and consumer protection laws.

The class action in Colorado is one of several lawsuits filed against the company, noted Justin M. Klein, Esq., a partner in the Red Bank, N.J. law firm of Marks & Klein, LLP. The firm represents the franchisees along with co- counsel Mark M. Leitner and Joseph S. Goode of the Milwaukee-based firm of Kravit, Hovel & Krawczyk S.C.

"The success of this system is dependent upon the success of its franchisees," said Danny Kessels, a Quiznos franchisee in Colorado and president of the Toasted Subs Franchisees Association, Inc. (TSFA), the trade group representing Quiznos franchisees that helped organize the class-action suit. "The goal of the lawsuit is to right the wrongs of the past, and to ensure that franchisee profitability will be the focus of this system in the future."

Recently, a class action lawsuit filed on behalf of franchisees alleging that the company had sold franchises it had no ability to open (Bonanno, et al v. The Quiznos Franchise Company, LLC, et al., Civil Docket No. 06-02358) was amended to expand the class to cover franchisees throughout the United States. According to Klein, who also represents the Plaintiffs in that case, that class has approximately 3,000 members.

Kessels added: "It is up to the courts now, but, on behalf of the TSFA, we are hopeful that the new management team at Quiznos will recognize and appreciate many of the historic problems with this system and do what is necessary to make this brand as successful as we know it can be."

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