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View Full Version : Before you open a franchise, read this.


Steve
02-25-2007, 07:18 PM
I have heard from a bunch of people over the years about getting involved with Quiznos. Yikes! After you read this article you may want to think twice. If you really want to open a sub shop, you might be better off creating one on your own than going through this.

Read this quote "As costs rise, some Quiznos operators say they are struggling to survive. One lawsuit cites a memorandum drafted by a Quiznos lawyer in 2003 that stated “40 percent of Quiznos units are not breaking even"

40 percent of Quiznos stores are not breaking even!? WOW! So much for there being a benefit to signing up with a franchise.

What's your take on this?

When Disillusion Sets In (http://www.nytimes.com/2007/02/24/business/24quiznos.html?pagewanted=1) - five years ago when John and Dawn Schodron opened a Quiznos in Slinger, Wis., about 30 miles north of Milwaukee, food costs ran about 28 percent of their revenue, Mr. Schodron said. According to budget goals provided by the company, franchisees were told they would not be profitable if their food costs climbed above 28.5 percent of their revenue, Mr. Schodron recalls.

Today, Mr. Schodron estimates his food costs are running in the “mid- to upper 30 percent” range and some double-meat sandwiches top out at 40 percent of revenue. “I called a supplier and was quoted a price for the same type of cheese Quiznos uses that was 40 cents a pound cheaper than I am paying now,” Mr. Schodron said. He said he wants to sell the restaurant because rising costs are making it increasingly difficult to break even.

Ms. Kezios of the American Franchisee Association said, “With some franchisors they don’t make their money, in truth, off of the royalty fees they collect from the franchisees, but rather, they make money selling products and services to the franchisees.” In some systems, like Subway and KFC, the franchisees themselves own or share the supply chain with the corporation, she noted.

But over the years, Quiznos has given few breaks to its franchisees, some claim.

In the spring of 2005, Fredrick N. Westerfield said he sent a letter to Quiznos pleading for a temporary suspension on his royalty payments to the company as he struggled to make ends meet in the three stores he ran in Wisconsin. He said he received a phone call back from the company saying there was nothing it could do.

So earlier this year after spending $14,000 in personal savings to keep the stores running in December, the former engineer realized he was drowning in more than $750,000 of debt and that sales were declining even as costs continued to climb. He decided to close all three stores.

He says the stress put a huge strain on his marriage and he will probably lose everything, including his home and cars, in bankruptcy.

“Customers used to come into the store and say to me, ‘You must be rolling in the money,’ ” recalled Mr. Westerfield. “If they only knew.”

S.P.Martin Lawn Care
02-25-2007, 07:47 PM
He got toasted alright....

tiedeman
02-25-2007, 08:17 PM
I believe it. I can see big companies doing that to franchies