CHICAGO Quiznos Sub franchisees in Illinois have followed the lead of colleagues in Wisconsin and Michigan by suing the brand's franchisors for allegedly defrauding them through the chain's purchasing and pricing policies.
The class-action suit seeks unspecified damages and injunctive relief from the practices that the plaintiffs contend are fraudulent. An announcement accuses The Quiznos Franchise Co. LLC and Quiznos Franchising LLC, both based in Denver, of forcing franchisees to buy food and supplies at inflated prices that they cannot pass along to customers because of the chain's pricing stipulations. In addition, the suit alleges that the franchisors omitted or misrepresented key facts about the business while selling franchises.
Also named as defendants are Richard E. Schaden and his son, Richard F. Schaden, who previously wholly owned the franchising parties, and Cervantes Capital LLC, the company that ran Quiznos' Denver headquarters and field support operations for them.
The Illinois franchisees are represented by Marks & Klein LLP of Red Bank, N.J., which is also the legal counsel for the Wisconsin and Michigan franchisees in their respective lawsuits. An announcement of the Illinois action said the class action was organized in part by a national organization of Quiznos franchisees, Toasted Subs Franchisees Association Inc.
The statement said the chain's new chief executive, former Burger King chief Greg Brenneman, had been quoted in a Feb. 24 newspaper interview as acknowledging that the chain's food costs were "out of line."
Brenneman's company, TurnWorks Inc., bought an undisclosed stake in the franchising concern in January. Earlier, a private-equity affiliate of J.P. Morgan Chase & Co. had purchased an interest in Quiznos from the Schadens. It is unclear how much of a stake, if anything, is still held by the father-son pair.