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Rick Schaden to step down as Quiznos CEO

Greg MacDonald to take over, head up major company changes

Sandwich chain franchisor Quiznos said co-founder Rick Schaden is stepping down from his role as chief executive, and has turned over those duties to president Greg MacDonald, a 12-year Quiznos veteran.

Quiznos said Schaden will remain with the company as chairman, but has plans to pursue other entrepreneurial opportunities and philanthropic endeavors.

MacDonald’s appointment marks the fourth such transfer of power at the struggling Denver-based chain since 2007, when Schaden handed the position to former Burger King executive Greg Brenneman.

In late 2008, Brenneman yielded the post to president Dave Deno, a former Yum! Brands Inc. executive, who resigned the job after just five months, leading to Schaden’s return to the top of the organization in February 2009.

“Greg brings unparalleled brand and industry knowledge to this role, as well as a targeted focus on company success through exemplary operations,” Schaden said.

MacDonald rose through the company ranks from the development and marketing departmens to be named head of Canadian operations in 2005 and president of the overall system last year.

Schaden said MacDonald has the support of franchise owners as well the support of the board and shareholders.

Calls to several franchisees and the Toasted Subs Franchisee Association seeking comment about the appointment had not been returned at press time.

Some individuals indicating that they are current or past Quiznos franchisees in posts at the “franchise community” website were critical of the appointment or suggested it would mean no change to the status quo.

Changing the status quo has been a major priority this year for Quiznos, which has seen its domestic store count drop by more than 600 restaurants since 2007 to “nearly 4,000” today.

Among recent developments:

• An announcement that Quiznos was ramping up some aspects of its international franchise sales operations.

• The finalization in August of a $206 million settlement between Quiznos and as many as 8,000 current or former franchisees involved in four class-action lawsuits.

• A change in its strategy of being a pure franchisor in favor of a mixed approach in which it was planning to open 600 company-run and Quiznos-funded joint ventures by the end of 2010. Officials said 70 company stores have opened during the past six months.

• A major recapitalization and “injection of capital” from primary shareholders, including equity funds affiliated with J.P. Morgan Partners LLC and managed by CCMP Capital Advisors LLC and Consumer Capital Partners. The company said it and its lending group also amended the terms of its existing secured debt to provide the company with the resources and flexibility to further its growth objectives support its franchise owners.

• The creation of an Operating Partner Program through which the franchisor said it would loan experienced restaurant managers the money to open their own locations. Quiznos officials recently confirmed that the OPP initiative has been put on the back burner in favor of recruiting managers for the new company-store operations.

• A renewed run at the breakfast business as part of a revitalization of the chain’s strategy to open branded units within convenience stores, which centers on a new “drop-in” concept.

Quiznos officials said that as president, MacDonald’s primary objective has been to elevate the guest experience through improved restaurant-level operations. Under his leadership, since the beginning of 2010, Quiznos has experienced “an uptrend in average unit volumes and customer experience measurements,” they said.

Some of the individuals claiming to be franchisees on criticized the chain in their posts, suggesting that average-unit volumes have risen primarily as a result of the failures of so many restaurants in recent years, or the culling of poor performers.

Chain officials also said that MacDonald was the driving force behind The New Quiznos, or TNQ — a comprehensive guest experience remodel and in-store refresh. Through that initiative, they added, the company recertified all managers and more than 80 percent of stores have incorporated TNQ into their locations.

“Our senior management team is freshly dedicated to driving even greater company success through operations, an elevated guest experience and innovative new products,” MacDonald said.

He said in coming weeks, the chain would share its 2011 plans for “moving forward.”

Contact Alan Liddle at [email protected].

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