Quiznos weighs in
What a difference an ounce makes
A couple lost their Quiznos franchise over a single ounce of meat, and perhaps the greater sin - posting an angry notice on the Toasted Subs Web site.
In 2004 Ellen Blickman and her husband Richard Piotrowski moved from New Jersey to rural Pennsylvania - where an ounce of roast beef unraveled their lives.
"We were looking to do something less stressful," said Blickman, "and thought we'd open a little sandwich shop." The couple attended a seminar put on by Denver-based Quiznos, then talked to 20 to 30 current franchisees about the concept. In December 2004, the couple paid a $25,000 franchise fee to open a store, but the shopping center they'd chosen was never built. In July 2005, Quiznos notified them of a store for sale in nearby Cooperstown, Pennsylvania.
Piotrowski managed the Cooperstown store for several months before the couple made a deal, putting down $70,000 and borrowing $150,000 through an SBA-guaranteed loan. By February 2006, they finally owned their "little sandwich shop" and set about trying to make it profitable.
On the national scene, Subway, with its multi-million dollar ad budget, was eating Quiznos' lunch. That summer, Quiznos launched an ad campaign for a Prime Rib Philly Cheesesteak sandwich and announced that it contained "over twice the meat" of a comparable Subway offering. To ensure the claim was true, and to protect Quiznos from any litigation from Subway, Michael Daigle, then Quiznos' general counsel, commissioned a test. An anonymous mystery shopper would order a small Prime Rib Philly Cheesesteak sandwich at each of the chain's 4,000-plus restaurants and weigh the meat. If it weighed under the specified five ounces, the franchisee would receive a termination notice.
Richard Piotrowski and Ellen Blickman won their legal battle with their franchisor, Quiznos, a battle that took more than two years and started over a single ounce of prime rib.
On October 2, 2006, Blickman and Piotrowski received such a notice, saying a mystery shopper found four ounces of meat in one of their sandwiches. The notice said they could call to discuss the issue.
Piotrowski called right away, got no response, and kept calling throughout the day. By that evening, when he feared losing his life savings over an ounce of meat, Piotrowski left a more aggressive message, saying he would hold a press conference to complain. Daigle called back and told Piotrowski that if he had sent an e-mail instead of calling, he would have received an instant response saying that the termination would be rescinded if their store passed a second test. Daigle told him the other franchisees (there were 300 in all) who received underweight Philly Cheesesteak terminations sent e-mails and were eventually cleared. By this point Piotrowski was really upset, and posted notices of his anger on the Toasted Subs Web site, the online presence of the Quiznos' franchisee association.
On October 6, Quiznos sued Blickman and Piotrowski for serving an underweight sandwich - and for saying bad things about the company. Among the documents the couple signed when they took over the Cooperstown store was a non-disparagement agreement that forbids franchisees from speaking or writing negatively about Quiznos or doing anything that would "subject the Quiznos brand to ridicule, scandal, reproach, scorn or indignity, which would negatively impact the goodwill of the Franchisor."
Franchisee attorney Justin Klein, of Marks & Klein in Red Bank, New Jersey, said that non-disparagement clauses are not uncommon in franchise agreements, although they are rarely enforced. "I can see how they can be tricky in a prospective franchisee's due diligence process." Klein said. "If I'm a new franchisee to the system and I'm having a miserable time, losing money and getting no support, I might get a little paranoid. If a prospective franchisee called me and asked how I'm doing, I might think I was being set up and I'd be inclined not to tell the truth."
The couple then entered what the judge trying their case called a "shadow land." While the lawsuit made its way up the Denver District Court docket, Quiznos allowed Piotrowski and Blickman to continue to operate their store as a quasi-franchise. They kept their signs and ordered food from the company-owned supplier, but their store's address was removed from Quiznos' online store locator. They paid no royalties, but received no support, not even e-mails about new products.
"We kept asking to be reinstated," said Piotrowski, "but Quiznos never allowed it. Finally, in December 2007, after we'd missed two product recalls about tomatoes and potato chips, we closed our store." Since they were still obligated to pay the rent, the couple operated an independent sandwich store there for four months, closing it when the lawsuit demanded more of their time.
The case went to trial in December 2008 and on the last day of the year, Judge Morris B. Hoffman issued a 37-page judgment in favor of Piotrowski and Blickman, granting them $349,797, plus attorneys' fees. Hoffman called the meat test "a charade," because, according to Quiznos' specifications for the sandwich, the original five ounces of meat was soaked in warm juices, then placed in a sandwich next to melted cheese, where it was heated again. It could easily lose weight while being heated and/or during the testing process, depending on how much prime rib the mystery shopper peeled off with the cheese.
Hoffman called the couple's situation as quasi-franchisees "schizophrenic behavior by Quiznos," and compared their situation to a Kafka novel. He agreed that many of Piotrowski's online postings were disparaging but said that Quiznos failed to show how they had impaired the company's goodwill. He gave Quiznos 45 days to appeal. As of press time, no appeal had been filed.
Quiznos' CEO Dave Deno would not comment directly on the case, and issued the following statement: "While we know Judge Hoffman to be a fair and balanced representative of the judicial system, we respectfully disagree with his opinion in this case. Regardless of the outcome, it is important to be very clear - my management team and I are diligently focused on building a positive partnership with our franchisees and have instituted a number of new programs to that end. That's not to say there won't be challenges, but it is certainly not our desire to engage in litigation with our franchisees. Instead, we will continue to dedicate our resources to improving franchise profitability, strengthening relationships with franchise owners and enhancing the Quiznos brand."
Back in Pennsylvania, Piotrowski and Blickman were still waiting for their money. "$349,000 sounds like a lot of money," Blickman said, "but it won't cover the financial damages we've suffered." The couple said they'll use the money to pay off the SBA loan and to pay back relatives, who have been lending them money to live on. Ironically, they still must pay rent on the store where they'd planned to open a little, stress-free sandwich shop.