Quiznos Corp.'s, which opened its first international restaurant in Vancouver, declared March 14 after struggling for years with high debt, angry franchisees and increasing competition.
The restructuring comes a few years after the Denver-based franchisor agreed to a US$95 million out-of-court settlement with 6,900 class-action franchisees who said the company overcharged them for supplies and failed to provide sufficient marketing support.
Alvin Blaise, who, along with Chris Moradian, opened the first international Quiznos location, in 1996, on West Broadway at Heather Street in Vancouver, told Business in Vancouver that the potential for profit operating a franchise was higher when he was involved with the company than in recent years.
Blaise and Moradian bought Canadian master franchise rights in January 1998 and soon projected that Quiznos would operate 650 locations Canada-wide by 2008. He resold master franchise rights to partners in 2001 and the rights eventually reverted to the U.S. owner.
When Blaise sold his stake, he had built the chain to 138 stores in Canada, including 82 in B.C., and more than 300 were in development.
Quiznos listed that it had more than US$500 million in debt in Chapter 11 documents filed in U.S. Bankruptcy Court March 14. It seeks a reorganization that would slice US$400 million off that debt. It also wants the court to approve a US$15 million loan to continue operations.
All except seven of its nearly 2,100 restaurants are independently owned and operated by franchisees and will not be affected by the bankruptcy, the company said in a statement.
Blaise pointed to Subway as an example of a franchisor that did things right.
Subway was founded in 1965 and has stayed true to the model of that time, Blaise said.
Subway is now the largest single-brand restaurant chain in the world. Its website noted that it had 40,855 restaurants in 105 countries and territories at the beginning of 2014.
Blaise now sells real estate in Vancouver and recently launched a new home building company named Vicom Homes Inc. along with Larry Clay, who last month won a Georgie Award as the best custom home builder of the year in B.C.