QUIZNOS: Quiznos Franchisees Celebrate Legal Victory
January 1, 2009 by Sean Kelly
Filed under Business
When the ball dropped and America yelled Happy New Year! last night, Quiznos franchisees Ellen Blickman and Rich Piotrowski were giddy on more than champagne. They had just received, hours earlier, the judge’s ruling that ended their two year battle with franchisor Quiznos Franchising II, LLC. They had just read District Court Judge Morris B. Hoffman’s 36-page ruling that, effectively, gave them their lives back.
If you have not followed previous Quiznos vs. Quiznos franchisee stories, the husband-and-wife’s story of legal persecution at the hands of the corporate giant might sound both preposterous and exaggerated. How could (and why would?) a well-known company immediately terminate a compliant franchisee, rob them of their livelihood for (supposedly) improperly making a single sandwich on one, isolated occasion? Who would believe that a corporate attorney could commence litigation against them because he didn’t like the voice mail message left by a frustrated franchise owner whose previous 20 urgent calls had gone unreturned? As implausible as it sounds, the judge found that’s exactly what occured. The ruling states:
Defendant Zig Zag Restaurant Group, LLC (“Zig Zag”) is a Pennsylvania limited liability company formed by the individual Defendants, Richard Piotrowski and Ellen Blickman. Piotrowski and Blickman, who are husband and wife, are the only members of Zig Zag, which they formed for the purpose of owning and operating a Quiznos franchise…
As discussed in more detail below, Defendants entered into two franchise agreements with Quiznos, but ended up operating only a single store, in Coopersburg, Pennsylvania. They operated the Coopersburg store for only eight months, at the end of which their franchise agreement was purportedly terminated by Quiznos because Quiznos allegedly determined Defendants had intentionally under-portioned the meat on a single sandwich. Quiznos brought this action claiming, among other things, that Defendants breached both franchise agreements, and Defendants counterclaimed for breach of the Coopersburg agreement and rescission of the unused agreement.
As the result of a five-day bench trial in early December, 2008, the judge dismissed Quiznos charges and ruled in favor of the Defendants:
I conclude that Defendants have proved their entitlement to rescissional-type damages as a remedy for Quiznos’ wrongful termination of the 6309 Agreement, and that the proper amount of 30 those damages is $349,797.00, plus costs, fees, and post-judgment interest at the contract rate of 24%.
Of course, this is much more of a moral victory than a financial one – since the franchisees have debt and obligations that will eat up the damage award.
Of course, there is much more to this story – which I will explore in future posts.
I’ll conclude with both thanks and congratulations to Rich & Ellen: Congrats on your win, and thanks for a great David & Goliath story. What a great way to start the new year!
READ IT HERE: Judge Hoffman’s Ruling Against Quiznos Franchising II LLC (PDF)
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It is a shame they treated them this way.
As these legal battles become public it will become obvious that the Quiznos Corporation has no regard for the Quiznos franchisee. The Quiznos owners are very unethical, lack business values, continues working on a hidden agenda. This group is more concerned about making money of the essential goods its sells to the Franchisees than creating a successful sustainable franchise system. They know a large percent of the franchisees or in distress and failing, stores are closing daily. This group of corporate owners continues to be the biggest threat to the individual Quiznos Franchise Owner.
Thanks Sean for reporting on this outcome. I’m looking forward to you being able to report even more about how this company is ran.
Richard Solomon you deserve [deletion], hopefully losing your ASSets. Its clear you have zero compassion, you’re a lawyer. You should work with the Schadens.
Dream Team, joke, show the numbers, stores in distress/profitability 80/20. The next Bennigan’s . Any educated business professional would have a field day with the actual store sales data. Anyone with Quiznos that’s responsible for the individual FO’s success would have to be embarrassed by the large amount of failure in the system.
Burned: What’s Richard Solomon got to do with this? Did he comment here?
Also, please keep the comments non-threatening. Thanks.
When I read the trial transcript, it first made me sick at my stomach and then angry or mad as hell! I again thought of Bob Baber and the TSFA incident where Quiznos Corporate tried to terminate franchisees who posted Bob Baber’s suicide note on the Internet. If it weren’t for the Internet, Quiznos legal would probably have gotten away with it.
Are Quiznos practices bordering on fascism? Has the absolute power that their contract and the FTC Rule gives them destroyed thousands of innocents who generally have no recourse against unlawful terminations and arbitrary punishments.
It’s good to see that a Judge recognized the arrogance and the injustice of the incident and slapped Quiznos. Of course, it is just a moral victory for the defendants who probably never will recover financially from the abuse.
Why shouldn’t punitive damages have been awarded in this situtation by the judge?
What is this about Richard Solomon? Richard Solomon tells the no BS truth about franchising and was one of my teachers on Blue Mau Mau before I was voted OFF of that website.
I would like to publicly thank our attorneys Jeff Cohen and Daniel Bristol, of Cohen & Associates in Denver.
Without their hard work, legal talents and perseverance we would never have been victorious. Jeff and Daniel
were personally committed to our case.
We are deeply grateful to them for their legal advise, their unwavering support and their friendship.
Congratulation to both of you Richard and Ellen. I am also like many other Quiznos owner. Lost my lifetime saving to this unethical corporation who took advantage franchisees from day 1.
I have one questions for you guys. I understand you converted your store to a non Quiznos sandwich shop. Can we do that? What do you think will happen if we do that?
Thanks
We did that as we had no choice, but I can understand people wanting to do it based on they way they have been treated. If you do it I really have no idea what will happen as I don’t know if they have the resources or the will to go after anyone right now. Even though I’m free of the contract, I don’t want to publicly tell anyone to violate it. The best thing to do for discussions like this are to join the TSFA and discuss in on the more private forum.
Congratulations to Ellen and Rich and to their attorneys who won a wrongful termination lawsuit for them.
Thanks for their participation on Franchise Pick and to their gracious recognition of their attorneys who worked so hard for them and won for them.
This was a good judge who could use the law to provide some kind of justice to Ellen and Rich.
It appears that arbitrary and wrongful terminations are being looked at by the courts and that franchisees are now winning a few of these lawsuits. There is now case law that will perhaps restrain Corporate legal in the future insofar as unlawful terminations are concerned.
QSucker would find out, however, if he consulted with an attorney that under the terms of the contract he signed with Quiznos, he can’t just quit and go into business on his own, even if he is losing money every month. Quiznos would immmediately get an injunction to close him down and sue for lost royalties, etc… —–and the courts would uphold the terms of the contract —in my opinion.
There is no new case law favoring franchisees whose businesses are failing because of encroachment, churning, or exploitation by franchisors of franchisees.
Franchise contracts do not allow for an exit when the franchisee can’t break even or when the franchisee just breaks even but there are no profits. How else could franchisors indenture franchisees for many years? Franchisees either have to sell their businesses at fire-sale prices or give them away or stand in place working for the franchisor and hoping they will break even some day before they are driven into bankruptcy. Remember that the franchisor profits all of the time you are trying to break even and even when you fail if your highly discounted business is taken over by a third party.
Federal regulatory policy is alive and well and protected by the courts.