Drinker Biddle & Reath LLP

Advertisement

Giordano Logo

 

Quiznos, the toasted sandwich chain based out of Denver, CO, filed for prepackaged bankruptcy protection within days of Sbarro. The company foresees this restructuring cutting $400 million of debt.  In its bankruptcy protection the company listed liabilities between $500 million and $1 billion.

Advertisement

In recent years, Quiznos has faced stiff competition from long-time rivals such as Subway as well as from new entrants to the market like Potbelly Corp.  Subway has over 41,000 restaurants in more than 100 countries, while Quiznos has only 2,100 locations.  All but seven of these restaurants are owned by franchisees.  There are over a dozen locations in New Jersey.  Similar to Sbarro’s bankruptcy, Quiznos franchise locations should not be directly affected by the bankruptcy.

Quiznos’ senior lenders have committed $15 million in debtor-in-possession financing to support ongoing operations during the bankruptcy.

Advertisement

The company plans to implement a franchisee rebate program as part of its restructuring. This program will include investments in advertising, new technology at the restaurants and new incentives for prospective franchisees.  The company has requested that the locations honor all outstanding gift cards.

Advertisement

Though the bankruptcy may not directly impact Quiznos’ franchisees, this is a sign of things to come.  Landlords and franchisees alike should brace themselves for a bumpy road if Quiznos cannot turn operations around.

The case is In re: The Quiznos Global LLC, U.S. Bankruptcy Court, District of Delaware No. 14-10557.

Article by:

Advertisement

Donald F. Campbell Jr.

Of:

Advertisement

Giordano, Halleran & Ciesla, P.C.

Published by

National Law Forum

A group of in-house attorneys developed the National Law Review on-line edition to create an easy to use resource to capture legal trends and news as they first start to emerge. We were looking for a better way to organize, vet and easily retrieve all the updates that were being sent to us on a daily basis.In the process, we’ve become one of the highest volume business law websites in the U.S. Today, the National Law Review’s seasoned editors screen and classify breaking news and analysis authored by recognized legal professionals and our own journalists. There is no log in to access the database and new articles are added hourly. The National Law Review revolutionized legal publication in 1888 and this cutting-edge tradition continues today.