Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Quiznos to file for bankruptcy amidst debt and declining sales
Author: Joel R. Glucksman
Date: March 25, 2014
Key Contacts
Back
Global sandwich chain Quiznos is preparing to file for protection under Chapter 11 of the bankruptcy act. According to reports published the evening of Feb. 27, the one-time fast food giant has accumulated about $570 million in debt and is experiencing declining sales nationwide.
Quiznos has been negotiating with creditors and unhappy franchisees for weeks to put together a restructuring plan that will help to ease the bankruptcy process, reported The Wall Street Journal, but thus far a deal has not been reached.
Two years ago, the chain underwent a major effort at turning business around, which included an out-of-court debt restructuring and change of management, according to the news source. While these efforts didn’t manage to change the company’s slide into bankruptcy, a Chapter 11 filing may be able to give Quiznos the flexibility on leases and contracts that it needs to turn things around.
A major challenge that the company will face, even if the bankruptcy filing is successful, is the damaged reputation that it now holds with its franchisees, who feel that the company has been attempting to squeeze more money out of them than is fair. Darren Tristano, executive vice president at restaurant consulting firm Technomic Inc., told The Wall Street Journal that the franchise fees charged by Quiznos – 7 percent in royalties and 4 percent in marketing – are higher than the industry average of 6 percent in royalties and 2 percent in marketing.
Since the company’s hey-day in the mid-2000s, its U.S. store count has fallen from more than 5,000 to about 1,200, according to CBS News. The average store’s sales have also fallen from an annual $425,000 per year to only $300,000 for the best performing stores, with weaker stores doing considerably worse.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
What is Business Law and Why Is it Important?
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Author: Dan Brecher
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
What Is Antitrust Litigation Law?
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Author: Robert E. Levy
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.