In September 2006, a mystery shopper visited the Pennsylvania Quiznos store owned by Rich Piotrowski and Ellen Blickman. At the time, Quiznos was in the midst of a major national advertising campaign targeting Subway, using commercials that claimed its Prime Rib Philly Cheeseteak sandwich had twice the meat of a comparable Subway sandwich.
To fend off a Subway lawsuit, Quiznos general counsel Michael Daigle had created a test for all 4,000 Quiznos locations. A mystery shopper would go in, order the Philly sandwich, and then tear it apart to weigh the meat and make sure it was at least 4.5 ounces.
Piotrowski and Blickman's beef weighed in at 4 ounces.
Like 300 other franchisees who failed to meet the meat requirements, the couple would soon receive notices terminating their franchise agreements with Quiznos, requiring that they shut down and lose their store. Those notices included an e-mail address at the bottom; if the franchisees replied via e-mail, they would have received another e-mail advising them that they weren't really terminated as long as they passed their next inspection.
But Piotrowski called Quiznos instead, and when he didn't get a call back that day, he eventually left a message threatening a press conference. Daigle responded with a e-mail pronouncing that Quiznos would not tolerate any defamation. "In case you're interested, following is the text of the email you would have received had you taken the time to send me an email as the support staff here suggested," Daigle wrote.
Two days later, on October 6, 2006, Quiznos sued Piotrowski and Blickman, claiming they had "materially harmed the brand" and thus broken their contract.
Last month, Denver District Judge Morris B. Hoffman heard the Quiznos claim and a counterclaim from the respondents during a five-day bench trial. His decision - in favor of the franchisees - was handed down on New Year's Eve.
"I find that this whole charade of 'terminating' and 'defaulting' franchisees who failed the field test was just that - a charade - driven not by Quiznos' genuine concern about whether its franchisees were making sandwiches to spec, but rather by its overriding public relations desire to be able to proceed with its national advertising campaign targeting Subway," Hoffman wrote. "But the public relations monster had to serve two masters - the action Quiznos took once it ferreted out non-complying franchisees had to look serious (otherwise what would Subway say?), but it couldn't really be serious, unless Quiznos was willing to lose a potentially huge number of non-complying franchisees, which it was not.
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"This explains the sort of non-termination termination process Mr. Daigle came up with. What he did not count on was that franchisees like Defendants might actually take the notice of termination seriously ...
"But it is quite clear to me what happened. Mr. Daigle got mad at defendants because Mr. Piotrowski threatened to call a news conference, and Mr. Daigle decided at that instant that he would not afford Defendants the same opportunity he had afforded every other of the roughly 300 franchisees who were terminated ... He decided not only not to accommodate Defendants, but to cause them to be sued for damages two days later."
Hoffman determined that Quiznos had failed to prove any of its claims, which sought damages for breach of contract. Instead, he ruled that Quiznos had in fact breached the contract by wrongfully terminating the defendants, and awarded them $349,797.
This case is just the latest, and most bizarre, in an ongoing saga I first wrote about in May 2007, in "You're Toast," which told the story of California Quiznos franchisee Bob Baber. He committed suicide in his store, leaving a note blaming the company for his death. At the time, franchisees with the Toasted Subs Franchisee Association were starting to file class-action lawsuits against the company, alleging an illegal business model that made profits not from sandwiches sold, but the products franchisees were forced to buy. Such suits, claiming fraud and deceptive business practices, are still pending in Wisconsin, Illinois and Colorado, where Quiznos is based. -- Jessica Centers