Franchise Law Blog reported that a group of Quiznos franchisees have filed a class action against the Denver based sandwich chain in Wisconsin.  The lawsuit contends that the franchisor forces franchisees to buy food and supplies from Quiznos and affiliates at inflated prices while setting retail prices so low the franchisees cannot profit.  The lawsuit also alleges that the franchise omits or misrepresents key facts about its business operations when selling the franchise. 

Quiznos denies the allegations and intends to vigorously defend the lawsuit.

Regardless of the outcome the lawsuit it provides an important lesson for prospective franchisees who are reviewing a franchise agreement.  Many franchise agreements contain restrictions on the products and suppliers the franchisee may use.  While this may seem reasonable in the beginning, (after all your buying a proven system, right?) many franchisees discover later they can get cheaper products and find better suppliers than the franchisor’s system.  After some time franchisees may begin to question why he or she is paying for higher priced products along with royalties which eat into profits even more.  When this happens franchisees tend to get upset and file lawsuits like the one against Quiznos. 

If the franchisee agreement you are considering contains restrictions on products and suppliers be sure to consider those provisions very carefully.  Be prepared to ask the tough questions of the franchisor when it comes to products and suppliers.  Also, don’t take for granted just because you are going with a top selling franchisor that you are getting the most for your money.  Above all, make sure to talk with as many current franchisees as possible and conduct your due diligence.