U.S. SECURITIES AND EXCHANGE
                   COMMISSION Washington, D.C. 20549
                             Form 10-KSB

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934
        For the Fiscal Year Ended December 31, 1996
[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934 FOR THE TRANSITION PERIOD
        FROM  ________ TO __________

                  Commission File Number 000-23174

                       THE QUIZNO'S CORPORATION
      (Name of small business issuer as specified in its charter)

            Colorado                           84-1169286
(State or other jurisdiction of             (I.R.S. Employer
 incorporation or organization)           Identification No.)

  1099 18th Street, Suite 2850
        Denver, Colorado                        80202
(Address of Principal Executive officers)     (Zip Code)

                               (303) 291-0999
               (Issuer's telephone number including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                     None

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                        Common Stock, $.001 par value


Check whether the issuer (1) filed all reports required to be filed
by Section  13 or 15(d) of the Securities Exchange Act during the past
12 months (or for such shorter period that the registrant was required
to file   such  reports),  and  (2)  has  been  subject  to  such
filing requirements for the past 90 days.  Yes [X]  No [ ]

Check  if  there is no disclosure of delinquent filers in  response
to Item  405  of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy  or information statements incorporated by
reference in Part  III of this Form 10-KSB or any amendment to this
Form 10-KSB. [ ]

State registrant's revenue for its most recent fiscal year:
$7,486,495

The aggregate market value of the registrant's common stock held by
nonaffiliates  of      the  registrant as of March 17, 1997 was
approximately
$4,102,676 (for purposes of the foregoing calculation only, each of
the registrant's officers and directors is deemed to be an affiliate).

There were 2,865,746 shares of registrant's common stock outstanding
as of March 17, 1996.

Documents  incorporated  by reference:  Portions  of  the
registrant's Proxy  Statement  that will be filed with the Securities
and  Exchange Commission  in  connection  with  the registrant's
annual  meeting  of
stockholders are incorporated by reference in Part III of this Form 10-KSB.
Transitional Small Business Disclosure Format (Check one): Yes [  ]
No [X]


                   This document contains __ pages.
               The Exhibit Index is located at page 27.



                       TABLE OF CONTENTS

                                                         Page

No. PART I

ITEM 1. Description of Business                            1

ITEM 2. Description of property                           15

ITEM 3. Legal proceedings                                 15

ITEM 14.Submission of matters to a vote of security
        holders                                           15

PART II

ITEM 5. Market for Common Equity and Related
        Stockholder Matters                               16

ITEM 6. Management's Discussion and Analysis or
        Plan of Operation                                 17

ITEM 7. Financial Statements                              26

ITEM  8.  Changes  in  and  Disagreements  with
          Accountants on Accounting and Financial
          Disclosure                                      26

PART III
ITEM  9.  Directors,  Executive Officers, Promoters  and
          Control Persons; Compliance
          with Section 16(A) of the Exchange Act          27

ITEM 10.  Executive Compensation                          27

ITEM 11.  Security Ownership of Certain Beneficial
          Owners and Management                           27

ITEM 12.  Certain Relationship s and Related
          Transactions                                    27

ITEM 13.  Exhibits and Reports on Form 8-K                27




                             PART I

ITEM 1.   DESCRIPTION OF BUSINESS

The Restaurants
         The  Company is engaged in franchising and, to a lesser
extent,   operating  quick  service  restaurants   ("QSR")   (the
"Restaurants") using the registered service mark "Quizno'sr"  and
the  name "Quizno's Classic Subs."  The Restaurants offer a
menu of  submarine  style  sandwiches,  salads,  soups,
desserts  and beverages,  including  "Classic  Lite"
selections  of  submarine sandwiches and salads designed for
consumers who are looking  for a low-fat, healthy alternative
to typical fast food products.

          The  Company  believes  that the  submarine
sandwiches offered  in  the  Restaurants are distinctive in the
market  for several  reasons.  Each submarine sandwich is
prepared after  the
customer  orders  and  with  special  ingredients,  recipes
and
techniques.   These  ingredients,  recipes  and  techniques
are
controlled to provide uniformity of taste and quality  among
all of the Restaurants.

          One  of the most important distinctions of the
Quizno's sandwich product is that it is served to the customer
warm.  Each sandwich  is  prepared open face and run through a
conveyor  oven that  toasts the bread, melts the cheese and
enhances the flavors of the meats.

          The  Company  focuses on the quality of the
ingredients contained in the food products it uses and requires
that  all  of its  specified  ingredients, which are generally
higher  quality than  those that other submarine sandwich shops
use, be purchased from approved suppliers.  The cheeses used in
the Restaurants are all  natural.  The Italian style meats
include a wine-cured Genoa salami,  pepperoni  and  capicola,
an Italian  spiced  ham.
The
turkey breast is real turkey breast.

          The  Restaurants  also  are  required  to  use
certain products  which  are prepared for the Company in
accordance  with proprietary  recipes  developed by the
Company.   Foremost  among these  is  Quizno's special recipe
soft baguette style bread  and its red-wine based vinaigrette
dressing used as a base on most of the  sandwiches.  In
addition, the Restaurants use the  Company's proprietary recipe
tuna mix blend, garlic oil blend, and marinara sauce.

          The Restaurants' upscale decor is designed to convey
an Italian  deli ambiance and to match the upscale QSR market
niche represented by the product.  The typical Restaurant has a
seating capacity of 20 to 60 customers at up to 30 tables.
Open kitchens allow  customers to watch as their sandwiches are
prepared. The
decor  package  for the Restaurants includes framed
reproductions of  old  Italian food product labels, hand-
painted Italian  style posters.   The  Italian theme is carried
through in standard  red and green seating fixtures against a
black and white ceramic tile floor.  Real wood trim adds a rich
warmth to the dining room  not found in typical fast food
dining environments.

          Besides  a  pleasant upscale environment  for  in-
house dining,  the  Restaurants offer conveniently packaged
meals  for carry  out  to serve lunch time office workers and
to  serve  the home meal replacement segment of the market.

          The  recently  developed Quizno's  Express  concept
is designed  to  operate in spaces as small as 100 square  feet
yet with  the  same  ambiance  and decor as  a  traditional
Quizno's Restaurant.   Quizno's Express units offer a full
menu  with  an extensive  variety  of Quizno's sandwiches.
Soups,  salads  and desserts  are also available at Quizno's
Express units.  Quizno's Express  units  will typically share
common area seating  or  may have  very limited seating at
venues designed primarily for  take out.   By  the end of 1997,
the Company believes Quizno's Express units  may  represent as
much as one third of all new Restaurants opened.

          Quizno's Restaurants were first opened in 1981  by
the Company's  predecessor.  As of March 17,  1997,  there
were  165 Restaurants  in operation, and agreements were in
place  for  the opening of an additional 153 franchised
Restaurants.

Concept and Strategy

          The  Company's  marketing strategy is to  position
the
Restaurants  between  fast  food and  full-service  dining.
The
Company  believes that consumers are looking for  a  healthy
and tasty alternative to typical fast foods; in particular,
they  are looking  for  an  alternative to fast food hamburgers
and  fried foods.   At  the same time, the Company also
believes  many  busy families are looking for a more convenient
and reasonably  priced alternative  to  full-service dining.
Quizno's  offers  all  the convenience of typical fast food in
terms of quick ticket  times, affordability,  and carry out and
home meal replacement  options, but  with  a fresh, tasty
alternative to fast food products.
In
terms  of  full-service  dining benefits,  Quizno's  offers
more comfortable dining rooms than most fast food restaurant
concepts as  well as other dining options -- such as catering
and delivery -- generally not available in the fast food arena.

          The   Company's  goal  is  to  build   a   strong
and
consistently  profitable nationwide chain  of  Restaurants.
The
primary  vehicle  for achieving the Company's planned  growth
is
expected  to be its Area Director marketing program.  Under
this program, the Company grants to an Area Director the right
to sell on  behalf                                           of
the Company Quizno's franchises  in  a  specified
market  area.   The  Area Director's agreement with  the
Company requires the Area Director, through the sale of
franchises  ,                                                to
open  a specified number of Restaurants within a specified
period of time.

          The  Company's revenues are derived from a  royalty
on
all  sales  at  franchised Restaurants, a per Restaurant
initial
franchise  fee  and  fees collected from Area Directors  for
the grant  of  territorial Restaurant marketing rights.
Franchisees and  Area  Directors  pay  fees  to  the  Company
only  once  in
connection  with  execution  of  Franchise  Agreements  and
Area
Director  Marketing Agreements.  Royalties provide  a  long
term continuing
source  of  revenue.  Although the  Company  believes
there  are  a substantial number of viable Area Director
markets
remaining  to  be  sold, revenue from the sale of  Area
Director rights  are  eventually  expected to decline  as  the
number     of
remaining  exclusive areas available for sale to  Area
Directors declines.
However,  as  that source of revenue  declines  other
sources  of  revenue, such as franchise fees and  royalties,
are expected  to increase as the number of franchised
Restaurants                                              in
operation  increases.  The royalty rate set in current
Franchise Agreements                                         is
6%; however, some franchisees operate under  older
agreements that set lower royalty rates at 4% or 5%.

          Due  to the Company's unique quick service product,
the Company  believes that it is well positioned to  fill  a
growing niche in the restaurant business that is developing
between  fast food and full-service dining.  Quizno's concept
also accommodates a  variety of dining options from comfortable
in-house dining                                              to
lunchtime  carryout to home meal replacement.  In  addition,
the Company believes there to be an opportunity to earn a place
as  a market  leader within the submarine sandwich segment of
the  food business.  Where other more mature segments of the
food  business have  five or more established chains with more
than 1,000 units, the submarine sandwich segment currently only
has two chains with more  than
1,000  units, with the second  largest  chain  having
approximately 1,581 units.  The Company's plan is to  become
the third largest submarine sandwich chain in 1997.

Area Director Marketing Agreements

          The  Company  offers  to  qualified  candidates
("Area Directors") an exclusive area ("Exclusive Area") within
which      to
sell   franchised  Restaurants  pursuant  to  an  Area
Director
Marketing  Agreement.   The Area Director marketing  program
was
established  by  the Company in January 1993 and restructured
in December of 1994.  This program is designed to assist the
Company in  accelerating  the marketing and sale of  franchises
and  the selection  of Restaurant locations in the Exclusive
Area.     Each
Exclusive  Area  is  established with  reference  to
"designated market  areas" of local television broadcast
stations as  defined by  the  television  broadcast industry.
The  Company's  growth strategy clusters Restaurants in
particular television markets in order to facilitate
implementation of its advertising program.

          Upon   execution   of   the  Area  Director
Marketing
Agreement,  the Area Director is required to pay the  Company
an Exclusive  Area Development Fee equal to the total  of  the
area population multiplied by five cents ($.035 prior to
December  31, 1996,  and  $.03  prior to July 1996), plus  a
training  fee  of $15,000  ($10,000  prior  to July 1996).
The  population  based portion  of  the fee is deemed fully
earned by the  Company  when paid and is not refundable.

          Area  Directors are required to market franchises
for Restaurants  to be located within the Exclusive Area.
The  Area
Director undertakes to open, through the sale of franchises  ,
a specified  number of franchised Restaurants within the
Exclusive Area  during  the term of the Area Director Marketing
Agreement. The  Area  Director Marketing Agreement does not
grant  the  Area Director  the  exclusive right to market
franchises  or  solicit franchisees  in  the Exclusive Area,
but it does grant  the  Area Director  the  right  to  receive
certain  fees  and  royalties, described  in more detail below,
from all franchised  Restaurants established  in the Exclusive
Area during the term  of  the  Area Director  Marketing
Agreement.  The Company reserves  the  right under  the Area
Director Marketing Agreement to market  and  sell franchises
and  to  establish Company-owned  Restaurants  in  an Exclusive
Area.

          The Company as of March 17, 1997, had 63 Area
Directors whose  territories cover approximately 55% of the
population  of the  United States.  The following is a list of
the markets under development by Area Directors as of March 17,
1997.

Markets Under Development by Area Directors as of March 17,
1997

Alabama                     Illinois, Springfield       Ohio, Cleveland
Arizona, Tucson             Indiana                     Ohio, Columbus
Arizona, Phoenix            Iowa                        Oregon, Portland
British Columbia            Kansas                      Oregon, Eugene/Medford
California, Los Angeles
 Cnty/Ventura Cnty          Kentucky, Louisville        Pennsylvania, Pittsburgh
                                                         (Partial)
California, San Diego       Kentucky, Lexington         S. Dakota, Rapid City
California, Orange County   Kentucky, Bowling Green     S. Dakota, Sioux Falls
California, Contra Costa
 County                     Louisiana, Lake Charles     Tennessee, Nashville
California Sacramento       Louisiana, Shreveport       Tennessee, Knoxville
California, Santa Carla/
 San Mateo                  Louisiana, Alexandria       Texas, Dallas/Ft. Worth
California, Riverside       Louisiana, Baton Rouge      Texas, Austin
 County/San Bernadino Cnty  Louisiana, New Orleans      Texas, El Paso
California, Solano County   Michigan                    Texas, San Antonio
California, Santa Barbara   Minnesota, Minneapolis/     Texas, Waco
                             St. Paul
Colorado, Old               Minnesota, Mankato          Texas, Houston
Colorado, New               Minnesota, Rochester        Utah
Connecticut                 Missouri, St. Louis         Virginia
Florida, Jacksonville       Missouri, Kansas City       Washington, Seattle
Florida, Orlando            Montana                     Washington, Spokane
Florida, St. Petersburg     Nebraska, Omaha             Washington, Yakima
Florida, West Palm Beach    Nebraska, Hastings/Kearney  Wisconsin, Milwaukee
Georgia, Atlanta            New Mexico                  Wisconsin, Madison
Georgia, Savannah           Nevada                      Wisconsin, Wausau
Idaho                       N. Carolina, Raleigh/Durham Wisconsin, La Crosse
Illinois, Chicago           N. Carolina, Greensboro     Wyoming, Casper
Illinois, Rockford          North Dakota                Wyoming, Cheyenne
Illinois, Peoria            Ohio, Cincinnati



          The  Area  Director Marketing Agreements set
increasing "Minimum  Performance Levels" that require the Area
Director  to sell  and  open  a specified number of franchised
Restaurants  in each  year  during  the  term  of  the  Area
Director  Marketing Agreement.
There  can be no assurance that each  Area  Director
will fulfill his or her obligation to sell and open the number
of Restaurants constituting the Minimum Performance Level for a
year or  any  number of years.  At any given time, some Area
Directors may  be ahead of schedule while others may be behind.
Delays  in the  sale  and opening of Restaurants can occur for
many reasons, including,  but  not  limited  to, delays  in
the  selection  or acquisition  of  an appropriate location for
the  Restaurant  and delays  in the build-out of the Restaurant
site.  The failure  on the  part  of  an  Area Director to sell
and open Restaurants  as required  by  the Area Director
Marketing Agreement  enables  the Company  to terminate the
Area Director Marketing Agreement,  but does  not  grant the
Company any other remedies against the  Area Director.
Termination of an Area Director  Marketing  Agreement for
failure to meet Minimum Performance Levels does  enable  the
Company  to  engage a new Area Director for the  relevant
market area.   In  its planning, the Company has allowed for  a
certain percentage  of Area Directors who will not meet their
development schedule.

          Most  Area Directors are required to maintain an
office within  the  Exclusive  Area.  In addition,  through  a
required monthly  minimum  marketing expenditure,  the  Area
Director  is required  to  actively  promote the sale  of
Company  franchises within  the  Exclusive Area.  The Area
Director  is  required  to visit   with   prospective
franchisees  and  refer   appropriate locations for franchised
Restaurants within the Exclusive Area to the  Company  for
consideration.   The  Area  Director  is  also required to
perform monthly quality assurance inspections of  the units  in
its  area and assist franchisees within  its  area  in opening.
The  Company's  franchise  sales  materials  are  made
available to the Area Director.

          The   Area  Director  receives  compensation  for
the
services provided under the Area Director Marketing Agreement
in the  form  of  a  commission equal to 40%  of  the  royalty
fees collected  by the Company from each franchised Restaurant
within the  Exclusive Area opened and operated during the  term
of  the Area Director Marketing Agreement.  The Area Director
is entitled to  receive  commissions for a period of 15 years
following  the opening  of  each franchised Restaurant.  Upon
the expiration  of
the  Area Director Marketing Agreement, the commission is
reduced to  1%  for the remainder of the 15 years.  This
approach rewards the  Area  Director for selecting higher
quality franchisees  and higher  quality  locations while
discouraging the  Area  Director from  selecting  locations
that  are  too  close  together.   In addition
to  the  foregoing, the Area Director  is  entitled  to
receive  a  commission  of 50% of the initial  fee  paid  to
the Company for each franchise sold within the Exclusive Area.

          The  Company has a program under which it will
finance up  to  50%  of  the  Area Director Marketing  Fees
for  certain approved
Area  Director candidates who have the  experience  and
skill  requirement sought by the Company for its Area
Directors, but do not have sufficient cash to pay the fee in
full.  The Area Director is required to personally sign a
promissory note due the Company for the amount financed, which
will bear interest at  15% per  year and be repaid in monthly
installments over five  years. The  promissory  note is secured
by the Area  Director  Marketing Agreement  and  by  other
collateral unrelated to  the  business, typically  a  second
mortgage in the Area Director's  home.                  The
amount  of  financing available under this program is limited
on both a per transaction and in total basis.

Franchise Program

          The   Company  authorizes  individuals  and
companies
("Franchisees" or "Owners") to establish and operate
Restaurants at  an  approved  location pursuant to the terms of
a  Franchise Agreement.  Under the Franchise Agreement, the
Company undertakes to perform or have performed certain
services with respect to the opening  and operation of a
Restaurant.  In connection  with  the opening  of  a
Restaurant, those services include (i) review  and approval
of the proposed Restaurant location, (ii)   review  and
approval    of    construction   plans   for   the
Restaurant,
(iii)  identification of sources of supply for  items  which
are ordinarily  necessary to operate a Restaurant, (iv) an
operations manual  providing detailed instructions with respect
to operation of  the  Restaurant, (v) training with respect to
the  Company's method  of  operations,  including  operating
procedures,   food preparation techniques, controls, promotion
programs,  management and  public  relations, and (vi) pre-
opening  assistance.   After opening of the Restaurant, the
Company provides continuing advice and  consultation with
respect to operation of the Restaurant  as well  as
oversight  of  such  operations  to  assure  that       the
Restaurant conforms to the Company's standards and
requirements.

          The  Company offers its franchise at a reduced fee
for smaller  locations where the Quizno's Restaurant will be
operated in  conjunction  with  another business  operated  by
the  Owner ("Quizno's Express").  Examples of such locations
are convenience and  gasoline  stations,  sports facilities,
hospitals,  college campuses, etc.

          Upon execution of the current Franchise Agreement,
the Franchisee  is  required to pay the Company  an  initial
fee  of $20,000  for  the  first  franchise agreement,  $15,000
for  the second,  and  $10,000 for the third and any additional
franchise agreement.   The initial fee for Quizno's Express
franchises  are $10,000,
$7,500 and $5,000, respectively.    The Owner  is  also
required under the current Franchise Agreement to pay the
Company a continuing royalty fee of 6% of the Owner's gross
sales (8% for Quizno's Express franchise).  Franchise
Agreements executed  from 1991  to
1994 provided for a 5% royalty, and franchise agreement
executed  prior  to  1991 provided for a 4% royalty  fee.
Gross
sales is defined as all sales, whether on credit or for cash
but excluding discounts, coupons and employee meals, and all
revenues
from  any  source  caused  by the operation  of  the
Restaurant, whether directly or indirectly relating to the
operation thereof. Sales  tax  and any other state or federal
tax which is collected by the Owner from customers and remitted
to any government agency are deducted from gross sales prior to
calculation of the royalty payment.
The Owner is also required under the current Franchise
Agreement  to pay an advertising fee to the Company in an
amount equal to 1% of the Franchisee's gross sales, which fees
are  used by  the  Company for advertising, marketing, and
public relations programs  and  materials  to enhance  and
build  the  image  and goodwill  of the Quizno's system.  There
are certain  other  fees that  must be paid by the Franchisee
to the Company in  order
to
reimburse the Company for costs incurred in connection  with
the establishment  of  a Restaurant.  The total  average  cost
to  a Franchisee  for opening a Restaurant ranges between
$129,500  and $194,500,  including  funds to cover the initial
franchise  fee, with  most  of the variation attributable to
differences  in  the costs  of leasehold improvements for the
Restaurant.  The average cost for a Quizno's Express unit is
between $40,000 and $80,000.

          The  Company  is an approved franchise with  The
Money Store Investment Corporation.  As an approved franchise,
Quizno's Owners  may obtain SBA guaranteed loans from The Money
Store  for up  to 70% of the total cost to open a restaurant.
The loans are repaid  over ten years with interest a prime plus
2.75%.   Owners may  be  prequalified and, generally, will  not
be  required                                                 to
collateralize the loans with assets unrelated to the business.

          The  Company has developed certain items, such as
bread and  dressings for salads and sandwiches, which are
prepared  for use  in  the  Restaurants  based upon recipes
developed  by  the Company and which are provided to Owners
under the private  label "Quizno's."  The Owner is required to
purchase those  items  from specified  vendors  for  sale and
use  in  the  Restaurant.
The
Franchise  Agreement also requires the Owner to acquire
specified equipment  and  inventory, to establish  and
maintain  specified signage  and  to  operate the Restaurant in
accordance  with  the standards  and requirements outlined in
the Company's  operations manual.

          The  Company  has  entered into  an  agreement  with
a national  food products distributor that allows Owners to
obtain meat   products,  produce  and  other  food  and  non-
food  items necessary for operation of franchised Restaurants
at prices  more favorable than those that could be obtained by
individual Owners. All  of  the purchasing of the ingredients
for the food  products offered in the Restaurants is done
centrally by the Company which allows  for  better quality
control by the Company.   Each  Owner then contacts the
distributor directly to obtain the items needed for   the
Owner's  Restaurant,  which  are  delivered   by
the
distributor.   The distributor bills the Owner directly  for
all
items  ordered.   If  the national food products  distributor
no
longer  provided this service to the Company and its
franchisees, the  Company  believes  adequate alternative
services  would
be
available to it without a significant increase in costs.

          The  Company retains the right to approve the terms
of
the  Owner's  lease.   A law firm selected by  the  Company
must review  the lease as part of the approval process.  The
cost  for review of the lease by the lawyer selected by the
Company are                                                  at
the expense of the Owner.

          The  Owner,  or  person designated  by  the  Owner
and approved  by the Company, is required to devote his or  her
full time,  attention and efforts to the performance  of  the
Owner's duties under the Franchise Agreement relating to the
operation of
the  Restaurant.  The Owner agrees in the Franchise Agreement
to use  his  or her best efforts to produce maximum volume of
gross sales  in  the  Restaurant.   The  Restaurant  must  be
operated continuously  on such days and during such minimum
hours  as  are required  by the Company, unless restricted by
Owner's  lease  or other rules applicable to the Restaurant.

          The  Owner agrees to maintain books and records for
the Restaurant in accordance with the requirements and
specifications set  forth  from time to time by the Company.
The Franchisee  is required  by  the  Franchise  Agreement  to
be  responsible  for submitting  all required reports to the
Company when and  in  the manner or format required by the
Company.

          In  order to provide for proper financial tracking
and planning  for  Owners, the Company began providing  a
restaurant bookkeeping  service  to its Restaurant  Owners  in
1994.   This
service  is intended to assure the Owners have accurate
financial records  as  well  as  to  allow the  Company  to
keep  accurate systemwide  statistics.   Franchise  agreements
executed   after February 10, 1995, require Owners to use this
bookkeeping service for the first year of operations for the
Owner's first unit for a fee  of  $350  per month.  This
service provides  for  a  revenue source  from  franchised
restaurants and is  expected  to  become profitable as the
number of Restaurants serviced increases.

          The   Owner   must  submit  copies  of   all
proposed
advertising or promotional materials for approval by the
Company prior to use.  The Company must give its written
approval to  any advertising  or  promotional  materials
before  the   Owner   is authorized to use such materials.

          The  Company expects that Restaurants operating
within its   franchise   system  will  emphasize   quality
"submarine" sandwiches.  In order to satisfy customer
expectations  regarding menus  and  service, the Company
requires substantial  uniformity among all Restaurants.  All
Restaurants must conform to the decor and menu specifications
of the Company.  The Owner is not allowed to  sell  any goods
or services at a Restaurant other than  those goods and
services specified by the Company.

Franchise Marketing Programs

          In  order  to  facilitate the  marketing  and  sale
of franchised Restaurants,  the Company devotes resources,
national print  media, sales staff, marketing materials, and
participation in  trade  shows.  In addition, the Company has
several  specific programs to market its franchise, which are
discussed below.

          Discovery  Day.   Discovery Day  is  a  day-long
event regularly scheduled in Denver to introduce potential
Owners  from throughout the country to the Quizno's concept.

          Toll Free Phone Line.  The Company has installed a
toll free  phone line (1-800-DELI-SUBS) which rings directly
into  the Franchise  Sales Department.  The information is
entered  into  a data  base  of  prospective Owner inquiries
and an  informational package mailed to the caller.

          Open  Houses.   The Company has an ongoing  program
of hosting  open  houses throughout the country in conjunction
with its  Area  Directors.  Individuals who have expressed an
interest in the Company's franchise are invited to open houses.

          Computerized  Data  Base of Franchise  Inquiries.
The
Company  has  installed a computer network within  its
Franchise
Sales  Department  for the purpose of organizing,  managing,
and tracking individuals who inquire about the Company's
franchise.

          National   Advertising.   The  Company   continues
to advertise  for new franchisees on a regular and consistent
basis in national, regional and local publications.
Company Owned Restaurants

          The Company currently owns and operates eleven
Quizno's Restaurants,  ten  located in the Denver  area  and
one  in  the Detroit  area.   The  Company may develop or
acquire  additional Quizno's Restaurants.

          The Company does not expect to add a significant
number of  new  Company  owned Restaurants.  From time to  time
it  may develop or acquire Restaurants when and if desirable
locations or franchised  Restaurants become available.   The
Company  expects virtually  all of its growth in the
foreseeable future to  result from the development of
franchised Restaurants.

          In addition, the Company has in the past and may in
the future  acquire  or  takeover  franchised  Restaurants
that  the franchisee  has been unable to operate successfully
for  reasons unrelated  to  the location or the market.  In
such  cases,  the Company  will typically operate the
Restaurant, make any required improvements and repairs, re-
staff, begin local store  marketing, and  ultimately transfer
the Restaurant to a new qualified owner. Occasionally  the
Company may incur short term  losses  in  such cases.
However, the royalty stream provided over the long  term
by the new owner will normally offset or exceed any such
losses.

          The Company continues to believe that the ownership
and management  of Company owned stores is important as  a
base  for research  and  development efforts, training, and
maintaining  a thorough first-hand knowledge of the business it
franchises.

Advertising

          Quizno's  advertising  staff, in conjunction  with
its advertising agency, is developing advertising campaigns
for  use at  all levels to support consumer sales in all of its
locations. The  1%  of sales advertising fees paid to the
Company by  Owners goes into a "national" fund to be used to
develop advertising  to attract  customers to the Restaurants
and to create awareness  of the   Quizno's  brand  image.
Campaigns  developed  using   the "national"  fund  are created
with television,  radio  and  print elements, which are
available to each local Quizno's market.   To date,  television
and  radio  buys  have  only  occurred  on  an individual
market basis.  Regional or network media buys will  be
investigated and reviewed as Restaurant distribution increases.

          Each    Restaurant,   except   for   Quizno's
Express Restaurants, is required to spend another 3% of sales
for  local advertising  or promotions.  Funds may be used to
purchase  media schedules for Company produced TV, radio, print
ads, or any other approved media.  A limited number of markets
with a concentration of  restaurants  have  formed separate
advertising  cooperatives which  coincide  with  the area of
dominant  influence  of  local television  broadcast  stations.
These cooperatives  pool  their advertising fees to jointly
purchase media.

          Consumer  advertising chain wide also is  funded  by
a vendor  program  in which marketing funds are  solicited  by
the Company  from vendors on behalf of all Restaurants once  a
year. These  funds  are  used  to  support  "national"
marketing  fund
programs which benefit all Restaurants.  The vendor payments
are voluntary  by the vendors and there is no guarantee or
assurance that such funds will continue to be available in the
future.
          In   addition  to  Company  advertising  support,
each Restaurant   pursues   local  marketing   strategies,
such   as distribution of coupons and fliers in the immediate
area  of  the Restaurant  and  point  of  sale  materials
displayed   in
the
Restaurant.  Several local marketing programs have been
developed by   the  Company's  advertising  staff  and  made
available  to individual Restaurants.

New Programs

          The  Company  has,  and will continue  to  develop
new programs   that  will  augment  its  Restaurant  operations
and
facilitate the marketing of new franchised Restaurants.

          Corporate  Organizational Chart.  The Company
continues to  strive  to  improve the Restaurant chain and its
franchising organization.  Early in 1996, the Company took
another major step in  its national growth plan by dividing the
corporate staff into two  divisions  -- one specifically
focused on Franchise  Support Services and the other on
Franchise Development.  Clearly defined goals  of  making
Quizno's Owners successful for  the  Franchise Support
division  and of bringing new markets to  critical  mass
quickly  for  the  Franchise  Development  division,  have
been identified  to  help  implement  the  key  strategies  of
making Quizno's  Owners  successful  and  of  bringing  new
markets  to critical mass quickly.

          In 1997, J. Eric Lawrence joined the Board of
Directors of  the  Company bringing an extensive background in
retail  and restaurant industries along with a solid financial
acumen.  He is a  general  partner at Retail & Restaurant
Growth Capital,  L.P., ("RRGC") a private investment
partnership that loaned the Company $2   million  in  December,
1996.   RRGC's  partners  have  been affiliated  with  Grandy's
Restaurants, On The Border,  Spaghetti Warehouse, Canyon Cafe,
and other retailers.  Mr. Lawrence  is  a CPA  formerly  with
Arthur Andersen & Co. and  Strategic  Retail Ventures, Inc.

          Co-Branding.  In 1997, the Company will investigate
and may  solicit  co-branding opportunities with other  food
service retailers offering products that are compatible with
the Quizno's menu.   The Company will look for co-branding
partners that offer products  that  can enhance the Company's
existing menu,  produce increased  traffic  through  the
Company's  units,  or   provide products that will increase
sales during the evening and  morning day-parts.

          Quizno's  Express  Units.  While the Company
continues its  aggressive  efforts  to  expand into
traditional  sites  in markets across the U.S. and in Canada,
the Company simultaneously has   adapted  its  concept  to
take  advantage  of   the   many opportunities in the growing
"express" market areas.

          These venues include gas and convenience stores,
sports stadiums,  hospitals and schools, among others.  The
Company  has opened  express-type concessions at Denver's Coors
Field baseball stadium,   Denver  International  Airport,
Albuquerque  Airport, several convenience and gas stores, and
has under development two units in health care facilities.

          Additionally,  the Company developed a prototype
kiosk which  can  be installed in express venues in a short
time  at  a
cost of approximately $40,000 to $80,000, including the
franchise fee, working capital, equipment and construction.

          Regionalization.  In 1996, the Company placed
regional representatives who are responsible to implement and
manage  the Franchise Support function in four geographic
regions of the U.S. The  regional  representatives  are  based
in  their  respective markets, allowing the Company to be more
efficient with regard to travel costs as it adds Restaurants
throughout the country.

          Turnkey  Program.   In  1997,  the  Company  plans
to
implement  a "turnkey" development program funded from a
portion of  the  proceeds of the $2 million debt financing
completed  in December,  1996.   Under the turnkey program,
the  Company  will target specific areas, locations, or types
of locations where  it will select sites, negotiate and sign
leases, fully construct and equip   a  Quizno's  Restaurant,
and  then  sell  the  completed Restaurant to an approved
franchisee.

          The Company will utilize its own funds to lease,
build, equip,  and  furnish each turnkey Restaurant.   Upon
completion, each  turnkey  Restaurant will be sold to a
franchisee  for  the Company's  total development costs plus an
initial franchise  fee and  a development fee.  The Company
will not offer financing but believes   that  long  term
financing  will  be   available
to
franchisees  for  up  to 70% of the total cost  from
traditional small  business  lenders, including those who
currently  provide financing to Quizno's Owners.

          The  Company  expects this program will accelerate
the number  of  new  Restaurants  the Company  can  open  each
year. Because  the  Company does not intend to provide
financing,  the cash required for each turnkey unit will be
invested only for the development period of three to six
months, after which the  funds can  be  put to use for the next
turnkey Restaurant.  The Company has  sufficient funds
allocated for this program so that multiple turnkey units can
be under development at the same time.

          Additional  advantages  the Company  believes  it
will realize  are:   (1) quicker sales due to the elimination
of  the Owner's  responsibility  to  find and  develop  a
location,  (2) increased   development  fee  and  franchise
fee  revenue,
(3)
increased  royalty  revenue, (4) potential for increased
average unit sales resulting from the development of high
volume shopping mall  units,  and  (5) lower costs for area
director  sales  and royalty commission expense.

          Shopping Mall Development.  The Company is committed
to increasing its shopping mall food court developments in
1997.  In preparation for building this into a national venue
for Quizno's, a new prototype food court design was developed,
built and opened in Austin, Texas, in the first quarter of
1996.

Competition

          Restaurant  Operations.   The  restaurant  industry
is highly  competitive with respect to price, service, food
quality and location, and there are numerous well-established
competitors possessing substantially greater financial,
marketing,  personnel and  other  resources  than  the
Company.   Presented  below  is numerical  information with
respect to these  competitors.   This information was obtained
from the Nation's Restaurant News, April 29, 1996 (NRN Top 100
Market Share).

          The  Company  competes in the sandwich segment  of
the fast  food  industry,  an  industry long dominated  by
hamburger
chains.    Subwayr,  the  nation's  largest  submarine
sandwich
restaurant chain, has grown significantly in recent years and
has a      total  of  10,093  units  open at December  31,
1995  .   The
expansion of Subwayr has drawn attention to submarine
sandwiches, during  a  time  of growing concern relating to
beef  and  fried foods.  Despite the growth of Subwayr, its
sales revenue makes up less  than  5.53% of the total sales
revenue of  the  18  largest sandwich   chains.
The  Company  believes  that  the  submarine
sandwich segment is underdeveloped, and that demand for
submarine style  sandwiches  will continue to grow.  Blimpier,
the  second largest  submarine sandwich chain had only 1,581
units opened  at June  30,  1996.   Most  of the other
submarine  sandwich  chains currently  have  less  than  150
units  each  or  are  primarily concentrated in their home
markets, e.g.., Miami Subsr (Florida), Cousinsr    (Wisconsin),
Togosr   (California)   and   Tubby'sr (Michigan).

          The  Company's  major competitors, including
Blimpier, have  followed  Subwayr closely in the style and
quality  of  the product,  creating very little, if any,
differentiation   in  the market.
Subwayr offers a low-cost product in a fast food  style
restaurant with limited seating.  The Company has positioned
the Restaurants between the traditional fast food restaurant
style of its  submarine sandwich competitors and full-service
dining,  and has  focused on higher quality food products, to
distinguish  the Restaurants   from
their   competitors.    See,   "Business   -
Restaurants."

          The  top 18 sandwich chains have $47 billion in
annual sales,  with  57,294 restaurant units.  Subwayr and
Blimpier  are the  only  sub  sandwich chains found in the top
18,  with  total systemwide  sales of $2.6 billion and $341
million  respectively, among  10,093 and 1,581 units
respectively.  The size of the  sub sandwich market continued
to grow through 1995, the last year for which  numbers are
available, primarily as a result of a decrease in the burger
market share.

  MARKET SHARE(1)

<TABLE>
<CAPTION>
<S>                          <C>        <C>       <C>      <C>       <C>
                            1991       1992      1993      1994     1995
Submarine sandwiches        3.54%      4.54%     5.19%     5.71%    6.89%
Burgers                    84.10%     81.52%    80.23%    80.07%   79.15%
</TABLE>

(1)  Source:   Nation's Restaurant News, August 7, 1995 (NRN
     Top 100  Market  Share).  Market Share Numbers  are
     derived  by totaling  the  Market Share Numbers of Sub-
     dominated  Chains and  Burger-dominated Chains, each
     expressed as a percentage of the Top 18 Sandwich Chain
     Market Share.



LEADING BURGER AND SUBMARINE CHAINS WITH AT LEAST 600 UNITS

<TABLE>
<CAPTION>

 Burger Chains        No. of Units        Sub Chains        No. of Units
 <S>                      <C>                <C>                 <C>

McDonald's              11,368             Subway              10,093
Burger King              6,492             Blimpie              1,581
Dairy Queen              5,000
Wendy's                  4,197
Hardee's                 3,395
Sonic                    1,464
Jack-in-the-Box          1,231
Carls Jr.                  633

TOTAL                   33,780                                 11,674
</TABLE>

          Certain Factors Affecting the Restaurant Industry.
The Company  will be required to respond to various factors
affecting the   restaurant   industry,  including   changes
in        consumer
preferences,  tastes  and eating habits, demographic  trends
and traffic patterns, increases in food and labor costs and
national, regional  and  local  economic conditions,  and
issues  of  food safety.  A number of fast food restaurant
companies have recently been  experiencing flattening growth
rates, customer counts,  and declines  in average sales per
restaurant, in response  to  which certain               of
such   companies  have  adopted  "value
pricing"
strategies.   Such  strategies could have the effect  of
drawing customers  away  from companies which do not engage  in
discount pricing and could also negatively impact the operating
margins of competitors,  including the Company, which do
attempt  to  match competitors' price reductions.

          Franchise  Competition.  In addition to its
Restaurant operations,  the  Company competes with fast food
chains,  major restaurant  chains  and other franchisors for
franchisees.   Many franchisors,  including  those in the
restaurant  industry,  have greater  market recognition and
greater financial, marketing  and human  resources than the
Company.  The Company believes that  it can  compete
successfully for franchisees for  several  reasons. The
royalties charged by the Company tend to be lower than those of
its major submarine sandwich competitors.  The total cost  of
opening  a  Quizno's Restaurant tends to be lower  than  that
of hamburger   fast   food  and  full-service  dining
restaurants. Finally, the ambiance of Quizno's Restaurants
offers a Franchisee a pride in ownership that is unique to the
Quizno's concept.

Government Regulations

          The  Company  is  subject to Federal  Trade
Commission ("FTC")  regulation  and several state laws  which
regulate  the offer and sale of franchises.  The Company is
also subject  to  a number  of state laws which regulate
substantive aspects  of  the franchisor-franchisee
relationship.    The   FTC's   rule
on
franchising (the "FTC Rule") requires the Company to  furnish
to prospective franchisees a franchise offering circular
containing information prescribed by the FTC Rule.

          State  laws  that  regulate  the  offer  and  sale
of
franchises  and the franchisor-franchisee relationship
presently exist  in  a  substantial  number of  states.   State
laws  that regulate the offer and sale of franchises require
registration of the  franchise  offering  with  state
authorities.   Those  that regulate   the  franchise
relationship  generally  require the
franchisor  to deal with its franchisees in good faith,
prohibit interference   with   the   right  of  free
association   among franchisees, limit the imposition of
standards of performance  on a  franchisee and regulate
discrimination against franchisees  in charges,  royalties or
fees.  Although such laws may  restrict  a franchisor  in the
termination of a franchise agreement  by,  for example,
requiring  "good cause" to exist as  a  basis  for  the
termination, advance notice to the franchisee of the
termination, an opportunity to cure a default and a repurchase
of inventory or other  compensation, these provisions have not
had a  significant effect on the Company's franchise
operations.  The Company is not aware  of any pending franchise
legislation which in its view  is likely  to  affect
significantly the operations of  the  Company. The  Company
believes that its operations comply in all  material respects
with  the FTC Rule and the applicable  state  franchise laws.

          Each  franchised  Restaurant,  and  each  Company-
owned Restaurant, is subject to licensing and regulation by a
number of governmental  authorities, which may include health,
sanitation, safety,  fire,  building  and other  agencies  in
the  state  or municipality in which the Restaurant is located.
Difficulties in obtaining or failure to obtain the required
licenses or approvals could delay or prevent the development of
a new Restaurant  in  a particular  area.   The Company is
subject to federal  and  state environmental  regulations, but
these have  not  had  a  material effect  on  the Company's
operations.  More stringent and  varied requirements of local
governmental bodies with respect to zoning, land  use  and
environmental factors could delay or  prevent  the development
of a new Restaurant in a particular area.

          The  Company is also subject to state and federal
labor laws  that  govern its relationship with its employees,
such  as minimum  wage  requirements,  overtime,  working
conditions  and citizenship requirements. Significant numbers
of food service and preparation  personnel are paid at rates
governed by the  federal minimum  wage.  Accordingly, increases
in the benefits under  any of  these laws would increase labor
costs to the Company and  its franchisees.


Trademarks

          The Company presently owns the following trademarks
or service  marks,  most of which are registered  on  the
Principal Register  of  the  United  States Patent  and
Trademark  Office: "QUIZNO'S"  service mark, Registration
Number 1,317,420  (January 29, 1985); "QUIZNO'S" service mark,
Registration Number 1,317,421 (January   29,   1985);
"QUIZNO'S  &  Design",   service   mark, Registration Number
1,716,834 (September 15, 1992) and  "QUIZNO'S CLASSIC  SUBS
EXPRESS" service mark for which an application  was filed  on
May  20,  1996  ("Express Mark")  (application  number
75/106989).   The service marks have not been registered  in
any state.

Employees

          As  of December 31, 1996, the Company employed 39
fulltime employees and one part-time employee, at its
headquarters in Denver, Colorado.  In addition, the Company
employed 20 full-time and 45 part-time employees in its Company-
owned Restaurants.  The Company's  employees are not covered by
any collective bargaining agreement  and  management believes
its  employee  relations  are excellent.

ITEM 2.   DESCRIPTION OF PROPERTY

          The  Company leases its headquarter's office  space
of 7,462  square  feet  at  1099 18th Street,  Suite  2850,
Denver, Colorado.   The Company leased the premises for each
of  the  11 Company-owned  and  operated Restaurants at March
17,  1997,  as follows:

<TABLE>
<CAPTION>
<S>                                        <C>                       <C>
1.   8081 E. Orchard Rd., #67      Greenwood Village, CO 80111  3,166 sq. feet
2.   2875 Pearl St., Unit A        Boulder, CO 80301            2,450 sq. feet
3.   760 S. Colorado Blvd., Unit 1 Glendale, CO 80222           2,855 sq. feet
4.   1275 Grant Street             Denver, CO 80203             1,400 sq. feet
5.   37012 Van Dyke Avenue         Sterling Heights, MI 48312   1,500 sq. feet
6.   1660 Lincoln Street           Denver, CO  80264            2,490 sq. feet
7.   10450 West Colfax             Lakewood, CO  80215          1,992 sq. feet
8.   4495 North Washington         Denver, CO  80216            1,903 sq. feet
9.   Coors Field                   Denver, CO  80205            429 sq. feet
10   5102 S. Broadway (1)          Englewood, CO 80110          2,000 sq. feet
11   999 18th St., Suite 136       Denver, CO 80202             1,360 sq. feet

</TABLE>
(1)  Stores held for resale


ITEM 3.   LEGAL PROCEEDINGS

          From   time  to  time,  the  Company  is  involved
in
litigation and proceedings arising out of the ordinary course
of its business.  There are no pending material legal
proceedings to which  the  Company is a party or to which the
property  of  the Company is subject.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted to a vote of security
holders of the Company during the fourth quarter of its fiscal
year ended December 31,     1996.
                            PART II

ITEM 5.   MARKET   FOR  COMMON  EQUITY  AND  RELATED
STOCKHOLDER
          MATTERS

          The  Company's  Common Stock is traded  in  the
NASDAQ Small-Cap  Issues Market under the symbol "QUIZ."  The
following table  shows  high asked and low bid price
information  for  each quarter  in  the last two calendar years
as reported  by  NASDAQ. Such quotations reflect inter-dealer
prices, without retail markups,  markdowns or commissions, and
may not necessarily represent actual  transactions.  On March
17, 1997,  the  stock  closed  at $2.94 bid, $3.13 asked.

Fiscal Year Ended December 31, 1995

<TABLE>
<CAPTION>

<S>                      <C>           <C>              <C>
                                                        Last
                        High            Low             Trade
First Quarter          $4.50           $3.31           $3.31
Second Quarter         $3.33           $2.75           $3.63
Third Quarter          $4.50           $3.25           $3.50
Fourth Quarter         $4.25           $3.38           $3.63

</TABLE>

Fiscal Year Ended December 31, 1996

<TABLE>
<CAPTION>

<S>                     <C>              <C>            <C>
                                                        Last
                        High            Low             Trade

First Quarter          $4.13           $3.38           $3.63
Second Quarter         $3.75           $2.88           $3.13
Third Quarter          $3.50           $2.63           $3.50
Fourth Quarter         $4.38           $3.00           $3.13
</TABLE>

          There  were  approximately 115 holders of  record
(and approximately  850  beneficial owners) of  the  Company's
Common Stock   as   of  March  17,               1997.   The
first  number  includes
shareholders of record who hold stock for the benefit of
others.

          The Company does not expect to pay any dividends on
its Common  Stock  in  the foreseeable future.  Management
currently intends to retain all available funds for the
development of  its business and for use as working capital.

          During 1996, the following securities were sold by
the Company  without  registration with the Securities  and
Exchange Commission pursuant to the exemption noted:

<TABLE>
<CAPTION>

     <S>      <C>           <C>            <C>              <C>
  Securities                                             Exemptions
     Sold     Date         Amount        Purchasers        Claimed

Senior        12/31/96   $1,155,825.70   1 institutional   Section 4(2)
Subordinate              (convertible      investor        and
                         into 372,847                      Regulation D
                         shares of Company
                         stock at $3.10 per
                         share for a period
                         of up to eight years,
                         subject to adjustment)
</TABLE>



ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
          OPERATION

Overview

          For   1996   the  Company  had  income  from
franchise operations  of  $19,866  and  income  from  Company
owned  store operations  of  $86,834, less other charges
totaling  $1,125,667, resulting  in  a loss for the year of
$1,018,968.  Other  charges include  the  costs of new programs
introduced in 1996,  research and  development,  amounts
reserved in 1996 for future  potential costs,  depreciation and
amortization expense, interest  expense, and certain other
cost, which are discussed in more detail below.

          In 1996 the Company enjoyed record growth while, at
the same time, investing in several programs for the sole
purpose  of accelerating its growth in years beyond 1996.
These programs are expected   to  significantly  increase  the
number  of  Quizno's Restaurants,  the  number  of area
directors,  and  the  economic performance  of  existing  and
future  Restaurants  in  1997  and beyond.  However, the costs
incurred and expensed in 1996 related to these efforts alone
exceeded the Company's net income from its core franchise and
Company owned store operations.  Nevertheless, management
believes that its investment in these  programs  will result in
returns and additional shareholder value over the  next
few years that will offset the costs incurred in 1996.

          Additionally  in  1996,  management  evaluated
certain assets  of  the Company and other potential risks  to
which  the Company  has exposure.  Management's evaluation was
made  on  the basis of current information, including certain
factors effecting the
industry in general, other factors relating to the  Company,
specific   franchisees,   and  specific   Quizno's
Restaurants. Management  determined that reserves should  be
established  for amounts due the Company by specific
franchisees whose business or financial  condition  had been
adversely impacted  in  1996  (see following table).  These
reserves recorded in 1996, along with  a reserve  for  a
potentially  adverse  claim  made  by  one  area director,
represented significant expenses in 1996 in relation to the
Company's  net income from its franchise and  Company  owned
store operations.  Although the recording of such reserves  is
a normal  business  practice  and, to a much  lesser  extent,
will likely  recur  in future periods, management does  not
currently expect  a recurrence of such charges in the same
magnitude  as  a percentage of revenue in future periods.

          The  following is a summary of the Company  net
income from                   franchise operations, Company
store operations,  and  other
charges for the last three years:

<TABLE>
<CAPTION>

<S>                              <C>            <C>            <C>
                                 1996          1995           1994
Franchise Operations:
  Revenue                    $ 4,574,603   $ 3,375,372    $1,849,739
  Expenses                    (4,554,737)   (3,045,505)   (2,218,691)
  Income (loss)                   19,866       329,867      (368,952)

Company Store Operations:
  Revenue                    $ 2,680,521   $ 3,011,195    $  603,485
  Expenses                    (2,593,687)   (3,078,821)     (630,440)
  Income (loss)                   86,834       (67,626)      (26,955)

Other Charges:
  New programs and research and
   development                  (217,321)      (10,564)         (954)
  Reserves against amounts
   due the Company              (224,063)      (13,780)      (15,182)
  Provision for litigation
   settlement, legal costs and
   settlement                   (134,500)           --           --
  Net loss related to stores held
   for  resale                   (76,442)      (120,439)    (326,889)
  Other                         (104,843)       (43,625)     175,000
  Depreciation  and
    amortization                (288,435)      (253,459)    (131,962)
  Interest expense               (80,063)      (111,946)     (58,137)
  Total                       (1,125,667)      (553,813)    (358,124)

Net  loss                    $(1,018,967)     $(291,572)   $(754,031)
</TABLE>

          The  Company's  primary business is the franchising
of Quizno's  Restaurants. As a franchisor, revenue is derived
from: (1) area director marketing fees, (2) initial franchise
fees, and (3)
royalties paid by its Owners.  Area director fees occur only
once for each exclusive area sold.  Although the Company
believes there  are a substantial number of markets remaining
to be  sold, eventually  such fees are expected to decline as
the  number  of remaining available markets declines.  Initial
franchise fees are one time fees paid upon the sale of a
franchise and vary directly with  the  number of franchises the
Company can  sell  and  open. Royalties,  on  the other hand,
are ongoing fees  paid  by  every franchised  restaurant and
increase as the number  of  franchised restaurants   increase.
Each  of  these  sources   of     revenue
contribute to the profitability of the Company, but the
relative contribution  of  each source will vary as the
Company  matures. The  Company  expects that over time initial
franchise  fees  and royalties  will generate proportionately
more revenue  than  area director marketing fees.

          The  following  chart  reflects the  Company's
revenue growth by source and the Company's restaurants for the
past three years:

<TABLE>
<CAPTION>
                                  Year Ended December 31,
                               1996           1995              1994
<S>                             <C>            <C>                <C>
Royalty  fees               $1,590,673    $1,046,329         $  779,249
Initial franchise fees       1,164,500       593,350            390,000
Area director fees           1,421,555     1,379,640            326,391
Other                          248,094       208,776            198,209
Interest                       149,781       147,277            155,890
Total franchise revenue      4,574,603     3,375,372          1,849,739
Sales by Company owned
 stores                      2,680,521     3,011,195            603,485
Sales by stores held for
 resale                        231,371       142,525            193,891
Total revenue               $7,486,495    $6,529,092         $2,647,115

Restaurants open, beginning        105            66                 40
New restaurants opened              67            39                 27
Restaurants closed                 (12)           --                 (1)
Restaurants closed, scheduled
 to reopen                          (4)           --                  --
Restaurant open, end               156           105                 66
New franchises sold                172            50                 37
Initial franchise fees
  collected                  1,743,846    $1,040,188           $710,000
Systemwide sales           $36 million   $26 million        $19 million
Average unit volume      $300,580  (1)      $322,000           $363,000
Same store sales (2) (3)      Down .2%      Down 7.3%            Up 4.1%
</TABLE>

(1)  Excludes non-traditional units located in convenience
stores and gas stations, and includes only units open all of
1996.
(2)  Same store sales for 1996 is based on 27 stores open all
of 1995  and  1996.  Stores which transferred ownership during
this
period, or were in substantial default of the franchise
agreement at  December 31, 1996, are excluded.  In 1996 many
quick  service restaurant   chains  experienced  same  store
sales      declines.
Quizno's decrease is attributable in large part to the fact
that included  in  the  niix are the Company's top  volume
stores                                                  in
Colorado  which have approached maturity after several  years
of
growth.   In addition, some new stores in markets which  are
not yet built out to critical mass have come into the mix.
(3)  Because  the  Company  is and will  continue  to  be  in
an
aggressive growth mode over the next few years, it is
anticipated that  same store sales will fluctuate as units are
included  from more  start up markets.  The Company will
continue to concentrate on  its  overall  rapid growth as a
primary goal and  to  provide interpretation of same store
sales changes from year to year. Results of Operations
Comparison of Years Ended December 31, 1996 and 1995




          Franchise  revenue  increased 36%  in  1996  to  $4,574,603
from $3,375,372  in  1995.  Total revenue increased  15%  in
1996                                                    to
$7,486,495  from  $6,529,092  in  1995.   The  revenue
increase resulted  from  the following items, in order of
impact:  initial franchise fees, royalty fees, and area

director fees.

           Royalty fees increased 52% to $1,590,673 from $1,046,329 in
1995. Royalty fees are a percentage of each Owner's sales paid
to  the Company  weekly  or monthly and will increase as  new
franchises open,  as  the average royalty percentage increases,
and increase or  decrease based on average unit sales.  At
December  31,  1996 there were 147 franchises open as compared
to 96 at December  31, 1995.   The  royalty  was  increased  to
6%  for  all  franchise agreements entered into after February
10, 1995.  The royalty for Quizno's Express units is 8%.  The
Company has no immediate plans to further increase the royalty
percent.

          The  Company  believes  it  is on  track  to  reach  a  level
of
franchised  units open in 1997 where royalty fees will  begin
to
equal  and  then  exceed  its  basic general  and
administrative expense.

          Initial  franchise fees increased 96% in 1996 to $1,164,500
from $593,350 in 1995.  Initial franchise fees are one time
fees  paid by  Owners  at  the  time  the franchise is
purchased.   Initial franchise  fees are not recognized as
income until the period                                      in
which all of the Company's obligations relating to the sale
have been  substantially performed, which generally  occurs
when  the franchise  opens.   In 1996 the Company opened 67
franchises                                              as
compared  to 35 opened in 1995.  The Company's initial
franchise fee  has been $20,000 since 1994.  Owner's may
purchase a  second franchise  for  $15,000  and third and
subsequent  franchise  for $10,000.                     The
initial  franchise fee  for  a  Quizno's  Express
franchise  is $10,000 for the first, $7,500 for the  second,
and $5,000  for the third and additional franchises purchased
by  the same Owner.

          For four months during 1996 the Company offered approved
existing franchisees  the right to purchase one additional
franchise  for every currently effective franchise agreement
for an initial  fee of $ 1,000.  All such franchises are
required to be open in 1997. The  Company sold 75 such
franchises, four of which were open                          as
of December 31, 1996.

           Initial  franchise fees collected by the Company are recorded
as deferred  initial  franchise  fees until  the  related
franchise opens.  Deferred initial franchise fees at December
31, 1996 were $1,575,471  and  represent 150 franchises sold
but  not  yet  in operation,   compared  to  $1,309,155  at
December   31,   1995 representing  66  franchises sold but
not  open.   Direct  costs related to the sale, primarily sales
commissions paid or  due  to area  directors,  are deferred on
the books of  the  Company  and recorded  as  an expense at the
same time as the related  initial franchise fee is recorded as
income.  Deferred costs paid and due at  the  time  of opening
with respect to initial franchise  fees deferred at December
31, 1996 were $644,701 ($413,051 at December 31,  1995).
Approximately 50% of all  initial  franchisee  fees
received by the Company are paid to area directors for sales
and opening commissions.


         Area  Director Marketing Fees increased 3% in 1996 to
$1,421,555 from  $1,379,640 in 1995.  Area director marketing
fees  are  one time fees paid to the Company for the right to
sell franchises in a  designated, non-exclusive, area.  The fee
was $.03 per  person in  the designated area through June,
1996, $.035 from July, 1996 through  December, 1996, and $.05
beginning April  1,  1997.                           In
addition,  each area director is required to pay a  training
and equipment  fee  of  $15,000 ($10,000 through  June,  1996).
The
population based portion of the fee is deemed fully earned by
the Company when the area director marketing agreement is
signed  and is  recognized  as income in that period.  In 1996,
the  Company sold  22  new  area  directorships including four
existing  area directors who purchased additional territory, as
compared  to  26 area  directorships  sold in 1995.  At
December  31,  1996,  the Company  had  a  total  of  62  area
directors  who  owned  areas encompassing  approximately 54% of
the population of  the  United States.

         The  Company offers area director applicants financing for up
to 50%  of the area director marketing fee.  The amount
financed  is required  to  be  paid to the Company in
installments  over  five years  at  15%  interest.  The
promissory  notes  are  personally signed  by  the  area
director and, depending  on  the  personal financial  strength
of  area  director,  secured  by  collateral unrelated to the
area directorship, usually a second mortgage  on the  area
director's home.  Of the 22 area directorships sold  in 1996,
three used this financing for $99,604, representing 7%  of the
area director marketing fees recognized in     1996.  In 1995,
a
total  of  $208,594 was financed representing 15.  1  %  of
area director fee revenue.

           Other  revenue increased by 19% in 1996 to $248,094 from
$208,776 in  1995.   Other revenue is primarily bookkeeping
fees  charged Owner's  for  whom  the  Company provided
bookkeeping  services. Since  1995  the Company's franchise
agreement requires  all  new franchisees  to  utilize the
Company's bookkeeping  services  for their  first  12  months
of operations.  The  fee  per  store  is currently $350 per
month.  Bookkeeping fees were $189,055 in 1996 compared to
$74,470 in 1995.

          Sales  and  royalty  commissions expense  increased  26  1  %
to $914,726  in  1996  from  $253,173 in 1995.   Sales  and
royalty commissions are amounts paid to the area directors of
the Company under  its area director program implemented March,
1995.   Since this  program  was  not implemented until the end
of  the  first quarter of 1995, the related expenses for 1995
were small

         The Company's area directors receive commissions equal to 50%
of
the  initial franchise fees and 40% of royalties received by
the Company  from franchise sold, opened, and operating in  the
area director's territory.  In exchange for these payments,
the  area director  is  required  to  market and sell
franchises,  provide location selection assistance, provide
opening assistance to  new owners,  and  perform  monthly
quality control  reviews  at  each franchise open in the area
director's territory.

          Sales  and  royalty commissions expense will increase  in
direct proportion to initial franchise fee revenue and royalty
revenue, and  may  ultimately reach 50% and 40% of such
revenue  amounts, respectively.  The amount of sales and
royalty commission expense for  1996  was  33%  of the total
for initial franchise  fee  and royalty  revenue because
certain operating franchises in Colorado open  prior to
October, 1995 are excluded from the area  director royalty
requirement until such time as the original franchise  is sold
or transferred.
The Company has, and expects it will continue to benefit from
its area  director program, including the commission amounts
paid  to area  directors, from both accelerated growth and a
reduction  in employee  costs,  travel  costs, and  other
overhead  costs  the Company  would  incur  if it were required
to  perform  the  area directors functions.
Advertising and promotion expense increased $160,135 to
$239,209 in   1996   from  $79,074.   Advertising  and
promotion  expense represents  national  advertising  of  the
Company's franchise
opportunity  combined  with  the  costs  of  regularly
scheduled orientation  and discovery days for franchise and
area  director candidates.

           General  and administrative expenses increased 25% to
$3,400,802 in  1996  from  $2,713,258 in 1995.  General  and
administrative expenses  include  all the operating costs of
the  Company.                                  The
increase is primarily due to the addition of employees to
service the   rapidly  growing  network  of  Quizno's  owners
and      area
directors.   Although  general and administrative  expenses
will likely  continue  to  increase as the Company  grows,
management expects  the  rate of increase to decline.  In fact,
general  and administrative expense increases have fallen from
127%  in  1994, 40% in 1995, to 25% in 1996.

The following is a summary of general and administrative
expenses for 1996 and 1995:

<TABLE>
<CAPTION>
                                               1996            1995
      <S>                                       <C>             <C>
      Employee compensation, benefits,
       and related employee
       costs                               $1,860,540       $1,528,234
      Office rent and operating costs         353,921          239,554
      Out-sourced services and professional
       fees                                   637,298          459,338
      Travel                                  255,802          200,884
      Other                                   293,241          285,248
                   Total                   $3,400,802       $2,713,258
</TABLE>

     The  Company believes its general and administrative expenses
are adequate  and  are not in excessive in relation to the
size  and growth of the Company.

     Sales  by  Company  owned  stores declined  by  11%  in  1996
to $2,680,521  from  $3,011,195 in 1995.  During  1996  the
Company operated  six stores for the full 12 months, one store
for  four months,  and  one  Quizno's Express unit  for  six
months  at  a baseball stadium, a total of 82 store operating
months.  In 1995, the  Company  had a total of 92 store
operating  months.   During
1996, the Company earned $86,834 at Company stores compared to
a loss of $67,626 in 1995.  At
December  31,  1996  and  1995 the Company  had  eight
operating Company stores plus one store which operates only
during baseball season.

     Direct retail advertising was $120,936 in 1996 and zero in
1995. Direct  retail advertising was a one time cost for direct
retail advertising  on behalf of franchised stores.  Retail
advertising is  paid  for  by  the individual stores or, in
certain  markets, store  advertising  cooperatives, from  the
advertising  amounts required to be spent under the terms of
the franchise agreements. In  1996 the Company contributed
additional funds to certain  new markets in order to increase
sales and awareness in these markets quicker.   Prior  to  1996
the Company  had  not  made  any  such contribution  and  the
Company  has  no  plans  to   make                        such
contributions in 1997.

     Research and development was $17,295 in 1996 compared to
$10,564 in   1995.   Research  and  development  are  costs
incurred  to research,  test,  and evaluate new concepts,
products  and  menu items.

     Non-traditional development program expenses were $79,090 in
1996 and  zero  in  1995.  In 1996 the Company formed  and
staffed  a department  for  the  purpose of developing  a
program  to  sell franchises and place Quizno's units in non-
traditional  locations such as airports, hospitals, convenience
stores and gas stations, sports   arenas,   etc.   The  new
non-traditional   development department  also  designed  the
Quizno's  Express  unit  for  the purpose  of  fitting into the
smaller locations typical  of  such venues.   The  costs of
starting up this program of $79,090  have been  fully expensed
in 1996, although the Company believes  that the  revenue
provided  from  the royalties  and  franchise  fees beginning
in 1997 will exceed future operating costs and  provide a
source of profit for the Company.

     Sales  by  stores held for resale increased to $231,371  in
1996 compared to $142,525 in 1995.  In 1996, the Company
operated  one store held for resale for six months, which store
was sold  to  a franchisee in the first quarter of 1997, one
store for two months sold  to  a  franchisee in 1996, and one
store for  three  months which was then closed in 1996.  In
1995, the Company operated one store  for seven months and one
store for four months, both  sold to  franchisees  in  1995.
At December  31,  1996,  the  Company operated  one  store held
for resale, and none  at  December  31, 1995.

     The  Company  has in the past and may continue in the  future
to acquire  or takeover franchised stores from Owners who have
been unable  to  operate  successfully for reasons  unrelated
to  the location  or  the  market.   In  such  cases,  the
Company  will typically  operate the restaurant, make any
required improvements and   repairs,   re-staff,  begin  local
store  marketing,
and
ultimately  transfer  the restaurant to a  new  qualified
Owner. Occasionally  the Company may in the future, as  it  has
in  the past,  incur short term operating losses in cases where
it  takes over  and  remarkets a franchised store.  However,
the  royalties paid over the long term by the new owner will
normally offset or exceed such losses.

     Loss and expenses related to stores held for resale increased
to $307,813 in 1996 compared to $262,964 in 1995.  The 1996
expense includes $27,886 in expenses related to a closed store
in Chicago sold  to a franchisee and reopened in the first
quarter of  1997.
The  remaining expense for 1996 represents cost of sales,
labor, and other operating costs incurred at stores temporarily
held and operated  by  the Company.  The 1995 expense includes
a  $35,000 provision for loss on a store in Detroit sold in
January of 1996.

     Provision  for litigation settlement was $134,500  in  1996.
In
1995,  there  was  no provision for litigation  settlement.
The
amount includes $13,500 related to a settlement agreement
reached in  1996  with a previous area director, which sum  was
paid  in 1997, $95,000 reserved at December 31, 1996, and the
direct legal costs associated with both claims.

     Provision for bad debts was $224,063 in 1996 compared to
$13,780 in  1995.  The 1996 expense includes an addition to the
Company's reserves of $173,000 in the 4' quarter of 1996.  The
addition  to the  reserves  was allocated $33,000 to accounts
receivable  and $140,000  to  note receivable.  The addition to
the reserves  was made on the basis of management's regular
evaluation of accounts, notes receivable and payment
performance.

     Other expenses were $104,843 in 1996 compared to $43,625 in
1995. The  1996 expense includes a one time loss on the sale of
a store located  in  Missouri and sold by the Company to a
franchisee  in 1996,  plus  subleasing losses related to two
stores  previously owned  by the Company and sold to
franchisees.  The 1995  expense is primarily subleasing losses.

Liquidity and Capital Resources

     Net  cash  used  by  operating activities was  $410,964  in
1996 compared to cash provided by operating activities of
$319,109  in 1995.  The primary reason for the change from 1995
to 1996 is the 1996  loss  which  exceeded  the  1995  loss  by
$727,396. The
difference  between the net loss and the cash  used  or
provided from  operations  in  both years is primarily  due  to
the  cash received from the sale of franchises not open at the
end  of  the year   and,                                  thus,
not  recorded  as  revenue,   and   non-cash
depreciation and amortization expense.

     Net  cash  used  in  investing activities was  $858,058  in
1996 compared  to  cash used by investing activities of
$1,027,190  in 1995.   Cash  used  by investing activities for
both  years  was primarily  related to the acquisition or
development  of  Company owned  stores and stores held for
resale, three in 1996 and  four in 1995.

     Net  cash provided by financing activities was $1,711,930 in
1996 compared  to  cash used by financing activities  of
$569,124  in 1995.   The  amount  provided  in 1996  was
primarily  from  the proceeds  of the convertible subordinated
debt financing  for  $2 million completed in December 1996.
During 1996, other debt  was reduced by $113,381, preferred
dividend of $56,940 paid, and loan costs  of $117,749 incurred.
The cash used in 1995 was  all  for the  reduction  of  debt
and  the  payment  of  preferred  stock dividends.

     On  December 31, 1996 the Company completed a debt financing
for $2 million.  The loan is payable interest only at 12.75%,
$21,250 per month, through June 1998, interest and principal
payments  of $45,251 from July 1998 through November 2001, and
a final balloon payments  of  $783,060  on December 31,  2001.
Any  outstanding balance on the loan is due in full if the
Company has a secondary public  offering of its stock.  In
connection with the loan,  the lender  has the right to
purchase 372,847 shares of the Company's common stock for $3.
10 per share.

     The proceeds of the loan are directed to be used $1,150,000 for
a "turn key" development program, or a similar program
resulting in the  opening of additional Quizno's units,
$400,564  to  pay  off existing debt outstanding at December
31, 1996, $80,000 for costs related  to  the  financing, and
$369,436 available  for  working capital.

     A "turn key" program is planned to commence in 1997 and the
funds will  be used to procure, secure and develop new
locations which, upon completion, will be sold to franchisees.
Under the program, the franchisee will reimburse the Company in
full for 100% of its development  costs, plus pay a franchise
fee  of  $20,000  and  a development fee of $10,000.  It is
expected that franchisees will be able to borrow up to 70% of
this amount from traditional small business  lenders, and the
remaining 30% will be the cash  equity provided by the
franchisee.

     The  lender  has agreed to subordinate its security interests
to other lenders, including a line of credit lender, for
amounts  up to  a  total of $700,000.  At December 31, 1996,
the Company  had $234,556 of such "senior" debt outstanding,
thus leaving  another $465,443  available.  The Company intends
to  arrange  a  working capital                           line
of  credit  for  this  amount  and  is  currently
negotiating with several interested lenders.

     The  working  capital  portion of the proceeds  of  the  loan
is unrestricted and may used by the Company as required.

     The  Company built one store in leased property in Denver  for
a cost  of  approximately $145,000 which is operated as  a
Company owned store.  The store opened in the first quarter of
1997.     In
the  first  quarter  of 1997 the Company reacquired  a  store
in Detroit  from  a  franchisee and canceled the sublease  with
the franchisee  pursuant to which the franchisee leased the
facility and  all  of  the assets at the location from the
Company.  The
Company  paid  no  cash but will incur operating  costs  for
the restaurant until it can be transferred to a new franchisee.
One
Company store held for resale in Denver is under contract  to
be sold  to  a franchisee in the second quarter of 1997 for
$50,000 cash  and  $70,000  in  the  form of a promissory  note
due  the Company.  The Company does not expect to record any
gain or  loss on this sale.

     Other  than  the above, the Company does not have any
commitments or  contracts  to build, acquire, or sell any
additional  Company owned stores.

     The  Company's restaurant sales, and therefore royalties,
during the  months of November through February are generally
lower  due to the location of most of its restaurants.


     Forward-Looking Statements

     Certain  of the information discussed in this annual report,
and in  particular  in this section entitled "Managements
Discussion and
Analysis   or  Plan  of  Operations,"  are  forward-looking
statements  that  involve  risks  and  uncertainties  that
might adversely affect the Company's operating results in the
future in a  material  way.  Such risks and uncertainties
include,  without limitation,  the  effect of national and
regional  economic  and market conditions, costs of labor and
employee benefits, costs of marketing, costs of food and non-
food items used in the operation of  the  Restaurants,
intensity of competition for  locations  as well  as customers,
perception of food safety, legal claims,  and the
availability  of  financing  for  the   Company   and     its
franchisees.   Many of these risk are beyond the control  of
the Company.                 In addition, specific reference is
made to  the  "Risk
Factors' contained in the Company's Prospectus, dated February
1, 1994, included in the Registration Statement filed by the
Company in  connection with its initial public offering
(Registration No. 33-72378-D).

     As  described earlier, the Company's principal sources of
income are  royalty  fees,  initial franchise fees,  and  area
director marketing  fees.   These  sources are subject  to  a
variety  of factors  that  could  adversely impact the
profitability  of  the Company in the future, including those
mentioned in the preceding paragraph.  The continued strength
of the U.S. economy is  a  key factor  in  the  restaurant
business because  consumers  tend  to immediately  reduce their
discretionary purchases in economically difficult times.  An
economic downturn would adversely affect all three  of  the
above identified sources of income.   Because  the Company's
franchises are still concentrated in a few regions  of the
U.S.,  regional economic factors could adversely affect  the
Company's  profitability.   Weather, particularly  severe
winter weather,  will adversely affect royalty income and
could  affect the other sources cited above.  Culinary fashions
among Americans will  also impact the Company's profitability.
As eating  habits change  and  types  of cuisine move in and
out  of  fashion,  the Company's  challenge  will  be to
formulate  a  menu  within  the Company's   distinctive
culinary  style  that  appeals   to   an increasing market
share.  Finally, the intense competition in the restaurant
industry continues to challenge participants  in  all segments
of this industry.

ITEM 7.  FINANCIAL STATEMENTS

Attached hereto and filed as a part of this Form 10-KSB are the
consolidated financial
statements     listed in the Index to the Consolidated
Financial Statements at page F- 1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.


                            PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
          PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

ITEM 10.  EXECUTIVE COMPENSATION

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by the above four Items is omitted
because the Company
intends to file a proxy statement with the Commission pursuant
to Regulation  14A not later than 120 days after the  close  of
the fiscal year in accordance with General Instruction E(3) to
Fon-n 10-KSB.                The   information  called  for  by
these   Items   is
incorporated herein by reference to the proxy statement.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits required by Item 601 of Regulation S-B.
The
Company  will  furnish to its shareholders of record  as  of
the record  date for its 1996 Annual Meeting of Stockholders, a
copy of any of the exhibits listed below upon payment of $.25
per page to cover the costs of the Company of furnishing the
exhibits.


Item No.         Exhibit Description

2.2              Articles of Merger Merging Schaden & Schaden into The
                 Quizno's Operating Company, incorporated by reference to
                 Exhibit 2(ii) to the Company's Form 8-K, dated November 4,
                 1994.

3.1              Amended and Restated Articles of Incorporation of the
                 Company, incorporated by reference to Exhibit 3(a) to the
                 Company's Registration Statement on Form SB-2 (Reg.  No. 33-
                 72378D).

3.2              Articles of Amendment to the Articles of Incorporation
                 of the Company Authorizing 146,000 Shares of Class A Cumulative
                 Convertible Preferred Stock.

3.3              Articles of Amendment changing the Company name.

3.4              By-laws of the Company.

4.1              Form of certificate evidencing Common Stock, $.001 par
                 value, of the Company, incorporated by reference to Exhibit
                 4(a) to the Company's Registration Statement on Form SB-2
                 (Reg.  No. 33-72378-D).

4.2              Form of Representative's Warrant, incorporated by
                 reference to Exhibit 4(b) to the Company's Registration
                 Statement on Form SB-2 (Reg.  No. 33-72378-D).

9.1              Voting Trust Agreement between Richard E. Schaden and
                 Richard F. Schaden, dated July 14, 1994, incorporated by
                 reference to Exhibit A to the Schedule 13D, dated July 14,
                 1994, filed by Richard E. Schaden and Richard F. Schaden.

9.2              First Amendment to Voting Trust Agreement dated
                 November 4, i994, incorporated by reference to Exhibit A to the
                 Amendment No. 1 to Schedule 13-D, dated November 4, 1994, filed
                 by Richard E. Schaden and Richard F. Schaden.

9.3              Second Amendment to Voting Trust Agreement dated
                 September 5, 1996.

10.1             Employment Agreement of Mr. Richard E. Schaden,
                 incorporated by reference to Exhibit 10(a) to the Company's
                 Registration Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.2             Employment Agreement of Mr. Richard F. Schaden,
                 incorporated by reference to Exhibit 10(b) to the Company's
                 Registration Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.3             Employee Stock Option Plan, incorporated by reference
                 to Exhibit 10(c) to the Company's Registration Statement on
                 Form SB-2 (Reg.  No. 33-72378-D).

10.4             Amended and Restated Stock Option Plan for Non-Employee
                 Directors and Advisors.

10.5             Indemnity Agreement of Richard E. Schaden, incorporated
                 by reference to Exhibit 10(e) to the Company's Registration
                 Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.6             Indemnity Agreement of Richard F. Schaden, incorporated
                 by reference to Exhibit 10(f) to the Company's Registration
                 Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.7             Indemnity Agreement of Patrick E. Meyers, incorporated
                 by reference to Exhibit 10(g) to the Company's Registration
                 Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.8             Indemnity Agreement of Brownell M. Bailey, incorporated
                 by reference to Exhibit 10(h) to the Company's Registration
                 Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.9             Indemnity Agreement of Frederick H. Schaden,
                 incorporated by reference to Exhibit 10(i) to the Company's
                 Registration Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.10            Form of Franchise Agreement.

10.11            Form of Territorial Development Agreement,
                 incorporated by reference to Exhibit 10(m) to the Company's
                 Registration Statement on Form SB-2 (Reg.  No. 33-72378-D).

10.12            Form of Area Director Marketing Agreement.

10.14            Office Lease for the Company.

10.15            Amendment to Employment Agreement between the Company
                 and Mr. Richard E. Schaden, dated February 29, 1996,
                 incorporated by reference to Exhibit 10. 15 to the Company's
                 1O-KSB, dated March 29, 1996.

10.16            Amendment to Employment Agreement between the Company
                 and Mr. Richard F. Schaden, dated February 29, 1996,
                 incorporated by reference to Exhibit 10. 16 to the Company's
                 10-KSB, dated March 29, 1996.

10.17            Deferment Agreement between the Company and Illinois
                 Food Management, Inc., dated February 27, 1996, incorporated by
                 reference to Exhibit 10. 17 to the Company's 10-KSB, dated
                 March 29, 1996.

10.18            Investment Agreement between the Company and Retail and
                 Restaurant Growth Capital, L.P. ("RRGC"), dated as of December
                 31, 1996.

10.19            Senior Subordinated Convertible Promissory Note (with
                 Form of Warrant attached) issued by the Company to RRGC, dated
                 December 31, 1996, incorporated by reference to Exhibit 99(a)
                 to Schedule 13D filed by Retail & Restaurant Growth Capital,
                 L.P., a Delaware limited partnership, filed with the SEC on
                 January 9, 1997.

10.20            Security Agreement between the Company and RRGC, dated
                 as of December 31, 1996.

10.21            Stockholders' Agreement between the Company and RRGC,
                 dated  as  of  December 31, 1996, incorporated  by  reference
                 to Exhibit 99(b) to Schedule 13D filed by Retail & Restaurant
                 Growth Capital, L.P., a Delaware  limited partnership, filed
                 with the SEC on  January 9, 1997.

20.1             Risk  Factors  Section from the Company's Prospectus
                 dated February 1, 1994 included in the Registration Statement
                 on Form  SB-2  filed  by the Company (Registration No.  33-
                 72378-D), incorporated  by reference to Exhibit 20.1 to the
                 Company's  10-KSB, dated March 29, 1996.

21.1             List   of  Company  subsidiaries,  incorporated by
                 reference  to Exhibit 21.1 to the Company's 10-KSB,  dated
                 March 29, 1996.

                (b) Reports on Form 8-K.  The Company filed three (3) reports
on Form 8-K during
the  last quarter of 1996.  AU such Form 8-K filings reported
on only  Item 5 matters.  Such filings where made on October  9
and 28,  and  November  25,  1996  and related  to  a  press
release regarding  franchises sold in the third quarter, a
press  release on          stores  opened  and  the  third
quarter  investor   update,
respectively.


                          SIGNATURES

In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized on March 1997.

THE QUIZNO'S CORPORATION



By: Original signed by Richard E. Schaden
    Richard E. Schaden, President and Chief
    Executive Officer

In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated and on the
dates indicated.

          Signature                Title                    Date

/s/ Richard E. Schaden  President, Chief Executive      March 28, 1997
Richard E. Schaden      Officer and (Principal and
                        Executive Officer)

/s/ Richard F. Schaden  Vice President,                 March 28, 1997
    Richard F. Schaden  Secretary and Director

/s/ Brownell M. Bailey   Director                       March 28, 1997
    Brownell M. Bailey

/s/ J. Eric Lawrence     Director                       March 28, 1997
    J. Eric Lawrence

/s/ Frederick H. Schaden Director                       March 28, 1997
    Frederick H. Schaden

/s/John L. Gallivan      Chief Financial Officer        March 28, 1997
   John L. Gallivan       and Treasurer (Principal
                          Financial and Accounting
                          Officer)




                    THE QUIZNO'S CORPORATION AND
                           SUBSIDIARIES
                 Consolidated Financial Statements
                 and Independent Auditors' Report
                  December 31, 1996, 1995, and 1994




                         Table of Contents


                                                               Page

Independent Auditors' Report                                   F-1

Consolidated Financial Statements

   Consolidated Balance Sheets                                 F-2

   Consolidated Statements of Operations                       F-3

   Consolidated Statement of Stockholders' Equity              F-4

   Consolidated Statements of Cash Flows                       F-5

Notes to Consolidated Financial Statements                     F-7





                  INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
The Quizno's Corporation and Subsidiaries
Denver, Colorado

We have audited the accompanying consolidated balance
sheets of The  Quizno's  Corporation and Subsidiaries as of
December 31, 1996,  1995, and 1994, and the related
consolidated statements of  operations, stockholders'
equity, and cash flows  for  the years then ended.  These
consolidated financial statements  are the   responsibility
of   the  Company's   management.
Our
responsibility  is to express an opinion on these
consolidated financial statements based on our audits.

We  conducted our audits in accordance with generally
accepted auditing  standards.  Those standards require that
we plan  and perform the audits to obtain reasonable
assurance about whether the  consolidated  financial
statements are  free  of  material misstatement.   An audit
includes examining, on a  test  basis, evidence  supporting
the  amounts  and  disclosures   in
the
consolidated  financial statements.   An  audit  also
includes assessing   the  accounting  principles  used  and
significant estimates made by management, as well as
evaluating the overall consolidated financial statement
presentation.  We believe that our audits provide a
reasonable basis for our opinion.
In  our opinion, the consolidated financial statements
referred to   above  present  fairly,  in  all  material
respects,  the financial position of The Quizno's
Corporation and Subsidiaries as  of  December  31, 1996,
1995, and 1994 and the  results  of their operations and
their cash flows for the years then ended, in conformity
with generally accepted accounting principles.



                         /s/Ehrhardt Keefe Steiner & Hottman PC
                            Ehrhardt Keefe Steiner & Hottman PC
February 28, 1997
Denver, Colorado

                             F-1



             THE QUIZNO'S CORPORATION AND SUBSIDIARIES
                  Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                  December 31,
                                           1996       1995       1994
<S>                                         <C>         <C>        <C>
                                  Assets
Current assets
 Cash and cash equivalents            $ 2,127,330   $1,684,422   $3,112,575
 Restricted cash                           16,748       15,927       30,280
 Accounts receivable, net of
  allowance for doubtful accounts
  of $51,077 (1996), $11,777 (1995)
  and $4,700 (1994) (Note 7)              363,602      276,522      137,129
 Current portion of notes receivable
  (Notes 2 and 7)                         501,255      304,918       83,841
 Other current assets                     147,856      155,973       99,152
 Assets of stores held for resale
  (Note 3)                                116,229      144,499      276,922
    Total current assets                3,273,020    2,582,261    3,739,899

Property and equipment at cost, net
  (Note 4)                              1,458,979    1,083,476      901,291

Other assets
  Intangible assets, net (Note 5)         557,483      537,149      547,327
  Deferred assets (Notes 6 and 12)        937,450      588,051      338,498
  Deposits                                 37,630       31,454       45,945
  Notes receivables, net (Notes 2 and 7)  575,222      528,484       26,173
    Total other assets                  2,107,785    1,685,138      957,943

Total assets                          $ 6,839,784  $ 5,350,875   $5,599,133

                   Liabilities and Stockholders' Equity
Current liabilities
  Accounts payable                    $ 1,053,028    $ 713,446    $ 378,849
  Accrued liabilities (Note 7)            170,728       53,168       47,960
  Line-of-credit (Note 8)                 100,000      160,000      200,000
  Current portion of long-term
   obligations (Notes 7 and 9)            375,595      171,217      226,424
  Provision for loss on stores held for
   resale (Note 3)                             -        58,000      259,000
    Total current liabilities           1,699,351    1,155,831    1,112,233

Line-of-credit (Note 8)                   120,239      215,505      290,506
Long-term obligations (Notes 7 and 9)     203,801      341,453      655,848
Convertible subordinated debt (Note 9)  2,000,000          -          -
Other liabilities                              -        12,101       20,692
Deferred revenue (Note 7)               1,575,471    1,309,155      862,317
    Total liabilities                   5,598,862    3,034,045    2,941,596

Commitments and contingencies (Notes 3,
8, 10 and 14)

Stockholders' equity (Note 11)
 Preferred stock, $.001 par value;
  liquidation preference of $6 per share
  plus unpaid and accumulated dividends,
  1,000,000 authorized, issued and
  outstanding 146,000 in 1996, 1995 and
  1994 ($876,000 liquidation preference)      146         146            146
 Common stock, $.001 par value; 9,000,000
  shares authorized; issued and
  outstanding, 2,864,757 (1996), 2,864,757
  (1995), and 2,860,000 (1994)              2,865       2,865          2,865
 Capital in excess of par value         3,233,415   3,290,355      3,339,495
 Accumulated deficit                   (1,995,504)   (976,536)      (684,964)
        Total stockholders' equity      1,240,922   2,316,830      2,657,537
Total liabilities and stockholders'   $ 6,839,784  $5,350,875     $5,599,133
 equity
</TABLE>


            QUIZNO'S CORPORATION AND SUBSIDIARIES
            Consolidated Statements of Operations


<TABLE>
<CAPTION>
                                            For  the Year  Ended December 31,
                                               1996       1995       1994
<S>                                             <C>         <C>        <C>
Franchise operations:
Revenue (Note 7)
  Royalty fees                            $ 1,590,673  $ 1,046,329    $779,249
  Initial franchise fees                    1,164,500      593,350     390,000
  Area director marketing fees              1,421,555    1,379,640     326,391
  Other                                       248,094      208,776     198,209
  Interest revenue                            149,781      147,277     155,890
      Total revenue                         4,574,603    3,375,372   1,849,739

Expenses
  Sales and royalty commissions              (914,726)    (253,173)   (118,370)
  Advertising and promotion                  (239,209)     (79,074)   (150,492)
  General and administrative (Note 7)      (3,400,802)  (2,713,258) (1,949,829)
      Total expenses                       (4,554,737)  (3,045,505) (2,218,691)

Income (loss) from franchise operations        19,866      329,867    (368,952)

Company store operations:
  Sales by Company owned stores expenses:   2,680,521    3,011,195     603,485
  Cost of sales at Company stores            (959,045)  (1,006,317)   (210,111)
  Cost of labor at Company stores            (777,170)    (894,217)   (229,405)
  Other Company store expenses               (857,472)  (1,178,287)   (190,924)
      Total expenses                       (2,593,687)  (3,078,821)   (630,440)

Income (loss) from Company stores
 operations                                    86,834      (67,626)    (26,955)

Other income (expenses):
 Research  and  development and  new
  programs
   Direct retail advertising                 (120,936)          -           -
   Research and development                   (17,295)    (10,564)        (954)
   Non-traditional development program        (79,090)          -           -
 Other
   Sales by stores held for resale            231,371     142,525      193,891
   Loss and expenses related to stores
    held for sale                            (307,813)   (262,964)     (320,780)
   Provision for litigation settlement       (134,500)         -            -
   Provision for bad debts                   (224,063)    (13,780)      (15,182)
   Other (expenses) income                   (104,844)    (43,625)      175,000
   Depreciation and amortization             (288,435)   (253,459)     (131,962)
   Interest expense                           (80,063)   (111,946)      (58,137)
      Total other expenses                 (1,125,668)   (553,813)     (358,124)

Net loss                                   (1,018,968)   (291,572)     (754,031)
Preferred stock dividends                     (56,940)    (56,940)      (14,235)

Net loss applicable to common
 stockholders                            $ (1,075,908)  $(348,512)    $(768,266)

Net loss per share of common stock       $       (.38)  $    (.12)    $    (.28)

Weighted average common shares
 outstanding                                2,864,757   2,863,130     2,746,849
</TABLE>


           THE QUIZNO'S CORPORATION AND SUBSIDIARIES
        Consolidated Statement of Stockholders' Equity
     For the Years Ended December 31, 1996, 1995, and 1994

<TABLE>
<CAPTION>
                        Convertible                     Additional
                      Preferred Stock    Common Stock     Paid-in    Accumulated
                     Shares    Amount  Shares    Amount   Capital       Deficit
<S>                   <C>        <C>     <C>       <C>      <C>           <C>
Balance, December
 31, 1994           146,000  $  146  2,860,000 $   2,860 $3,339,495  $ (684,964)
Issuance of common
 stock in exchange
 for general
 partnership
 interest                -       -       2,500         3     9,997          -

Purchase price paid
 for Quiz One
 Limited
 Partnership
 general partner's
 interest over
 historical book value
 (Note 13)               -      -           -          -     (56,940)        -

Issuance of common
 stock pursuant to
 employee benefit
 plan                    -      -         2,257        2        7,803        -

Preferred stock
 dividends               -      -            -          -     (56,940        -

Net loss                 -      -            -          -         -    (291,572)

Balance, December
 31, 1995           146,000    146    2,864,757     2,865   3,290,355  (976,536)

Preferred stock
 dividends               -      -             -          -    (56,940)       -

Net loss                 -      -             -          -        -  (1,018,968)

Balance, December
 31, 1996          146,000   $146  $ 2,864,757   $2,865  $3,233,415 $(1,995,504)

</TABLE>


          THE QUIZNO'S CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                               For the Year Ended December 31,
                                               1996           1995        1994
<S>                                            <C>             <C>         <C>
Cash flows from operating activities
  Net loss                               $(1,018,968)    $ (291,572)  $(754,031)
  Adjustments to reconcile net loss to
   net cash (used) provided by operating
   activities -
  Depreciation and amortization              259,840        253,459     131,962
  Provision for losses on accounts and
   notes receivable                          179,300          7,077      15,000
  Loss on disposal of asset                   44,648        189,463          -
  Reserve for closure losses                     -           35,000     259,000
  Issuance of stock for services                 -            7,805          -
  Deferred tax asset                             -               -     (175,000)
  Issuance of notes receivable for area
   director agreements                      (236,407)      (208,594)    (42,599)
  Changes in assets and liabilities -
   Restricted cash                              (821)        14,353     (30,280)
   Accounts receivable                      (126,380)      (146,470)   (103,664)
   Other current assets                        8,117        (69,911)    (11,163)
   Accounts payable                          339,582        334,597     (35,417)
   Accrued liabilities                       117,560          5,208    (119,502)
   Other liabilities                         (12,101)        (8,591)        -
   Deferred franchise costs                 (231,650)      (249,553)    (33,857)
   Deferred initial franchise fees           266,316        446,838     210,247
                                             608,004        610,681      64,727

      Net cash (used) provided by
       operating activities                 (410,964)       319,109    (689,304)

Cash flows from investing activities
 Cash from sale of stores                         -         105,000          -
 Purchase of businesses, net of cash
  acquired                                        -              -     (632,281)
 Purchase of property and equipment          (626,157)     (869,926)    (87,902)
 Proceeds from notes receivable               273,421        24,680     (63,183)
 Issuance of other notes receivable          (305,089)      (75,474)         -
 Intangible assets                           (149,773)     (153,008)    (26,249)
 Proceeds from sale of asset                   13,716        14,460          -
 Deposits                                      (6,176)       12,130     (28,896)
 Payments of obligation associated with
  stores held for resale                           -       (236,000)         -
 Provision for store closure                  (58,000)           -           -
       Net cash used by investing
        activities                           (858,058)   (1,178,138)   (838,511)

Cash flows from financing activities
  Line-of-credit - net                        (155,266)    (115,001)    490,505
  Principal payments on long-term
   obligations                                (196,099)    (397,183)   (654,855)
  Proceeds from long-term obligations        2,237,984           -      100,000
  Loan costs                                  (117,749)          -            -
  Proceeds from issuance of common stock           -             -    5,300,000
  Offering costs                                   -             -     (823,643)
  Dividends paid                               (56,940)     (56,940)    (14,235)
         Net cash provided (used) by
          financing activities               1,711,930     (569,124)  4,397,772

Net increase (decrease) in cash and cash       442,908   (1,428,153)  2,869,957

Cash and cash equivalents - beginning of
 year                                        1,684,422    3,112,575     242,618

Cash and cash equivalents - end of year     $2,127,330   $1,684,422  $3,112,575
</TABLE>

Supplemental disclosure of cash flow information
     Cash  paid during the year for interest was  $80,063
(1996), $111,946 (1995) and $58,137 (1994).

Supplemental   disclosure  of  non-cash   investing   and
financing activities
    During  1996,  the  Company sold a  restaurant  to  a
    franchisee for $115,000 plus $20,000 for a
    franchise fee.                         The
    franchise fee was paid in cash  with  the
    remaining $115,000 to be paid in the future
    pursuant to  a  promissory note.  The net book
value  of  the assets  sold  was $155,000 resulting
in  a  loss  of $40,000 in the current year.
    During  the first quarter of 1995, the Company
    issued 2,500  shares of its $.001 par value
    common stock  to Berger  Restaurant Corporation
    in exchange  for  the general
    partner's  interest  in  Quiz  One  Limited
    Partnership  owned by Berger Restaurant
    Corporation. The  shares  and the general
    partner's interest  were valued at $10,000 (Note
    13).

    During  the second quarter of 1995, the Company
    sold two  restaurants to franchisees for $114,000
    of which $30,000 was paid in cash, $49,000 to be
    paid  in  the future pursuant to a promissory
    note, and $35,000 to be  paid  in  the  future
    upon the  renewal  of  the franchisee's franchise
    agreement.  The net book value of  the assets
    sold was $281,650, resulting in a loss of
    $167,650, which had been accrued and reserved for
    in
    1994.
    During  the fourth quarter of 1995, the Company
    sold three  restaurants  to franchisees  for
    $455,000  of which  $75,000 was paid in cash,
    $380,000 to be  paid in  the future pursuant to
    promissory notes.  The net book value of the
    assets sold was $473,278, resulting in a loss of
    $18,278.
   During  1996  and  1995, the Company  acquired
   assets under  capital  leases totaling $24,841
   and $27,581, respectively.
  During  the  fourth  quarter of 1996  and  1995,
    the Company
    offered a store for resale and  reclassified
    $116, 229 and $144,499, respectively, of property
    and equipment  as  assets held for resale.
    During 1996, the  1995  store  was taken off the
    market and  the $144,499  property  and equipment
    were reclassified back  into operating assets.
    The 1996 store was sold in 1997 (Note 13).

    During  the year ended December 31, 1994, the
    Company purchased the net assets at Schaden &
    Schaden,  Inc., Quiz One Limited Partnership and
    a Quizno's franchise
restaurant.  The acquisitions were accounted  for  as
follows:
<TABLE>
<CAPTION>
<S>                                              <C>
   Cash                                        $23,565
   Inventory                                    41,296
   Equipment                                 1,051,710
   Other                                        14,060
   Current liabilities                        (317,130)
   Long-term debt                             (748,579)
            Net  book value of assets                         64,922
              acquired

   Cash                                        656,000
   Note payable                                165,000
   Preferred stock issued                      876,000
               Proceeds                                    1,697,000

    Amount charged to additional paid-in-
     capital (Note 13)                                     1,632,078
</TABLE>

THE QUIZNO'S CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Note  1  -  Description  of Business  and  Summary  of
Significant Accounting Policies

The    Quizno's   Corporation   (The   Company)    was
incorporated  on  January 7, 1991,  in  the  State  of
Colorado, and is primarily engaged in the business
of franchising   Quizno's   quick   service
restaurants throughout  the  United  States
featuring   submarine sandwiches, salads, soups, and
refreshments.

The   Company's  wholly  owned  subsidiaries  are
the Quizno's Operating Company (QOC) incorporated in
1994
to  own  and  operate  Company  stores,  the
Quizno's Development  Company  (QDC) incorporated
in  1995  to develop  stores  to sell or lease to
franchisees,  and the Quizno's Realty Company (QRC)
incorporated in 1995 to          execute  leases
for  store  location.   QRC  was
inactive in 1996 and 1995.

The  following table summarizes the number of
Quizno's restaurants open at December 31, 1996:

<TABLE>
<CAPTION>
                                 Sold But Not
                                    Yet in
                                   Operation     Operational     Total
<S>                                  <C>           <C>            <C>
The    Quizno's    Operating
Corporation  and  affiliated           -               9               9
entities
Franchise restaurants                 150            147             297

                                      150            156             306
</TABLE>

Principles of Consolidation

The  consolidated  financial  statements  include  the
accounts   of   The  Company  and  its  wholly
owned subsidiaries QOC, QDC, QRC and a 52% owned
subsidiary, Classic  Subs Limited Liability Company.
The minority interest  was reduced to zero due to
losses  incurred. All  significant intercompany
transactions  have  been eliminated.

Cash and Cash Equivalents

The  Company  considers all highly liquid
instruments purchased with an original maturity of
three months or less to be cash equivalents.

Restricted Cash

The Company sold franchise agreements in the state
of California,  which required funds paid for
franchises to  be  held  in  escrow  until the
franchise  opens. Accordingly,  The  Company holds
these  amounts,  plus interest earned in restricted
accounts.  Beginning  in 1995,  the  Company was no
longer required  to  escrow such funds.

Inventory

Inventory is included in other assets and is stated
at the  lower of cost or market and consists of food
and paper  products.  Cost is determined using  the
first in, first out (FIFO) method.

Credit Risk

The  Company  grants credit in the  normal  course
of business,   primarily  consisting  of   royalty
fees
receivable  and  loans to area directors  and  to
its franchisees, the majority of whom are located
in  the Midwest  and  the  Rocky Mountain region.
To  reduce credit  risk,  the Company electronically
debits  the franchisees  bank  account weekly  for
fees  due  the Company according to franchise
agreements entered into after  1993,  and  reserves
the  right  to  terminate franchise and area
director agreements for non-payment of amounts owed.
The  Company's cash equivalents consists of short-
term commercial  paper  with  original  maturities
not  in excess  of  three  months.   The  Company
continually monitors  its  positions with, and the
credit  quality of,  the  financial institutions it
invests with.                                  In
addition,  the  Company limits the  amount  of
credit exposure with any one institution.

Accounts Receivable/Royalties Receivable

At  the  time the accounts and royalty receivable
are originated,  the  Company  considers  a  reserve
for
doubtful accounts based on the creditworthiness of
the franchisee.   The provision for uncollectible
amounts is  continually reviewed and adjusted to
maintain  the allowance  at  a  level considered
adequate  to  cover future  losses.   The allowance
is  management's  best estimate  of  uncollectible
amounts and is  determined based on historical
performance of the notes which  is tracked  by  the
Company on an  ongoing  basis.                 The
losses ultimately incurred could differ materially
in the   near   term  from  the  amounts   estimated
in
determining the allowance.

Property and Equipment

Property  and  equipment is stated at cost;
equipment under  capital leases is valued at the
lower  of  fair market value or net present value of
the minimum lease payments  at inception of the
lease.  Depreciation  is provided  utilizing the
straight-line method over  the estimated  useful
lives for owned assets and leasehold improvements,
ranging from 5 to 31.5 years,  and  the related
lease term for equipment under capital leases.

Deferred Financing Costs

Cost   associated   with  obtaining  the
convertible subordinated debt financing are deferred
and amortized on a straight-line basis over the term
of the debt.

Intangible Assets

In  connection  with  the Company's  purchase  of
the Quizno's  name and business in 1991 from the
founder, it  entered  into  a  non-compete agreement
with  the founder.    Under   the  terms  of   the
non-compete agreement,  the founder was paid
$500,113 in  exchange for  his agreement not to
compete with the Company for the  period  of  10
years.  The amount  paid  by  the Company  is being
amortized over the term of the  noncompete
agreement.

The  excess  of  the purchase price  over  net  assets
acquired  for  stores purchased by  the  Company  from
unrelated third parties is recorded as goodwill and is
amortized over 15 years.

Other  intangibles  are  recorded  at  cost  and   are
amortized   on  the  straight-line  basis   over   the
contractual or estimated useful lives as follows:

Franchise agreements
                                              12 years
Trademarks and other
                                              3  -  15 years

Initial Franchise Fees and Related Franchise Costs

Management  believes it is probable that  all  of  the
deferred franchise fees will be realized.  The  amount
of  the deferred franchise fees considered
realizable, however,  could  be  reduced  in  the
near  term
if
estimates of the future franchise openings is
reduced.

Initial franchise fees are recognized as revenue
when all  material services and conditions required
to  be performed  by  the  Company  have  been
substantially completed,  which  is  generally  when
the  franchise commences   operations.    Initial
franchise    fees collected by the Company before
all material  services and conditions are
substantially performed is recorded as
deferred  franchise  sales  revenue.  Incremental
development costs are deferred, but not in  excess
of the  deferred revenue and estimated cost to  open
the Quizno's restaurant, and are expensed when the
revenue is recognized.

Deferred Financing Costs

Costs   associated  with  obtaining  the
convertible subordinated debt financing are deferred
and amortized on a straight-line basis over the term
of the debt.

Area Director Marketing Agreements

Prior  to  1995,  the Company had  entered  into
area director  marketing agreements which provide
the  area director  an  exclusive right to market
and  sell  or purchase  franchises in a defined
geographic territory and  the rights to one Quizno's
restaurant within  the territory.   The  marketing
agreements  require                           the
Company  to pay the area director $5,000 per
franchise sold by the area director and to pay the
area director a  continuing  fee of .5% to 1.5% of
gross  sales  as defined,   of   each  franchise
within  the   defined geographic territory.

The  Company  changed the terms of the  area
director marketing agreement, effective December 31,
1994.  The new  agreement provides the area director
an exclusive
right  to  sell  and  open  franchises  in  a
defined geographic  territory  and  requires  that
the      area
director   be   responsible   for   advertising
for,
soliciting and screening prospective franchisees.
The agreements also require the area director to
sell  and open a minimum of new franchised
restaurants each year or  to  forfeit  future rights
to the  territory.
In
addition,   the  area  director  is  responsible
for
identifying  possible  locations,  providing   on-
site opening  assistance, and providing  quality
assurance services  to  franchises in  the  defined
area.       The
Company  pays  the area director 50%  of  the
initial franchise fee sold by the area director, and
a fee       of
40%  of the royalty received by the Company from
each franchise within the defined area.  The
agreements are for  a  period of ten years, with the
option to extend for  an  additional ten years.  The
area  director                                    is
entitled  to  receive commissions for a period  of
15
years   following  the  opening  of  each
franchised Restaurant, notwithstanding the
expiration of the area director agreement (unless
the area director agreement is  terminated  upon
the occurrence  of  a  event                      of
default).  The area director marketing fee is $.03
to
$.035   per  person  living  in  the  area
director's territory,  plus  a  $10,000 to $15,000
training  fee which  is  deferred until training has
been completed. Subsequent  to  year  end, the
Company  increased  the marketing fee to $.05 per
person living in the area.

During  the  years ended December 31, 1996,  1995
and 1994,  zero, twelve and nine area directors
opted       to
amend  their  previous  agreement,  respectively,
to
conform  to the terms of the new agreement.
Revenues are recognized under the new agreement upon
collection of  the marketing fee, which is non-
refundable. Fees
recognized  in  conjunction with this  amendment
were approximately  $0, $54,000 and $74,000 in
1996,  1995 and  1994,  respectively.  Area
directors  under  the original  agreement  were
given the  option  to  amend their   agreement  to
meet  the  terms  of  the
new
agreement, but are under no obligation to do so.

Reserve for Losses on Stores Held for Resale

The  Company  continually assesses the  operations
of
Company  owned stores.  At the time when  the
Company determines  to sell a store, a reserve is
established for   any
anticipated  loss  in   conjunction          with
disposition of the store.

Royalties and Advertising Fees

Pursuant   to   the   various  franchise
agreements, franchises  are required to pay the
Company  royalties and  advertising fees based on a
percentage  of  sales ranging from 4% to 8% for
royalties, and 1% to 3%  for advertising fees.

Royalties  as  allowed by the franchise agreement
are accrued  based  on  a percentage of  gross
sales,      as
reported  by franchisees and are included in
accounts receivable.

The  Company  does not recognize any  portion  of
the advertising  fees as revenue, nor does it accrue
such fees  or  consolidate  the  accounts  of  any
of  the advertising funds.

Income Taxes

Prior to 1994, the Company had elected to be taxed
as an     "S"  corporation  under  the  provisions
of  the
Internal  Revenue Code.  Subsequent to the
completion of  the  initial public offering as
discussed in  Note 11, the Company's "S" status
terminated for income tax purposes.  The effect of
terminating the S Corporation generated  a  net
deferred tax asset of  approximately $175,000  and
a  tax  benefit which  is  included  in continuing
operations for the year ended December  31, 1994.

The Company calculates and records the amount of
taxes payable or refundable currently or in future
years for temporary   differences   between   the
consolidated financial  statement basis and income
tax basis  based on
the   current   enacted  tax   laws.    Temporary
differences are differences between the tax  basis
of assets  and liabilities and their reported
amounts  in the consolidated financial statements
that will result in taxable or deductible amounts in
future years.  The Company's temporary differences
result primarily  from depreciation,  deferred
franchise sales  revenues  and deferred  franchise
costs  and  net  operating   loss carryforwards.

Net Loss Per Common Share

Net  loss per common share has been computed based
on the  weighted  average  number of  shares
outstanding during each year.  Common stock
equivalents have  been excluded  from the weighted
average number  of  common shares  outstanding  as
their affect  would  be  antidilutive.

Use of Estimates

The  preparation of consolidated financial
statements in
conformity  with  generally  accepted  accounting
principles  requires management to make estimates
and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of
contingent  assets and  liabilities  at  the  date
of  the  consolidated financial  statements  and
the  reported  amounts  of revenues  and  expenses
during the  reporting  period. Actual results could
differ from those estimates.

Fair Value of Financial Instruments

The   carrying   amounts   of  financial
instruments including  cash  and  cash  equivalents,
receivables, prepaids,   current   portion  of
notes   receivable, accounts  payable  and  accrued
expenses  approximated fair  value  as  of December
31, 1996 because  of  the relatively short maturity
of these instruments.


The  carrying  amounts of long-term  notes
receivable approximate fair value as of December 31,
1996 because the discounted cash flows at current
rates approximate the rates of the notes.
The  carrying amounts of notes payable and debt
issued approximate fair value as of December 31,
1996 because interest rates on these instruments
approximate market interest rates.
Reclassifications of Prior Year Amounts
Certain  reclassifications  have  been  made  to
the
balances  for  the years ended December 31,  1995
and 1994  to  make them comparable to those
presented  for the year ended December 31, 1996,
none of which change the previously reported net
income or total assets.


Note 2 - Notes Receivable

Notes receivable consist of the following:

<TABLE>
<CAPTION>
                                                        December 31,
                                                1996        1995        1994
<S>                                              <C>          <C>        <C>
Notes receivable related to area director
marketing  agreements,  interest  ranging
from  11% to 15%, due in varying  amounts
through July 2002.                          $ 453,135      $ 241,697   $ 44,337

Notes  receivable  for  sale  of  stores,
interest ranging from 8% to 15%,  due  in
varying amounts through October 2007.         434,383        464,000        -

Other   notes  receivable  with  interest
ranging  from 0% to 15%, due  in  varying
amounts  through 2001.  Includes $178,444
(1996), $95,447 (1995) and $26,173 (1994)
due from the advertising fund (Note 7).       328,959        127,705     65,677
                                            1,216,477        833,402    110,014
   Less current porti on                     (501,255)      (304,918)   (83,841)
                                              715,222        528,484     26,173
   Less allowance                            (140,000)           -           -

                                            $ 575,222      $ 528,484   $ 26,173
</TABLE>


At  the  time, the notes receivable are executed,  the
Company    reserves   an   allowance   for    doubtful collections.  The
provision for uncollectible  amounts is  continually reviewed and
adjusted to maintain  the allowance  at  a  level considered adequate
to  cover future  losses.   The allowance is  management's  best
estimate  of  uncollectible amounts and is  determined based on
historical performance of the notes which  is tracked  by  the  Company
on an  ongoing  basis.                     The
losses ultimately incurred could differ materially  in the   near   term
from  the  amounts   estimated   in determining the allowance.
Future principal payments are as follows:

<TABLE>
<CAPTION>

            <S>                                     <C>
     Year Ended December 31,
           1997                                 $ 501,255
           1998                                   176,333
           1999                                   117,174
           2000                                    98,827
           2001                                    62,941
           Thereafter                             259,947
                                                1,216,477
           Less allowance                        (140,000)

                                              $ 1,076,477
</TABLE>

Note 3 - Reserve for Losses on Stores Held for Resale

At  December  31,  1996, 1995 and  1994,  the  Company identified  one,
one and two Company owned stores  for closure  or sale in 1997, 1996 and
1995, respectively. At December 31, 1996, the Company had a signed
letterof-intent  relating to the store held for  sale  which was  in
excess of the carrying amount of  the  stores assets, therefore no
impairment was recorded.   During 1995 and 1994, the Company impaired
the carrying value of the assets to their estimated realizable value.

Included in assets of stores to be sold or closed  are the following:

<TABLE>
<CAPTION>
                                                    December 31,
                                            1996       1995       1994
<S>                                          <C>        <C>         <C>
Furniture fixtures and equipment          $ 29,999   $ 36,961   $127,838
Leasehold improvements                      81,673    107,538    113,947
Goodwill                                     4,557        -       35,137

                                         $ 116,229   $ 144,499  $276,922
</TABLE>

The  provision for loss on stores held for  resale  is
comprised of the following:

<TABLE>
<CAPTION>
                                                         December 31,
                                                      1995         1994
<S>                                                    <C>           <C>

Impairment of assets held for sale                 $      -      $182,000
Reserve  for  costs associated  with  the
  termination of the facility leases                  58,000       77,000

                                                   $  58,000     $259,000
</TABLE>

The  operating losses associated with these stores for
the  periods  ended December 31, 1995  and  1994  were $85,838 and
$67,889, respectively, and are included in the  loss  and provision for
loss on stores  held  for resale  in  the  accompanying  consolidated
financial statements.

As  a  result of the sale of one store for  which  the
Company  will subsidize rent over a period of time,  a reserve for rent
associated with the sale of the store has been recognized in the amount
of $23,000.

Subsequent to December 31, 1995, the Company subleased the  store  held
for sale.  The sublessee paid  $5,000 for  the  rights  to lease the
store and  will  pay  a specified amount to the Company for rent
ranging  from 3%                              to  14%  of  gross
monthly sales.  The  difference
between anticipated rent received on the sublease  and rent paid by the
Company of approximately $35,000  has been  accrued  as a loss at
December  31,  1995.                      The
sublesee  has an option to purchase the franchise  for $140,000,
including the franchise fee through December 31, 1996.  The option
expired and the accrued loss was realized at December 31, 1996.

In  1995, the Company sold one store in Denver and two
stores  in Detroit for a net loss of $43,625.  $14,117 of the loss
related to the store in Denver operated by the  Company for two months.
The balance of the  loss is                   applicable to the two
stores in Detroit.  The  two
Detroit  stores  were acquired, along  with  the  area directorship
for  Detroit,  in  connection  with  the Company's purchase of Quiz One
Limited Partnership  in 1994.   The  Detroit area directorship was
resold  for $147,000  in  the  fourth quarter of  1995,  the  same
quarter  the two Detroit stores were sold at  a  loss, resulting in a
combined net effect of a $117,492 gain.


Note 4 - Property and Equipment

Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                                          December  31,
                                                 1996          1995     1994
<S>                                               <C>           <C>       <C>
Equipment                                      $267,061     $227,581   $278,823
Furniture and fixtures                          271,727      195,590    149,841
Leasehold improvements                        1,138,461      804,866    491,302
Vehicles                                            -             -      27,662
                                              1,677,249    1,228,037    947,628
Less  accumulated  depreciation  and           (218,270)    (144,561)   (46,337)
 amortization

 Net property and equipment                  $1,458,979    $1,083,476  $901,291
</TABLE>

Note 5 - Intangible Assets

Intangible assets consist of the following:
<TABLE>
<CAPTION>
                                                  December 31,
                                       1996         1995      1994
<S>                                      <C>          <C>       <C>

  Covenant not to compete                 $500,113   $500,113   $500,113
  Franchise agreements                     292,395    292,395    292,395
  Goodwill (Note 13)                        77,407         -          -
  Trademarks and other                     183,885    159,141     58,328
                                         1,053,800    951,649    850,836
  Less accumulated amortization           (496,317)  (414,500)  (303,509)

                                          $557,483   $537,149   $547,327
</TABLE>

Note 6 - Deferred Assets

Deferred assets consist of the following:

<TABLE>
<CAPTION>
                                                 December 31,
                                          1996       1995       1994
<S>                                        <C>        <C>         <C>

Deferred franchise costs               $ 644,701    $ 413,051    $163,498
Deferred tax asset (Note 12)             175,000      175,000     175,000
Deferred financing costs                 117,749            -          -

                                       $ 937,450    $ 588,051    $338,498

</TABLE>

Note 7 - Related Party Transactions

The  Company has notes receivable from the advertising
fund of $178,144, $95,447 and $26,173 at December
31, 1996,  1995  and  1994,  respectively.   The
balances relate  to an off season build-up for
advertising  and are  reimbursed to the Company in
the subsequent year. At  December 31, 1996, the
Company had a $44,555  noninterest  bearing note to
the advertising  fund  which will be paid off in
1997 when the notes receivable are paid back.

In 1995 the Company sold the Detroit Area
Directorship to   a  majority  stockholder  of  the
Company.                                  The
agreement  was  sold  for  $150,000  paid   in
cash. Accordingly, the Company recognized $147,000
in  1995 for  area  director revenue, net of $3,000
for  future marketing services to be provided by the
Company.

The  Company was affiliated with Schaden and
Schaden, Inc.  (Schaden) through common ownership
until October
1, 1994, when the Company purchased Schaden.
Schaden, and  entities in which Schaden had an
equity interest, owned  and operated eleven Quizno's
restaurants.                               The
Company   recognized  royalty  fees  of
approximately $152,000  during  the year prior to
October  1,  1994. Initial  franchise  fees
recognized  upon  opening  of these  stores  were
$45,000  during  the  year  ended December  31,
1994.  During 1994,  the  Company  paid $31,500,
respectively,  to an  entity  controlled  by Schaden
for use of the entity's Quizno's restaurant as a
training facility.
Prior  to  October  1,  1994, Schaden  was  a
general partner  and  a  limited partner in Quiz
One  Limited Partnership ("Quiz One").  Schaden,
prior  to  October 1,  1994,  was owned by two
individuals who were  also directors  and majority
stockholders of  the  Company. On  October  1,
1994, the Company  acquired  Schaden, which
included   Schaden's   general   and       limited
partnership  interests in Quiz One.   On  December
1, 1994,  the  Company  purchased all  of  the
remaining limited partnership interests in Quiz One.
In January 1995,  the  Company  purchased the
remaining  general partnership interest in Quiz One.

Two  directors of the Company own more than 50% of
the outstanding  shares  of Illinois Food  Managers,
Inc. which  owned and operated Quizno's franchises
in  the Chicago area.  Two directors of the Company
owned  55% of  the outstanding shares of S&K Food
Services,  Inc. which  was  a  franchisee of the
Company  until  such franchise  was sold in October
1995.  As  of  December 31,  1996,  1995 and 1994,
the Company had receivables of
approximately  $12,092,  $51,048  (net  of   area
director royalties due) and $11,343, respectively.

Two stockholders of the Company loaned Schaden
$99,243 in  1991  and  another  $62,000  under
notes  payable agreements.   The  notes had
outstanding  balances  of $28,855  and  $34,895 at
December 31, 1995  and  1994, respectively.   The
notes were paid  in  full  during 1996.

Summarized  below  is  a recap of  the  related
party transactions previously described:

<TABLE>
<CAPTION>
                                            As of and for the Years Ended
                                                      December 31,
                                             1996         1995         1994
<S>                                          <C>           <C>          <C>
Assets
  Accounts receivable                      $ 44,793    $ 61,829      $ 13,232
  Notes receivable advertising fund         178,444      95,447        26,173

                                          $ 223,237   $ 157,276      $ 39,405
Liabilities
  Accrued liabilities                      $ 14,611   $ 42,655       $     -
  Current portion of long-term
   obligations                               44,555     28,855         34,895
  Long-term obligations                         -       10,297        114,156
  Deferred initial franchise fees               -        3,000             -

                                           $ 59,166   $ 84,807       $149,051

Revenue
  Royalty fees                             $ 16,773   $ 51,100       $151,801
  Initial franchise fees                        -           -          45,000
  Area director marketing fees                  -      147,000          5,000
  Other income                               10,720      3,605             -

                                           $ 27,493  $ 201,705       $201,801
Expenses
  General and administrative expenses      $ 47,429  $  63,083   $     48,889

</TABLE>

Note 8 - Line-of-Credit

The  Company  has available a $300,000  line-of-credit
and  a  term  note from a financial institution.   The
terms of the agreements specify a maturity date of May 1,  1999  and
require that $100,000 of the outstanding balance be converted to a
twelve month term note  each May, with an interest rate of prime plus
3/4% (9.0% at December  31,  1996).   The line  and  term  note  are
collateralized by a first lien in all  assets  of  the Company  and  is
also  guaranteed  by  the  Company's majority  stockholder.  As of
December 31,  1996,  the outstanding  balance  on the line-of-credit
and  term note was $220,239, of which $100,000 is classified  as a
current liability.  The line-of-credit and term note
were paid off January 1997 with the proceeds from  the $2,000,000 loan
from a commercial lender (Note 9).

The  Company had an unsecured $100,000 revolving lineof-credit  from  a
financial institution  obtained  in 1994.   The terms of the agreement
specify a  maturity date  of April 1, 1996, with interest payments
payable monthly at prime rate plus 3/4%, and principle due  on
maturity.   As  of December 31, 1995, the  outstanding balance on the
line-of-credit was $60,000.  The  lineof-credit was paid in full during
1996.


Note   9   -  Long-Term  Obligations  and  Convertible Subordinated
Debt

Long-term obligations consists of the following:
<TABLE>
<CAPTION>
                                                       December  31,
                                                1996       1995      1994
<S>                                              <C>          <C>      <C>
Note payable to a financial institution,
monthly  principal and interest payments
of  $6,699  through December 1998,  when
any  unpaid  principal and  interest  is
due.   Interest is at 1% over the bank's
index rate (9.75% at December 31, 1996).
Collateralized  by accounts  receivable,
inventory, and equipment.                     $166,433     $226,970   $280,455

Various  capital  leases,  with  monthly
installments totaling $4,374,  including
interest  and expiring through  November
1999.  Collateralized by equipment.             88,647      121,015     146,960

Note  payable to an individual,  monthly
payments   totaling  $1,509,   including
interest at 7%, through June 1998,  when
any  unpaid  principal and  interest  is
due.    Collateralized  by   terms   and
conditions of a security agreement.             25,846       41,546     127,734

Note payable to a financial institution,
$1,372    monthly   payments   including
interest  at the bank index rate  (9.25%
at  December 31, 1996) plus 1%,  through
February 2001, when any unpaid principal
and interest is due.  The note is cross-
collateralized   by  substantially   all
assets.                                         68,123        83,987    100,303

Note  payable to bank, interest at  11%,
unpaid   principal  and   interest   due
January   7,   1997.    The   note   was
subsequently paid in full on January  7,
1997.                                         185,789              -         -

Note payable to advertising fund, without
interest, principal due February 1997.         44,558              -        -

Notes payable, paid in full in 1996  and           -          39,152    226,820
1995.
                                              579,396        512,670    882,272
Less current portion                         (375,595)      (171,217)  (226,424)

                                             $203,801       $341,453   $655,848

</TABLE>

Convertible subordinated debt consists of:

<TABLE>
<CAPTION>
                                                       December 31,
                                                1996       1995       1994
<S>                                              <C>        <C>         <C>
12.75%  Convertible  Subordinated  Debt,
$1,155,825  convertible into  10%  on  a
fully diluted basis, (372,847 shares  at
December  31,  1996)  of  the  Company's
common   stock  at  $3.10   per   share.
Interest  only  until  June  30,   1998.
Principal  and  interest payments  based
upon a 5 year amortization from July  1,
1998 through November 30, 2001 with  the
balance due December 31, 2001.  The note
is collateralized by a first deed on all
of  the assets of the Company and in 90%
of   the   stock  of  the  two   largest
stockholders  who are also Directors  of
the   Company.    The   note   will   be
subordinated to $700,000 of debt if  and
when  arranged  by  the  Company.    The
Company  is subject to certain financial
covenants  including maintaining  a  net
worth  of $1,000,000 and current  ratio,
debt service and cash flow ratios, along
with     restrictions     on     capital
expenditures,   stock    issuance    and
acquisitions.  The underlying stock  and
warrants  have  a  put  option  to   the
Company  on  December 31, 2002,  if  the
Company  has  not completed a  secondary
public   offering.   The  warrants   and
underlying     stock     have     demand
registration rights as well as unlimited
piggy  back  registration rights  .
No value  was  ascribed to  the
underlying conversion
rights  as  the  conversion
price exceeded the trading value of
the stock   on
the   date   of   issuance.
$1,150,000 of the proceeds are
reserved for   use   in  the
Company's   turnkey development
program and $850,000 may  be used for
working capital and payment  of
existing notes.                               $2,000,000     $     -    $     -
</TABLE>

Maturities   of  long-term  obligations,   convertible
subordinated debt and capital leases are as follows:

<TABLE>
<CAPTION>
                                   Long-Term
                                Obligations and
                                  Convertible
                                   Subordinated        Capital
     Year Ending December 31,          Debt             Leases      Total
              <S>                       <C>              <C>           <C>
             1997                    $325,617          $56,663    $ 382,280
             1998                     277,345           38,560      315,905
             1999                     341,908            5,362      347,270
             2000                     385,915                -      385,915
             2001                   1,159,964                -    1,159,964
                                    2,490,749          100,585    2,591,334
     Less amount representing
      interest                             -           (11,938)     (11,938)
     Total principal                2,490,749           88,647    2,579,396
     Less current portion            (325,617)         (49,978)    (375,595)

                                   $2,165,132          $38,669   $2,203,801
</TABLE>

Included  in equipment in the accompanying 1996,  1995
and  1994 balance sheet are assets held under
capital leases   in  the  amount  of  $83,205,
$134,557   and $213,082, respectively and
accumulated amortization of
$32,850, $54,895 and $54,018, respectively.
Note 10 - Commitments and Contingencies

The   Company   leases  an  office  facility,
eleven restaurant   locations  and  certain
equipment  and
vehicles   under  operating  lease  agreements
which
provide for the payment of rent totaling
approximately $34,000  per  month.  One of the
restaurant  locations also requires the Company to
pay 6% of gross sales  in excess of $430,000
annually.  Rent expense under these operating
leases,  totaled  $367,439,  $335,846         and
$127,689  during  the years ended December  31,
1996, 1995, and 1994, respectively.

Future minimum rental payments are as follows:

<TABLE>
<CAPTION>

   Year Ending December 31,

            <S>                                <C>
           1997                            $ 406,876
           1998                              223,300
           1999                              179,116
           2000                               98,271
           2001                               30,465
           Thereafter                         15,470

                                           $ 953,498
</TABLE>

During  the year ended December 31, 1993, the  Company
entered into employment agreements with two directors,
officers,  and  stockholders  of  the  Company   which
provide  for  the payment of annual salaries  totaling
$145,000  plus individual bonuses in fiscal year  1995
equal  to six and ten percent of the positive increase
in  net  income before depreciation, amortization
and interest  over  the prior year.  The  agreements
were amended to reduce the bonus percentages to 4%
and  7% for  1995 only, equal to a total of $86,340,
which  is accrued  at December 31, 1995.  There were
no  bonuses accrued and paid during 1996 and 1994.
The agreements expire  in December 1998 and 2003,
respectively.                                 The
annual  salary  amount,  in total,  was  increased
to $192,000 effective October 1, 1994.

Litigation

There  are various claims and lawsuits pending by
and against  the  Company, which, in the  opinion
of  the management,  and  supported  by  advice
from   legal counsel,  will  not  result in  any
material  adverse effect   in   excess  of  amounts
accrued    in                                 the
accompanying consolidated financial statements.


Note 11 - Stockholders' Equity

Common Stock

In  February  1994,  the Company  completed  a
public offering  of  its common shares, whereby  the
Company sold  1,060,000  shares  at $5.00  per
share.   Total proceeds,  net  of underwriters
commission  and  other expenses of $1,007,023, were
$4,292,977.

Convertible Preferred Stock

Convertible  preferred stock bears a  6.5%
cumulative dividend, payable monthly and is
convertible beginning three years after issuance
into common shares on a one for  one  basis and is
callable beginning three  years after  issuance by
the Company with sixty days notice. The  convertible
preferred stock  has  a  liquidation preference
equivalent to $6 per share plus  all  then accrued
and unpaid cumulative dividends.

Stock Options and Warrants

The  Company has established an Employee Stock
Option Plan  (the  Plan).   The Company has reserved
320,000 shares  of  its  Common Stock for  issuance
upon  the exercise  of  options available for  grant
under  the Plan.  Options are granted under the plan
at not  less than  the  market  price of the
Company  stock.   The options expire after ten
years.  Options granted under the  Plan will include
incentive stock options  (ISOs) as defined in
Section 422 of the Internal Revenue Code and  non-
qualified stock options (NQSOs).   Under  the terms
of  the  Plan, all officers and  employees  are
eligible  for  ISOs.  During the years ended
December 31,  1996, 1995, and 1994, 53,073, 64,899
and  66,321, options were granted under the Plan,
respectively.

Additionally, the Company has established  an
Amended and   Restated  Stock  Option  Plan  for
Non-Employee Directors  and Advisors (Director
Plan).  The  Company has   reserved  90,000  shares
of  common  stock  for issuance  upon  the  exercise
of  options  granted  or available  for  grant to
non-employee directors  under the  Director  Plan.
The Director Plan provides  that any  person who
becomes a non-employee director of the Company may
receive an option to purchase 4,000 shares at  their
fair market value on the date  such  person becomes
a   non-employee  director   and   on   each
anniversary  date  thereafter as long  as  the
person continues  as a non-employee director limited
to  the overall number of shares available for
issuance  under the   Director  Plan.   Options
that  expire  or  are canceled may be re-granted
under the Director Plan  at the discretion of the
Board of Directors.  The options expire  after  ten
years.   During  the  years  ended December 31,
1996, 1995, and 1994, 12,000, 28,000  and 16,000
options were granted under the Director  Plan,
respectively.

In  connection with the public offering,  the
Company issued a warrant for the underwriter to
purchase up to 100,000 shares of its common stock at
$5.00 per share. At December 31, 1996, no warrants
have been exercised.

Stock Options and Warrants
The   Corporation   has  adopted  the  disclosure-
only provisions   of  Statement  of  Financial
Accounting Standards   No.   123,  "Accounting  for
Stock-Based
Compensation."  Accordingly, no compensation cost
has been  recognized  for  the stock  option  plans.
Had compensation  cost  for  the Corporation's  two
stock option  plans been determined based on the
fair  value at  the  grant  date  for  awards  in
1995  and  1996 consistent  with the provisions of
SFAS No.  123,  the Corporation's  net  earnings and
earnings  per  share would  have  been  reduced to
the  pro  forma  amounts indicated below:

<TABLE>
<CAPTION>
                                                  December 31,
                                               1996         1995
<S>                                             <C>          <C>
Net loss applicable to common
 stockholders - as reported                $(1,075,908)    $(348,512)
Net loss applicable to common
 stockholders - pro forma                   (1,218,264)     (577,126)
Loss per share - as reported                      (.38)         (.12)
Loss per share - pro forma                        (.43)         (.20)

</TABLE>

The  fair  value of each option grant is estimated  on
the  date  of  grant  using the Black-Scholes
optionpricing  model  with  the  following  weighted-
average assumptions  used for grants: dividend
yield  of  0%; expected volatility of 37%; discount
rate of 9.5%; and expected lives of 10 years.

Convertible Preferred Stock

The  following is a table of the shares covered by
the options and warrants granted:

<TABLE>
<CAPTION>
                                                            Exercise
                                           Options and        Price
                                             Warrants        Per Share
<S>                                             <C>             <C>

Balance, December 31, 1993                    6,000           $    5.00

   Granted                                  182,321         $3.75-$5.00

Balance, December 31, 1994                  188,321         $3.75-$5.00

   Granted                                   92,899         $3.31-$4.25

Balance, December 31, 1995                  281,220         $3.31-$5.00

   Granted                                   65,073         $3.00-$3.88
   Forfeited                                (24,500)        $3.13-$5.00

Balance, December 31, 1996                  321,793         $3.00-$5.00
</TABLE>


The  Company granted an option during the  year  ended
December 31, 1993, to an area director that after
this area                                 director
opened  its  tenth   restaurant            in
accordance with the area director agreement, the
area director would be entitled to purchase one
percent  of the  then outstanding common stock of
the Company  for $50,000.   As of December 31, 1996,
this area director had  opened  four  restaurants.
Compensation  will  be recognized  equal to the
difference between  the  fair market  value  and the
option price at  the  date  the tenth restaurant is
opened.


Note 12 - Income Taxes

As  an  S  Corporation, the Company's  taxable
income exceeded  its financial reporting income  by
$560,000 due  to recognition of franchise fees and
costs  on                                  a
cash  basis.  Consequently, the Company will  not
pay income taxes on this income when it recognizes
it  for financial    reporting   purposes   and
accordingly
recognized  a  deferred  tax  asset  of  $175,000
and revenue of $175,000 which is included in other
income for  the  year  ended  December  31,
1994.   Although
realization is not assured, management believes it
is more  likely  than  not that all of the  deferred
tax asset  will  be realized.  The amount of the
deferred tax asset is considered realizable,
however, could  be reduced  in  the near term if
estimates of the  future taxable  income are
reduced.  The Company has incurred losses  of
approximately $1,650,000 before the  income on  the
deferred tax on the C Corporation  conversion
resulting  in a deferred tax asset from operations
of approximately $561,000.  The Company has impaired
the deferred  tax  asset resulting from  operations. The
following is a summary of the deferred tax asset:

<TABLE>
<CAPTION>
                                                         December 31,
                                                  1996       1995       1994
<S>                                               <C>         <C>        <C>
    Deferred tax asset related to S
     Corporation termination                  $ 175,000    $ 175,000  $ 175,000
    Deferred tax asset related to net
     operating losses                           561,000      325,000    122,000
                                                736,000      500,000    297,000
    Less impairment                            (561,000)    (325,000)  (122,000)

   Net deferred tax asset                     $ 175,000    $ 175,000  $ 175,000
</TABLE>

As  of  December  31,  1996, the  Company  had  a  net
operating loss of approximately $1,650,000 expiring in 2011.


Note 13 - Purchase Agreements

During  1996,  the  Company  acquired  three  existing
restaurants from franchisees.  The net assets acquired totaled
approximately $433,000 and were acquired  for cash and notes of
approximately $510,000 resulting  in goodwill of approximately
$77,000.  Subsequent to  the acquisition  of one of the stores
with net  assets  of approximately $155,000 it was sold for
$115,000 in the form  of  a  note  receivable and a $40,000
loss  was recorded.

Effective  October 1, 1994, the Company acquired  100% of  the
issued and outstanding shares  of  Schaden  & Schaden,  Inc.
(Schaden) located in Denver,  Colorado for  $1,139,000 of which
$263,000 was paid in cash and the  remainder through the
issuance of 146,000  shares of  the  Company's preferred stock
in  the  amount  of approximately  $876,000.   In  addition,
the  Company incurred  acquisition costs of approximately
$124,000. Prior  to the acquisition, Schaden was owned  100%
by two  individuals who own 50% of the outstanding shares of
the Company.

Effective December 1, 1994, QOC purchased all  of  the
partnership  interests  from the  individual  partners
(excluding the Company's partnership interest) of  the Quiz One
Limited Partnership (the Partnership) located in  Michigan  for
the original contribution  price  of $279,000  plus a rate of
return of 10% on the original contribution, $21,326, for a
total purchase  price  of $300,326.  Prior to the acquisition,
the Company owned 50% of the General Partnership interest and
22.275% of the limited partnership interest in the Partnership.

During   1995,  The  Company  acquired  the  remaining general
partner interest in Quiz One for 2,500  shares of its $.001 par
value common stock valued at $10,000. Subsequent  to  the
acquisition, the  Partnership  was dissolved.

Both  the  Schaden  and Partnership acquisitions  have been
accounted for as a reorganization  of  companies under  common
control as the entities had  significant common ownership.


Note 14 - Employee Benefit Plan

The  Company has adopted a 401(k) plan during 1995 for its
employees.   Participation  is   voluntary         and
employees  are eligible to participate at age  21  and after
one  year of employment with the Company.          The
Company matches 50% of the employee's contribution  up to  6%
of the employee's salary.  The Company may also make a
discretionary contribution and/or an additional matching
contribution.

A  participant's  vested benefit is fully  distributed upon
death  or  disability and  is  distributed  upon termination
of employment according to the  following vested schedule:

<TABLE>
<CAPTION>

     Years   of
       Services          Percentage
        <S>                 <C>
         1                  0%
         2                  25%
         3                  50%
         4                  75%
         5                 100%
</TABLE>

The Company has contributed $10,525 and $19,878 to the Plan
for the years ended December 31, 1996 and  1995, respectively.