UNITED STATES
                       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 September 30, 1999 (Nine Month Transition
    Period)

    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
        (Exact 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.)

          1415 Larimer Street
            Denver, Colorado                            80202
----------------------------------------            ------------
(Address of Principal Executive Offices)             (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: $20,947,634

The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant as of December 17, 1999 was approximately
$11,682,385 (for purposes of the foregoing calculation only, each of the
registrant's officers and directors is deemed to be an affiliate).

There were 3,049,750 shares of registrant's common stock outstanding as of
December 17, 1999.

                      Documents incorporated by reference:
                                      None

      Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]




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                           TABLE OF CONTENTS


PART I
PAGE NO.

ITEM 1.    DESCRIPTION OF BUSINESS.....................................1

ITEM 2.    DESCRIPTION OF PROPERTY....................................12

ITEM 3.    LEGAL PROCEEDINGS..........................................12

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF
           SECURITY HOLDERS...........................................14

PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS........................................15

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS
           OR PLAN OF OPERATION.......................................16

ITEM 7.    FINANCIAL STATEMENTS.......................................27

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH
           ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
           DISCLOSURE.................................................27

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.....................................31

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
           OWNERS AND MANAGEMENT......................................35

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED
           TRANSACTIONS...............................................38

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K...........................39


<PAGE>



                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS

General

     The Quizno's Corporation was incorporated in Colorado in 1991. Our
headquarters is located at 1415 Larimer Street, Denver, CO 80202. Our telephone
number is (720) 359-3300.

     We incorporated in Colorado in January 1991 as D&R, Inc. We changed our
name to The Quizno's Franchise Corporation in April 1991 and to The Quizno's
Corporation in June 1995. We do business as The Quizno's Corporation and
Quizno's. Our principal business address and that of our subsidiaries is 1415
Larimer Street, Denver, Colorado 80202. In January 1991, we purchased certain
assets of Quizno's America, Inc., which had operated, owned, and franchised
Quizno's restaurants (directly and through predecessors and affiliates) under
the QUIZNO'S name since 1981. We operate, and offer franchises to individuals or
entities ("Franchisees" or "Owners") to operate, restaurants with carry-out
facilities that sell submarine and other sandwiches, salads, other food products
and beverages, and related services ("Restaurants"). As of December 17, 1999,
there were 614 Restaurants (including 8 Bain's Deli Restaurants) in operation in
the United States, and agreements were in place for the opening of an additional
542 franchised restaurants in the United States. During the last two years, we
have grown to become the third largest sub sandwich chain in the United States.

     Additionally, we offer franchises for area director marketing businesses
in which the area director ("Area Director") acts as our sales representative
within a defined geographic area to solicit and identify prospective
franchisees, to assist us in locating and securing sites for Restaurants within
a territory, and to provide additional support before, during, and after the
Restaurant opens.

     We also offer master franchise rights for international markets, in which
the master franchisee has the right to function as a franchisor to offer and
sell Restaurant franchises and area director marketing agreements using our
trademarks and service marks in a defined geographic area (usually a country).
We have master franchise agreements in place for Canada, the United Kingdom,
Japan, Australia, and Central America. As of December 17, 1999, there were 83
Quizno's restaurants in operation in Canada, 3 in Japan, and 1 in Australia.

     The Area Director or master franchisee is required to open a specified
number of Restaurants annually throughout the life of the area director
marketing agreement or master franchise agreement.

     In 1999, we changed the date of our fiscal year end to September 30.
Therefore, our 1999 fiscal year, which ended on September 30, 1999, contained
only three-quarters (or nine months).

The Restaurants

     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. We believe 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.

                                       1

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     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.

     We focus on the quality of the ingredients contained in the food products
we produce and we require that certain 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 us in accordance with proprietary recipes developed by us. 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 our 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 quick service market niche represented by the
product. Open kitchens allow customers to watch as their sandwiches are
prepared. The decor package for the Restaurants includes reproductions of old
Italian food product labels, and hand-painted Italian style posters. The Italian
theme is prevalent throughout a Quizno's Restaurant.

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

     The Restaurants are also located in mall food courts and are designed to
operate in smaller spaces while retaining the same ambiance and decor as a
traditional Quizno's Restaurant. "Quizno's Express" Restaurants are typically
smaller units established at such non-traditional locations as convenience and
gasoline stations, sports facilities, hospitals, and college campuses. 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.

Concept and Strategy

     Our marketing strategy is to position the Restaurants between fast food
and full-service dining. We believe 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, we
believe 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. We believe our concept is well positioned to fill a
growing niche in the restaurant business between fast food and full-service
dining. The Quizno's concept also accommodates a variety of dining options from
comfortable in-house dining to lunchtime carry out to home meal replacement.

                                       2


<PAGE>


     Our goal is to build a strong and consistently profitable nationwide chain
of Restaurants with international expansion of the chain into selected foreign
markets. The primary vehicle for achieving our planned growth has been our area
director marketing program and, more recently, our master franchise program.

     Our revenues are primarily derived from a royalty on all sales at
franchised Restaurants, initial franchise fees from each franchise sold, and
fees collected from Area Directors or master franchisees, as well as revenue
generated from company-owned Restaurants and license fees generated from
licensing of our logos or in exchange for allowing a product company to sell
proprietary Quizno's items. Franchisees, master franchisees and Area Directors
pay fees to us only once in connection with execution of franchise agreements,
master franchise agreements, and area director marketing agreements,
respectively. Royalties provide a long-term continuing source of revenue.
Franchise fees and royalties are expected to increase as the number of
franchised Restaurants in operation increases. We may also repurchase certain
area directorships and territories in the future, as we have in 1999. The
royalty rate is currently 7% for traditional Restaurants, and the royalty rate
is 8% for Quizno's Express units; however, a small number of Franchisees operate
under older agreements that set lower royalty rates at 4% or 6%.

     From time to time, we may make proposals and engage in negotiations
regarding acquisitions of material restaurant assets or other companies in the
restaurant industry, if management and the Board of Directors believe that such
proposed transaction would be in the our best interest. Our policy is not to
publicly announce such proposals until the likelihood that the proposed
transaction will be completed becomes probable.

Bain's Deli

     In November 1997, our wholly-owned subsidiary, The Quizno's Acquisition
Company, purchased the assets of Bain's Deli Franchise Associates, L.P., a
Pennsylvania limited partnership and franchisor and operator of approximately 63
delicatessen-style sandwich shops located primarily in the eastern United
States. We never offered or sold additional Bain's Deli franchises and, in March
1999, sold to a third party all but 14 of the Bain's Deli franchise agreements
we originally acquired. There are currently 8 non-converted Bain's Deli
franchisees for which we are the franchisor. We will continue to give these 8
Bain's Deli franchisees the opportunity to convert to Quizno's Restaurants.

Area Director and Master Franchise Agreements

     We offer Area Directors a domestic geographical territory, within which to
sell franchised Restaurants pursuant to an area director marketing agreement.
This program is designed to assist us in accelerating the marketing and sale of
franchises and the selection of Restaurant locations in the territory. Each
territory is based on areas of dominant influence of local television broadcast
stations as defined by the television broadcast industry. Our growth strategy
clusters Restaurants in particular television markets in order to facilitate
implementation of our advertising program.

     Each Area Director pays us a fee based on the total of the population in
the territory. At present, the fee is $.07 per person located within the
territory, plus a training fee of $10,000. The population based portion of this
fee is not refundable.

                                       3


<PAGE>


     Area Directors are required to market franchises for Restaurants to be
located within the territory. The Area Director agrees to open, through the sale
of franchises, a specified number of franchised Restaurants within the territory
during the term of the area director marketing agreement. The sales and opening
schedules are lower in the first years of the development period. The area
director marketing agreement does not grant the Area Director the exclusive
right to market franchises or solicit franchisees in the territory, but it does
grant the Area Director the right to receive certain fees and royalties,
described in more detail below, from all franchised Restaurants and
company-owned Restaurants established in the territory during the term of the
area director marketing agreement (with certain exceptions). We reserve the
right under the area director marketing agreement to market and sell franchises
and to establish company-owned Restaurants in a territory.

     In international markets, we generally market our franchises through a
qualified person, or "Master Franchisee," from whom we receive a one-time master
franchise fee, negotiated on a case by case basis. The Master Franchisee
receives the right to sell franchises and area directorships in a defined
international market on an exclusive basis. We are paid a portion, typically
30%, of all franchise fees, royalties and area director fees collected by the
Master Franchisee.

     As of December 17, 1999, we had 68 Area Directors whose Territories cover
approximately 75% of the population of the United States. We have also sold
master franchise rights for Canada, Japan, United Kingdom, Australia, and
portions of Central America.

     The area director and master franchisee agreements set increasing minimum
performance levels that require the Area Director or Master Franchisee to
develop a specified number of Restaurants in each quarter or year (depending on
the form of agreement) during the term of the agreement. Our experience with the
Area Director and Master Franchisee programs to date indicates that while some
Area Directors and Master Franchisees will exceed their development schedules,
others will fail to meet their schedules. In our planning, we have allowed for a
certain percentage of Area Directors and Master Franchisees who will not meet
their development schedules. Delays in the sale and opening of Restaurants can
occur for many reasons. The most common are delays in the selection or
acquisition of an appropriate location for the Restaurant, delays in negotiating
the terms of the lease and delays in franchisee financing. We may terminate an
agreement if the Area Director or Master Franchisee fails to meet the
development schedule, and we would then have the right to resell the territory
to a new Area Director or Master Franchisee.

     In addition, through a required monthly minimum marketing expenditure, the
Area Director is required to actively promote the sale of our franchises within
the territory. The Area Director is required to visit with prospective
franchisees and refer appropriate locations for franchised Restaurants within
the territory to us 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. Our franchise sales materials are
made available to the Area Director.

     Each domestic Area Director is paid a commission of 40% of the royalty
fees collected by us from each franchised Restaurant, or of royalties that would
otherwise be payable by company-owned Restaurants in the territory opened and
operated during the term of the area director marketing agreement, so long as
the Area Director performs the services described above, subject to certain
exceptions in some contracts for pre-existing Restaurants in the territory,
"Turnkey" Restaurants, and conversion Restaurants for which the Area Director is
paid a flat monthly fee of $200 per Restaurant for performing support services.
Other forms of agreement exclude airport and other non-traditional units from
the commission payment obligation. Under some forms of agreement, Area Directors
are entitled to an ongoing commission of 1% on gross sales of Restaurants open
and operating in the territory on the date the area director marketing agreement
is terminated because of failure to meet the sales or opening goals, through
either the initial term of the underlying franchise agreement or five years (15
years for area director marketing agreements executed before January 1998),
whichever is less. 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 franchise fee paid to us for each franchise sold and open within the
territory during the term of the area director marketing agreement.

                                       4
<PAGE>

     We have a program under which we will finance up to 50% of the area
director marketing fees for certain approved domestic Area Director candidates
who have the experience and skill requirement sought by us for our 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 to us 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.

Franchise Program

     We authorize individuals and companies, within the United States, called
"Franchisees" or "Owners," to establish and operate Restaurants at an approved
location pursuant to the terms of a franchise agreement. Under the franchise
agreement, we undertake 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 our 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, we provide continuing advice and consultation with respect to
operation of the Restaurant. From time to time, we elect to take over the
operation of a Restaurant from an unsuccessful franchisee and operate the
Restaurant until a new franchisee is found. Our investment in such operations
may be recovered at the time the Restaurant is transferred to the new
franchisee.

     The current franchise fee for the Owner's first Restaurant is $20,000,
$15,000 for the second, and $10,000 for the third and any additional franchise
agreement. We offer the franchise for a Quizno's Express unit at a reduced
franchise fee of $10,000. The Owner also pays us a continuing royalty fee of 7%
of the Owner's gross sales (8% for Quizno's Express franchises). Old forms of
the franchise agreement require royalty fee payments at rates between 4% and 6%.
"Gross sales" is defined as all sales whether on credit or for cash and all
revenues from any source caused by the operation of the Restaurant, whether
directly or indirectly relating to the operation. Sales tax and any other state
or federal tax is excepted. The Owner also pays an advertising fee to us in an
amount equal to 1% to 4% of gross sales, which are used by us 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 us in order to reimburse us for costs incurred
in connection with the establishment of a Restaurant. The total average cost to
a Franchisee for opening a Restaurant ranges between $50,200 and $225,162,
including the initial franchise fee, with most of the variation attributable to
differences in the costs of leasehold improvements for the Restaurant, size of
the Restaurant, and whether the unit is a traditional or Express Restaurant.

                                       5
<PAGE>
     We collect weekly and monthly sales and other operating information from
each franchisee. We have agreements with most franchisees permitting us to
electronically debit the franchisees' bank accounts for the payment of
royalties, marketing fund contributions and other amounts owed to us under the
franchise agreement. This system significantly reduces the resources needed to
process receivables, improves cash flow and helps to limit past-due accounts
related to these items. Franchisees generally are required to purchase and
install an approved point of sale system that, among other things, allows us to
poll sales information daily.

     We have 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 us 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 our operations manual.

     We have 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 us, which allows for better quality control.
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 and we are not liable for any
amounts owed by the Owners. If the national food product distributor no longer
provided this service to us and our franchisees, we believe adequate alternative
national services would be available without a significant increase in costs.

     We retain the right to approve the terms of the Owner's lease. A law firm
selected by us must review the lease as part of the approval process. The Owner
pays the costs for the review of the lease. We also reserve the right to enter
into a lease directly with each landlord and then to sublease to the Franchisee.

     The Owner, or person designated by the Owner and approved by us, 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 us, unless restricted by the 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 us. The Franchisee is required by the franchise agreement to submit all
required reports to us when and in the manner or format required by us.

                                       6

<PAGE>

     In order to provide for proper financial tracking and planning for Owners,
we began providing a restaurant bookkeeping service to our Restaurant Owners in
1994. In mid-1998, we outsourced the bookkeeping function. This service is
intended to assure the Owners have accurate financial records as well as to
allow us 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 $85 per week.

     The Owner must submit copies of all proposed advertising or promotional
materials for written approval by us prior to use.

     We have the right to terminate a franchise agreement for a variety of
reasons, including a Franchisee's failure to make payments when due or failure
to adhere to our policies and standards. However, state franchise laws may limit
our ability to terminate or refuse to renew a franchise.

     We expect that Restaurants operating within our franchise system will
emphasize quality submarine sandwiches. In order to satisfy customer
expectations regarding menus and service, we require substantial uniformity
among all Restaurants. All Restaurants must conform to our decor and menu
specifications. The Owner is not allowed to sell any goods or services at a
Restaurant other than those goods and services specified by us.

Franchise Marketing Programs

     In order to facilitate the marketing of franchised Restaurants, we devote
resources for national print media, sales staff, marketing materials, and trade
shows. In addition, we have specific programs to market our franchises,
including:

     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. We have installed a toll free phone line
(1-800-DELI-SUBS) that rings directly into the Franchise sales department. The
information is entered into a data base of potential Owner inquiries and an
informational package is mailed to the caller.

     Open Houses. We have an ongoing program of hosting open houses throughout
the country in conjunction with our Area Directors. Individuals who have
expressed an interest in our franchises are invited to open houses.

     Computerized Data Base of Franchise Inquiries. We have installed a
computer network within our Franchise sales department for the purpose of
organizing, managing, and tracking individuals who inquire about our franchises.

     National Advertising. We advertise nationally for new franchisees on a
regular and consistent basis in national, regional and local publications.

Company-Owned Restaurants

     As of December 28, 1999, we currently own and operate 25 Quizno's
Restaurants. 17 are located in Colorado and 8 are located in Kansas. In fiscal
1999, company-owned Restaurants generated $534,636 in earnings. We also
currently own and operate 1 Quizno's Restaurant held for resale, which incurred
losses totaling $210,753 in fiscal 1999.

                                       7
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     While we expect to add new company-owned Restaurants from time to time, we
expect most of our growth in the foreseeable future to result from the
development of franchised Restaurants.

     In addition, from time to time, we acquire or assume the operation of
franchised Restaurants where the franchisee has been unable to operate
successfully for reasons unrelated to the location or the market. In such cases,
we 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, we 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.

Advertising

     Our advertising staff develops advertising campaigns for use at all levels
to support consumer sales in the Restaurants. Each franchised Restaurant
currently pays 1% of gross sales to the marketing fund. All company-owned
Restaurants must pay into the marketing fund on an equal percentage basis with
all franchised Restaurants. We use the marketing fund to create, produce, and
place advertising, in-store signs, in-store promotions, and commercial
advertising; to pay agency costs and commissions; to create and produce video,
audio, and written advertisements; to administer multi-regional advertising
programs, including direct mail and other media advertising; to employ
advertising agencies and in-house staff assistance; and to support public
relations, market research, and other advertising and marketing activities. The
advertising may be disseminated in print, television, or radio. The coverage has
been local or regional, and, since early 1998, we have used national cable
television campaigns.

     Each traditional Restaurant is required to spend another 3% of sales for
local advertising or promotions. Funds may be used to purchase media schedules
for TV, radio, or print ads produced by us, or any other approved media. A
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. We have the right to collect and designate all
or a portion of the local advertising fee for either a regional advertising
program or the marketing fund for the benefit of either the Restaurants within a
particular region or all Restaurants.

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 we possess.

     We compete in the sandwich segment of the fast food industry, an industry
long dominated by hamburger chains. We believe that within the sub sandwich
segment, our largest competitors by number of stores are Subway and Blimpie.
Subway, the nation's largest submarine sandwich restaurant chain, has in excess
of 12,000 units in the U.S., while Blimpie has grown significantly in recent
years and has approximately 2,000 domestic units. The expansion of Subway has
drawn attention to submarine sandwiches, during a time of growing concern
relating to beef and fried foods. We believe that the submarine sandwich segment
is underdeveloped, and that demand for submarine style sandwiches will continue
to grow. Other than Subway and Blimpie, most submarine sandwich chains currently
have less than 200 units each and are primarily local or regional.

                                       8
<PAGE>

     Our major competitors, including Blimpie, have followed Subway closely in
the style and quality of the product, creating very little, if any
differentiation in the market. Subway offers a low-cost product in a fast food
style restaurant with limited seating. We have positioned the Restaurants
between the traditional fast food restaurant style of our submarine sandwich
competitors and full-service dining, and have focused on higher quality food
products, to distinguish the Restaurants from their competitors. The restaurant
business can be affected by changes in consumer tastes, national, regional or
local economic conditions, demographic trends, traffic patterns and the type,
number and location of competing restaurants. In addition, inflation, increased
food costs, labor and benefits costs and the lack of experienced management and
hourly employees may adversely affect the restaurant industry in general and our
Restaurants in particular

     Franchise Competition. In addition to our Restaurant operations, we
compete 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 we have. We believe that we can compete successfully for franchisees for
several reasons. The total cost of opening a Quizno's Restaurant tends to be
lower than that of hamburger fast food and full-service dining restaurants. The
ratio of sales revenue per restaurant to restaurant opening costs is also better
for Quizno's Restaurants than for most of our competitors. Finally, the ambiance
of Restaurants offers a Franchisee a pride in ownership that is unique to the
Quizno's concept.

Government Regulations

     We are subject to Federal Trade Commission ("FTC") regulation and several
state laws which regulate the offer and sale of franchises. We are also subject
to a number of state laws which regulate substantive aspects of the
franchisor-franchisee relationship. The FTC's Trade Regulation Rule on
Franchising (the "FTC Rule") requires us 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 generally
require registration of the franchise offering with state authorities. Those
that regulate the franchise relationship generally require that the franchisor
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 our
franchise operations.

     In October 1999, the FTC issued proposed changes to the FTC Rule that
would effect certain disclosure obligations in connection with franchise sales.
These proposed changes are still subject to public comment, and even if adopted
as proposed, we do not think the changes would materially effect our franchise
sales or other operations. We are not aware of any other probable pending
franchise legislation that in our view is likely to affect our operations
significantly. We believe that our operations comply in all material respects
with the FTC Rule and the applicable state franchise laws.

                                       9

<PAGE>


     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. We are subject
to federal and state environmental regulations, but these have not had a
material effect on our 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.

     We are also subject to state and federal labor laws that govern our
relationship with our employees, such as minimum wage requirements, overtime,
working conditions and citizenship requirements, or customers, such as the
Americans with Disabilities Act. 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 could increase
labor costs to us and our franchisees.

     We do not have significant costs related to environmental law compliance
or research and development.

Trademarks

     We presently own the following principal trademarks or service marks (the
"Marks"). All of our primary Marks are registered on the Principal Register of
the United States Patent and Trademark Office:


           Mark          Registration Number        Registration Date
-----------------------  --------------------  -------------------------

"QUIZNO'S" service mark       1,317,420              January 29, 1985

"QUIZNO'S" service mark       1,317,421              January 29, 1985

"QUIZNO'S & Design"
service mark                  1,716,834              September 15, 1992

"QUIZNO'S EXPRESS
CLASSIC SUBS" service
mark                          2,086,598              September 19, 1996

"QUIZNO'S SUBS OVEN
BAKED CLASSICS and
DESIGN"                       2,228,680              March 2, 1999


     The Quizno's Acquisition Company grants current Bain's Deli franchisees
the non-exclusive right to use the following trademarks for the operations of
their Bain's Deli Restaurants: "BAIN'S CAFETERIA" trademark, Registration Number
959,079 (May 15, 1973); and "BAIN'S" trademark, Registration Number 1,640,049
(April 2, 1991).

     There are no presently effective determinations of the United States
Patent and Trademark Office, the trademark trial and appeal board, the trademark
administrator of any state or any court, nor are there any pending infringement,
opposition or cancellation proceedings or material litigation, involving the
Marks.

     We have also filed the following trademarks or service marks
internationally:

                                       10

<PAGE>




                            Application or  Application or
                             Registration    Registration
 Country         Trademark       Number          Date           Status
-------------  ------------ --------------  ---------------  --------------



Australia      Quizno's      App. # 789815   30 March 1999     Pending

               Quizno's Subs
Australia      Oven Baked    App. # 789814   30 March 1999     Pending
               Classics

Canada         Quizno's      Reg. # 489496    6 February 1998  Registered

               Quizno's Subs
Canada         Oven Baked    App. # not yet
               Classics      available                          Pending
               (and design)

Europe-CTM     Quizno's      App. # 1057223   28 January 1999   Pending

               Quizno's Subs
Europe-CTM     Oven Baked    App. # 1057264   28 January 1999   Pending
               Classics

Great          Quizno's      Reg. # 1576926   18 August 1995    Registered
Britain

               Quizno's Subs
Great          Oven Baked
Britain        Classics      App # 2197852
               (and design)

Japan          Quizno's      Reg. # 4275508   21 May 1999       Registered

               Quizno's Subs
Japan          Oven Baked
               Classics      App. # 17745/99   1 March 1999     Pending
               (and design)

Mexico         Quizno's      Reg. # 502259    30 August 1995    Registered

Puerto         Quizno's      None             23 September 1997 Pending
Rico

Singapore      Quizno's      Reg. #6014/94    12 September 1994 Registered

South          Quizno's      Reg. # 29994     11 January 1996   Registered
Korea

     There are no agreements currently in effect which significantly limit our
right to use or license the use of the Marks.

                                       11
<PAGE>
Employees

     As of December 20, 1999, we employed 70 full-time employees. In addition,
we employed 97 full-time and 191 part-time employees in our company-owned
Restaurants. Our employees are not covered by any collective bargaining
agreement and we believe our employee relations are excellent.

ITEM 2.    DESCRIPTION OF PROPERTY

     We lease our headquarters office space of 13,368 square feet at 1415
Larimer Street, Denver, Colorado. We also lease the premises for each of the 27
company-owned and operated Restaurants at September 30, 1999, as follows:

1.    12201 East Arapahoe      Englewood, CO 80112     2,486 sq. feet
      Road, #B7
2.    6525 Gunpark Drive       Boulder, CO 80301       1,976 sq. feet
3.    191 Blue River Parkway   Silverthorne, CO 80498     931 sq. feet
4.    8081 East Orchard Road,  Greenwood Village, CO   3,166 sq. feet
      #67                      80111
5.    2311 30th Street         Boulder, CO 80301       1,400 sq. feet
6.    9425 South University    Highlands Ranch, CO     1,919 sq. feet
      Blvd.                    80126
7.    1275 Grant Street        Denver, CO 80203        1,400 sq. feet
8.    1250 South Hover Road,   Longmont, CO 80501      2,350 sq. feet
      Bldg. 8A
9.    1660 Lincoln Street, #   Denver, CO 80264        1,660 sq. feet
      105
10.   10450 West Colfax        Lakewood, CO  80215     1,992 sq. feet
11.   4495 North Washington    Denver, CO  80216       1,903 sq. feet
12.   11211 120th Avenue, #    Kenosha, WI 53142       1,214 sq. feet
      73A
13.   14413  West Colfax       Lakewood, CO 80401      1,300 sq. feet
14.   999 18th Street,  # 136  Denver, CO 80202        1,360 sq. feet
15.   3507 Manchester Expr.,   Columbus, GA 31909        613 sq. feet
      # F10
16.   270 West 14th Street     Denver, CO 80204        1,700 sq. feet
17.   4403 South Tamarac       Denver, CO 80237        2,420 sq. feet
      Parkway
18.   818 17th Street          Denver, CO 80202        1,800 sq. feet
19.   2401 West Central        El Dorado, KS 67042     1,800 sq. feet
20.   738 North Waco           Wichita, KS 67203       1,151 sq. feet
21.   4100 East Harry, #55     Wichita, KS 67218       1,850 sq. feet
22.   3300 North Rock Road     Wichita, KS 67226       1,840 sq. feet
23.   2792 South Seneca        Wichita, KS 67217       1,700 sq. feet
24.   2407 West 21st Street    Wichita, KS 67203       1,225 sq. feet
25.   602 North Tyler          Wichita, KS 67212       1,500 sq. feet
26.   678 East 47th Street     Wichita, KS 67216       1,540 sq. feet
      South
27.   1695 Larimer Street      Denver, CO 80202        2,981 sq. feet

ITEM 3.    LEGAL PROCEEDINGS

     In re Kirwin Ventures, L.L.C., Case No. 54 114 00312 98, American
Arbitration Association. On June 29, 1998, Kirwin Ventures, L.L.C., a Michigan
franchisee, filed an arbitration action in Southfield, Michigan against us, the
Marketing and Promotion Fund, Michigan Restaurant Development, L.L.C. (the
former Michigan area director), Richard F. Schaden, and Richard E. Schaden. The
claim alleges violations of the Michigan Franchise Investment Law and
misrepresentations in connection with the franchise sale; failure of the area
director to comply with the area director marketing agreement; that advertising
materials were not well-suited to the Michigan market; breach of a duty of good
faith and fair dealing; and fraud. Kirwin seeks compensatory damages in excess
of $400,000 plus attorneys' fees and other unspecified relief. On July 17, 1998,
we filed a declaratory judgment action in federal court in Colorado asking that
the arbitration be moved to Colorado according to the terms of the underlying
franchise agreement. On December 27, 1999, the American Arbitration Association
notified us that the arbitration would be held in Denver. We and the other
defendants intend to deny each claim and will pursue counterclaims against
Kirwin Ventures.

                                       12
<PAGE>
     Mibichu L.L.C. v. The Quizno's Corporation, No. 98-007226-CK (Oakland
County, Michigan). Mibichu L.L.C. is a franchisee owned by the same individuals
who own Kirwin Ventures and which operate a second Restaurant in Michigan. On
June 29, 1998, Mibichu filed an action in Michigan state court against the same
respondents named in Kirwin. We removed the case to the United States District
Court for the Eastern District of Michigan Southern Division (No. 98-73256).
The complaint alleges virtually identical claims and seeks identical relief. We
and the other defendants once again deny the claims and intend to vigorously
defend the action and pursue counterclaims.

     The Quizno's Corporation v. Robert W. Mitelhaus, No. 77 114 00187 98,
American Arbitration Association (Denver, Colorado). On August 1, 1998, we
terminated the area director agreement between us and Robert W. Mitelhaus, a
California area director. On the same day, we instituted an arbitration action
against Mitelhaus in Denver, Colorado, alleging that Mitelhaus breached various
provisions of the area director agreement. On September 1, 1998, Mitelhaus
denied that he breached the area director agreement. Mitelhaus alleged
fraudulent termination of the area director agreement. In addition, Mitelhaus
alleged that we failed to refund or pay certain amounts he claimed were due to
him, and that we violated various state and federal franchise laws. Hearings in
this matter were held before the American Arbitration Association from March
8-16, 1999. During the hearings, the respondent demanded damages in excess of $4
million.

     On April 13, 1999, the arbitration panel issued its ruling. It found that
Mitelhaus had materially breached the area director agreement and that we had
properly terminated that agreement. The panel therefore denied all of Mitelhaus'
claims for breach of contract and refuted his allegations of franchise law
violations. While the panel did award Mitelhaus approximately $230,000 in
pre-termination commissions and costs, those related primarily to referral
commissions that we owed Mitelhaus, before we terminated him in August 1998, for
previous master franchise and area directorship sales we had made. We had no
liability for our lawful termination of Mitelhaus' area director agreement. The
panel also ordered Mitelhaus to abide by all of the post-termination covenants
in the area director agreement

                                       13
<PAGE>
     The Quizno's Corporation v. Hot Concepts, Inc., No. 77 116 00246 99,
American Arbitration Association (Denver, Colorado). On July 19, 1999, we
terminated the area director agreement between us and Hot Concepts, Inc., an
area director for the Cincinnati, Ohio and Lexington, Kentucky markets. On the
same day, we instituted an arbitration action against Hot Concepts in Denver,
Colorado, alleging that Hot Concepts breached various provisions of the area
director agreement, including failure to develop the market. On October 14,
1999, Hot Concepts denied that it breached the area director agreement. Hot
Concepts counterclaimed that we fraudulently terminated the area director
agreement. In addition, Hot Concepts alleged that we failed to deal in good
faith by terminating the agreement, and that we fraudulently induced Hot
Concepts to enter into the agreement by misrepresenting the ability to develop
the market. Hot Concepts also alleged unjust enrichment. Hot Concepts seeks
damages of $1.5 million. We have denied the counterclaims and intend to pursue
the claims against Hot Concepts. The principal owners of Hot Concepts also owned
a second area directorship under Hampton-Davis Corp. for the Bowling Green,
Kentucky and Jacksonville, Tennessee markets. On September 15, 1999, we filed an
action entitled The Quizno's Corporation v. Hampton-Davis Corp., in the United
States District Court for the District of Colorado (No. 99-S-1812), in which we
asserted that Hampton-Davis failed to meet its development quota. On October 11,
1999, we terminated the area director agreement with Hampton-Davis. Although
Hampton-Davis has not yet responded to the compliant, we believe it will file
counterclaims similar to those filed by Hot Concepts and will seek similar
relief. If so, we intend to also deny those counterclaims.

From time to time, we are involved in litigation and proceedings arising
out of the ordinary course of our business. There are no other pending material
legal proceedings to which we are a party or to which our property is subject.
We do not believe that any of the foregoing litigation will have a material
adverse effect on us.

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

The following matters were submitted to our shareholders at the 1999
Annual Meeting of Shareholders held on September 27, 1999:

Proposal #1        Election of Directors
                                            For            Withheld
                   Richard E. Schaden    1,596,203           225
                   Richard F. Schaden    1,596,203           225
                   Frederick H. Schaden  1,596,203           225
                   J. Eric Lawrence      1,596,203           225
                   Mark L. Bromberg      1,596,203           225
                   Brad A. Griffin       1,556,247
                   Brownell M. Bailey       39,956           225

Proposal         #2 Approval of the increase of the number of shares  authorized
                 under our Employee Stock Option Plan from 320,000 to 670,000

                         For            Against         Abstained
                      1,592,403          4,025              0

                                       14

<PAGE>


Proposal          #3 Approval of the increase of the number of shares authorized
                  under our Amended and  Restarted  Non-Employee  Directors  and
                  Advisors Stock Option
                  Plan from 140,000 to 200,000

                         For            Against         Abstained
                      1,592,203          4,225              0

Proposal # 4       Ratification of Accountants
                         For            Against         Abstained
                      1,595,928            0               500

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our Common Stock is traded in the NASDAQ Small-Cap Issues Market under the
symbol "QUIZ." The following table shows high asked, low bid and close price
information for each quarter in the last two fiscal years as reported by Prophet
Information Services, Inc., a provider of online historical stock price data for
all major U.S. securities markets. Such quotations reflect inter-dealer prices,
without retail mark-ups, markdowns or commissions, and may not necessarily
represent actual transactions. On December 17, 1999, the stock closed at $8.125.

Fiscal Year Ended December 31, 1998
                        High             Low             Close
First Quarter          $5.88            $4.44            $5.88
Second Quarter         $9.00            $6.00            $8.19
Third Quarter          $8.38            $7.25            $8.13
Fourth Quarter         $8.06            $6.50            $7.63

Fiscal Year Ended September 30, 1999
                        High             Low             Close
First Quarter          $7.75            $6.88            $7.19
Second Quarter         $7.75            $6.50            $7.25
Third Quarter          $9.50            $6.94            $8.25

     There were 169 holders of record (and approximately 1,000 beneficial
owners) of our Common Stock as of December 17, 1999. The first number includes
shareholders of record who hold stock for the benefit of others.

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

     In October 1999, we announced a program to repurchase up to 200,000 shares
of our common stock. The timing, price, quantity and manner of purchases are
being determined by management consistent with applicable Securities and
Exchange Commission rules and are dependent upon market conditions. As of
November 30, 1999, we had repurchased 61,300 shares under this program.

                                       15

<PAGE>
     During the last quarter of the fiscal year ending September 30, 1999, we
sold the following securities without registration with the Securities and
Exchange Commission pursuant to the exemption noted:



 Securities            Number of                                    Exemptions
    Sold        Date     Shares   Consideration     Purchasers       Claimed
------------ --------  ---------  -------------   -------------   ------------

Common Stock    8/5/99   1,527     $12,025 Plan    Quizno's 401(k)  Section 4(2)
                                    obligation      Trust


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

     Forward-Looking Statements

     Certain of the information discussed in this annual report, and in
particular in this section entitled "Management's Discussion and Analysis or
Plan of Operation," are forward-looking statements that involve risks and
uncertainties that might adversely affect our 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 in the U.S. and
the other countries in which we franchise Restaurants, costs of labor and
employee benefits, costs of marketing, the success or failure of marketing
efforts, costs of food and non-food items used in the operation of the
Restaurants, intensity of competition for locations and Franchisees as well as
customers, perception of food safety, spending patterns and demographic trends,
legal claims and litigation, the availability of financing for us and our
Franchisees at reasonable interest rates, the availability and cost of land and
construction, legislation and governmental regulations, and accounting policies
and practices. Many of these risks are beyond our control. In addition, specific
reference is made to the "Risk Factors" section contained in our Prospectus,
dated January 9, 1998, included in the Registration Statement on Form S-3 filed
by our company (Registration No. 333-38691).

     The principal sources of our income are continuing fees, initial franchise
fees, and, historically, area director marketing fees. These sources are subject
to a variety of factors that could adversely impact our profitability in the
future, including those mentioned in the preceding paragraph. The continued
strength of the U.S. economy is a key factor to 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 sources of income identified above. Because our franchises are
still concentrated in certain regions of the U.S., regional economic factors
could adversely affect our profitability. Weather, particularly severe winter
weather, will adversely affect royalty income and could affect the other sources
cited above. Culinary fashions among Americans and people in other countries in
which we franchise the Restaurants will also impact our profitability. As eating
habits change and types of cuisine move in and out of fashion, our challenge
will be to formulate a menu within the Quizno'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.

     As our revenues from foreign operations become more significant, our
profitability could be adversely impacted by international business risks and
political or economic instability in foreign markets. While, international
operations involve risks that do not exist in domestic operations, such as
adverse fluctuation in foreign exchange rates, monetary exchange controls,
foreign government regulation of business relationships, and uncertainty of
intellectual property protection, we believe that the potential rewards of
expanding the market for our services to selected foreign countries far
outweighs such risks.

                                       16

<PAGE>


Overview

     In November 1999, we announced that we had changed our fiscal year end
from December 31 to September 30. The financial statements included with this
10-KSB filing reflect our balance sheet as of September 30, 1999, December 31,
1998 and December 31, 1997 and the related statements of operations,
stockholders' equity and cash flows for the nine months ended September 30, 1999
and the twelve months ended December 31, 1998 and 1997. Included below is the
unaudited statement of operations for the twelve months ended September 30, 1999
and 1998 and the unaudited statement of cash flows for the twelve months ended
September 30, 1999 and 1998. For purposes of Management's Discussion and
Analysis or Plan of Operation, we believe that these twelve-month statements and
comparisons provide a more meaningful analysis. Therefore, all comparison and
analysis included in this Management's Discussion and Analysis or Plan of
Operation will be based upon these twelve-month statements and related data.
Unless noted otherwise, all references to 1999 and 1998 refer to the twelve
months ending September 30, 1999 and 1998, respectively.


                      Consolidated Statement of Operations

                                               For the Year Ended
                                                  September 30,
                                          ------------------------------
                                              1999              1998
                                          ------------      ------------
                                                     (Unaudited)
Franchise operations:
 Revenue
   Continuing fees ..................     $ 10,412,414      $  5,119,903
   Initial franchise fees ...........        3,610,042         2,675,567
   Area director and master franchise
    fees ............................        2,131,882         2,357,216
   Other ............................          508,240           659,263
   Interest .........................          355,608           172,582
                                          ------------      ------------
           Total revenue ............       17,018,186        10,984,531
                                          ------------      ------------

 Expenses
   Sales and royalty commissions ....       (5,302,456)       (3,607,186)
   Advertising and promotion ........          (96,433)         (213,700)
   General and administrative
                                            (8,560,924)       (5,567,313)
           Total expenses
                                           (13,959,813)       (9,388,199)

Income from franchise operations ....        3,058,373         1,596,332
                                          ------------      ------------

Company store operations:
   Sales ............................        8,276,368         6,378,379
   Cost of sales ....................       (2,511,086)       (1,929,730)
   Cost of labor ....................       (2,222,855)       (1,549,512)
   Other store expenses
                                            (2,924,237)       (2,319,752)
           Total expenses
                                            (7,658,178)       (5,798,994)
                                          ------------      ------------

Income from Company stores operations     $    618,190      $    579,385
                                          ============      ============

                                       17
<PAGE>





                Consolidated Statement of Operations (continued)

                                                       For the Year Ended
                                                          September 30,
                                                 ------------------------------
                                                    1999               1998
                                                 -----------        -----------
                                                          (Unaudited)
Other income (expenses):
   Research, development and new programs ..     $      --          $   (72,161)
   Sales by stores held for resale .........         997,583            859,745
   Loss and expenses related to stores held
    for sale ...............................      (1,260,529)
   Loss on sale or closure of Company stores        (127,809)          (120,928)
   Sale of Japan master franchise ..........       1,168,801               --
   Provision for bad debts .................        (354,827)          (115,141)
   Other expenses ..........................         (68,245)           (16,261)
   Depreciation and amortization ...........      (1,280,836)          (564,766)
   Privatization costs .....................        (265,472)              --
   Interest expense ........................        (321,718)          (330,779)
                                                 -----------        -----------
           Total other expenses                   (1,513,052)        (1,433,270)
                                                 -----------        -----------

Net income before income taxes .............       2,163,511            742,447
Income tax provision .......................        (353,135)              --
                                                 -----------        -----------

Net income (loss) ..........................       1,810,376            742,447
Preferred stock dividends ..................        (179,151)          (217,262)
                                                 -----------        -----------

Net income before cumulative effect of
 changed accounting principle ..............       1,631,225            525,185
Cumulative effect of changed accounting
  principle (net of taxes) .................      (2,769,592)              --
                                                 -----------        -----------

Net income (loss) applicable to common
 stockholders ..............................     $(1,138,367)       $   525,185
                                                 ===========        ===========


                 Consolidated Statement of Cash Flows

                                                    For the Year Ended
                                                       September 30,
                                                ----------------------------
                                                    1999             1998
                                                -----------      -----------
                                                        (Unaudited)
Cash flows from operating activities
   Net income (loss) before preferred stock
    dividends .............................     $  (959,216)     $   742,447
   Adjustments to reconcile net income
   (loss) to net cash provided by operating
   activities -
      Depreciation and amortization .......       1,179,690          564,766
      Cumulative effect of changed
       accounting principle ...............       4,388,208             --
      Provision for losses on accounts and
       notes receivable ...................         354,827          115,141
      Loss on disposal of Company stores ..         158,308          120,928
      Deferred income taxes ...............      (3,395,416)         (65,515)
      Amortization of deferred financing
       costs ..............................         101,146           54,072
      Issuance of notes receivable for
      master franchise and area director ..      (1,211,237)        (965,407)
      marketing agreements
      Other ...............................          17,972            2,660
      Changes in assets and liabilities -
         Accounts receivable ..............        (497,682)        (249,502)
         Other assets .....................         108,968         (184,110)
         Accounts payable .................          95,453         (334,563)
         Accrued liabilities ..............         384,684          (71,374)
         Deferred franchise costs .........        (536,385)        (283,370)
         Deferred initial franchise fees
          and other fees ..................       5,174,771        2,010,112
         Accrued income taxes .............         851,469             --
                                                -----------      -----------
                                                  5,581,278          887,193
                                                -----------      -----------
         Net cash provided by operating
          activities ......................     $ 6,215,560      $ 1,456,285
                                                ===========      ===========



                                       18


<PAGE>


                Consolidated Statement of Cash Flows (continued)

                                                    For the Year Ended
                                                       September 30,
                                               ----------------------------
                                                   1999            1998
                                               -----------      -----------
                                                        (Unaudited)
Cash flows from investing activities
   Cash paid for acquisition .............     $  (286,355)     $        -
   Purchase of property and equipment ....      (2,139,866)      (1,420,853)
   Proceeds from notes receivable ........       1,355,282          812,944
   Investment in turnkey stores ..........          (7,558)        (546,790)
   Short-term investments ................      (3,060,688)      (1,203,189)
   Issuance of other notes receivable ....        (362,578)        (631,864)
   Investment by minority interest owners          151,601             --
   Purchase of minority interest owners ..        (150,000)            --
   Intangible and deferred assets ........      (1,262,185)        (248,207)
   Proceeds from sale of assets and stores         213,000             --
   Deposits ..............................         (42,805)        (121,265)
   Area director marketing territory
    repurchases ..........................        (863,984)            --
   Other investments .....................         (15,000)            --
                                               -----------      -----------
         Net cash used by investing
          activities .....................      (6,471,136)      (3,359,224)
                                               -----------      -----------

Cash flows from financing activities
   Principal payments on long-term
    obligatins ...........................      (1,866,919)        (377,605)
   Proceeds from long-term obligations ...       2,242,187          973,924
     Loan and offering costs .............            --            (56,317)
     Redemption of Class B Preferred Stock        (500,000)            --
   Proceeds from issuance of common stock
    and preferred stock ..................         128,479        1,419,351
   Preferred dividends paid ..............        (179,452)        (217,262)
                                               -----------      -----------
         Net cash (used by) provided by
          financing activities ...........        (175,705)       1,742,091
                                               -----------      -----------

Net decrease in cash and cash equivalents         (431,281)        (160,848)

Cash and cash equivalents - beginning of
 year ....................................       1,058,109        1,218,957
                                               -----------      -----------

Cash and cash equivalents - end of year ..     $   626,828      $ 1,058,109
                                               ===========      ===========

     In 1999, before the cumulative effect of accounting changes, we were
profitable for the year and for each of the four quarters in 1999. We ended the
year with 634 Restaurants open (including 8 Bain's Deli restaurants), another
505 Restaurants sold and scheduled to open in the future, 27 Company owned
Restaurants, 79 area directorships owned by 68 Area Directors, and 5
international master franchisees. We believe we have built a strong foundation
for the Company upon which growth can continue with regular profits. In 1999,
before the cumulative effect of accounting changes, we earned $1,810,376
compared to $742,447 in 1998 (amounts are before preferred stock dividends).

     On a quarterly basis, earnings before cumulative effect of changes in
accounting principle and preferred stock dividends, by business segment, reflect
continued overall improvement over the last eight quarters.

                                       19
<PAGE>



                       Franchise     Company
   Quarter Ended      Operations      Stores       Other         Net
-------------------  ------------  ------------  ----------  -----------
December 31, 1997       357,877       102,059    (386,349)     73,587
March 31, 1998          291,888       107,384    (257,593)    141,679
June 30, 1998           482,699       166,386    (400,411)    248,674
September 30, 1998      463,868       203,556    (388,917)    278,507
December 31, 1998       708,022        83,554    (347,821)    443,755
March 31, 1999          526,519       183,564    (260,848)    449,235
June 30, 1999           535,169       197,769    (538,877)    194,061
September 30, 1999    1,288,663       153,303    (718,641)    723,325


     The following table reflects our revenue growth by source and Restaurants
for the past two years:

                                  For the year ended
                                      September 30,
                                  --------------------
                                    1999        1998
                                  -------      -------
Revenue (000's)
Continuing fees .............     $10,412      $ 5,120
Initial franchise fees ......       3,610        2,676
Area director fees ..........       2,132        2,357
Other .......................         832
                                  -------      -------
                                      864          832
Franchise revenue ...........      17,018       10,985
Sales by Company owned stores       8,276        6,378
Sales by stores held for ....         860
                                  -------      -------
resale ......................         998          860
                                  -------      -------
Total revenue ...............     $26,292      $18,223
                                  =======      =======
Percent increase ............          44%
                                  =======

Restaurants open, beginning .         438          241
New Restaurants opened ......         258          167
Restaurants acquired ........         --            60
Restaurants sold ............         (31)          --
Restaurants closed ..........         (28)         (25)
Restaurants closed, scheduled
 to reopen...................          (4)          (5)
Restaurants reopened ........           1           --
                                  -------      -------
Restaurant open, end ........         634          438
                                  =======      =======

Franchises sold, domestic and
 international ..............         545          361
                                  =======      =======

Initial franchise fees
 collected (000's)...........      $6,986       $4,785
Systemwide sales (millions)..        $152          $89
Average unit volume (1)......    $369,000     $339,000
Same store sales (2) (3).....      Up 7.3%

(1) Average unit volumes of $369,000 and $339,000, are for the nine months ended
September 30, 1999 (annualized) and December 31, 1998, respectively. Average
unit volumes exclude Restaurants located in convenience stores and gas stations
and include only Restaurants open at least one year under the same ownership.

(2) Same store sales are for the nine months ended September 30, 1999 compared
to the comparable period in 1998 and is based on 228 stores open all of 1999 and
1998. Stores that transferred ownership during this period, or were in
substantial default of the franchise agreement at September 30, 1999, are
excluded.

(3) Because we are 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 Restaurants are included from more start up markets. Results of
Operations

                                       20
<PAGE>

Comparison of Years Ended September 30, 1999 and 1998

     Franchise revenue increased 55% in 1999 to $17,018,186 from $10,984,531 in
1998. Total revenue increased 44% in 1999 to $26,292,137 from $18,222,655 in
1998. The revenue increase resulted primarily from continuing fees and Company
store sales.

     Continuing fees increased 103% in 1999 to $10,412,414 from $5,119,903 in
1998. Continuing fees are comprised of royalties and licensing fees.

     Royalty fees increased 74% in 1999 to $8,386,050 from $4,832,014 in 1998.
Royalty fees are a percentage of each Owner's sales paid to us and will increase
as new franchises open, as the average royalty percentage increases, and as
average unit sales increase. At September 30, 1999, there were 607 franchises
open (including Bain's) compared to 408 franchises open at September 30, 1998.
The royalty rate was 5% for agreements entered into prior to February 11, 1995,
6% for all franchise agreements entered into from February 11, 1995 through
March 31, 1998 and 7% for all agreements entered into since March 31, 1998. We
have no immediate plans to further increase the royalty rate.

     Licensing fees are generated through the licensing of our trademark for
use by others. Licensing fees are expected to continue and to increase as
systemwide sales and the awareness and value of our brand increases. For 1999,
licensing fees were $2,026,364 and $287,889 in 1998. There was no licensing fee
revenue prior to January 1, 1998.

     Initial franchise fees increased 35% in 1999 to $3,610,042 from $2,675,567
in 1998. 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 our obligations relating to the sale have been
substantially performed, which generally occurs when the franchise opens. Our
share of initial franchise fees sold by foreign master franchisees is recognized
when received. In 1999, we opened 258 franchises, including 46 international
Restaurants, as compared to 167, including 22 international Restaurants, opened
in 1998. Our initial franchise fee has been $20,000 since 1994. Owners 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. Our share of initial franchise fees for
international Restaurants is generally 30% of the franchise fee and will vary
depending on the country and the currency exchange rate.

     Initial franchise fees collected by us for domestic franchise sales are
recorded as deferred initial franchise fees until the related franchise opens.
Deferred initial franchise fees at September 30, 1999 were $7,910,648 and
represent 505 domestic franchises sold but not yet in operation, compared to
$4,279,868 at September 30, 1998 representing 324 domestic franchises sold but
not open. Approximately 159 international franchises had been sold but were not
open at September 30, 1999 (approximately 80 at September 30, 1998). Direct
costs related to the sale, primarily sales commissions to Area Directors, are
deferred on our books 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 September 30,
1999 were $1,585,773. Approximately 50% of all domestic initial franchise fees
received by us are paid to Area Directors for sales and opening commissions.

                                       21
<PAGE>

     We did not sell or open any Bain's franchises in 1999 or 1998, nor do we
expect to in the future.

     Area director and master franchise fees were $2,131,882 in 1999 and
$2,357,216 in 1998. Domestic area director fees were $1,200,813 in 1999 and
$1,499,466 in 1998. For analysis purposes, these amounts are not comparable.
Effective January 1, 1999, we changed our accounting policy related to the
recognition of revenue from area director marketing agreement fees to one that
recognizes these fees as revenue on a straight-line basis over the term of the
agreement, which is ten years. This change reflected a decision made by the U.S.
Securities and Exchange Commission in December 1999 relative to the recognition
of area director fee revenue. Commissions paid to the area director upon the
inception of the agreement are classified as a prepaid and recognized as an
expense over the same ten year term. The effect of the change in the nine-month
period ending September 30, 1999, was the deferral of $4,262,701 of net revenue
previously recognized in prior years. This was reported as a cumulative effect
of change in accounting principle for $2,685,502 (net of $1,577,199 in income
tax benefits) and is included in the net loss for 1999.

     The fee for U.S. areas was $.03 per person in the designated area through
June 1996, $.035 from July 1996 through December 1996, $.05 from January 1997
through December 1997, $.06 from January 1998 through February 1998, and $.07
since March 1, 1998. In addition, each Area Director is required to pay a
training fee of $10,000. In 1999, we sold 14 new area directorships including 5
existing Area Directors who purchased additional territory, as compared to 20
area directorships sold in 1998. At September 30, 1999, we had a total of 79
area directorships owned by 68 Area Directors who owned areas encompassing
approximately 75% of the population of the United States.

     International master franchise fees are one-time fees paid to us for the
right to sell franchises in a designated, exclusive, international market. The
master franchisee assumes all of our obligations and duties under the agreement.
We recognize these fees when received. International master franchise fees
earned were $931,069 in 1999 and $857,750 in 1998. The 1999 fees received were
for the United Kingdom, $510,000, Japan, $125,000, Australia, $221,069, and the
rights to part of Central America, $115,000. A total of $40,000 of the fees have
been deferred until our training obligations are completed.  The 1998 fees of
$632,750 and $225,000 were for Canada and Japan, respectively.

     We offer domestic Area Director applicants financing for up to 50% of the
area fee. The amount financed is required to be paid to us in installments over
five years at interest rates between 6% and 15%. The promissory notes are
personally signed by the Area Director and, depending on the personal financial
strength of the Area Director, secured by collateral unrelated to the area
directorship. We also periodically offer payment plans to international Master
Franchisee applicants. Of the 14 domestic and international areas sold in 1999,
11 used this financing for $1,450,309, representing 68% of the area director
fees recognized in 1999. In 1998, a total of $1,083,408 was financed,
representing 46% of area revenue.

     Other revenue decreased by 23% in 1999 to $508,240 from $659,263 in 1998.
Other revenue is primarily amounts paid by equipment suppliers for design and
construction, franchise transfer fees and bookkeeping fees charged Owners for
whom we provided bookkeeping services. Amounts paid by equipment suppliers were
$324,139 in 1999 compared to $298,330 in 1998. This amount will vary based on
new store openings. Franchise transfer fees increased in 1999 to $86,500 from
$46,000 in 1998. Since 1995, our franchise agreement requires all new Owners to
utilize our bookkeeping services, or a firm designated by us, to provide
bookkeeping services, for their first 12 months of operations. Bookkeeping fees
were $30,888 in 1999 compared to $286,364 in 1998. Bookkeeping fees declined,
and are expected to be immaterial in the future, because we out-sourced the
function to a third party in 1998.

                                       22
<PAGE>

     Sales and royalty commissions expense increased 47% to $5,302,456 (44.2%
of royalty and initial franchise fees) in 1999 from $3,607,186 (48.0% of royalty
and initial franchise fees) in 1998. Sales and royalty commissions are amounts
paid to our domestic Area Directors, commissions paid to other sales agents and
employees, and costs related to sales promotions and incentives. Sales and
royalty commission expense declined in 1999 as a percentage of royalty and
initial franchise fee due to the repurchase of certain area directorships.

     Our domestic Area Directors receive commissions equal to 50% of the
initial franchise fees and 40% of royalties received by us from franchises 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.

     The Area Director is entitled to receive commissions during the term of
the area director marketing agreement and in some cases, upon expiration of the
area director agreement, the commission paid is reduced to 1% of sales for 5
years.

     General and administrative expenses increased 54% to $8,560,924 in 1999
from $5,567,313 in 1998. As a percent of franchise revenue, general and
administrative expenses have decreased slightly from 50.7% in 1998 to 50.3% in
1999. General and administrative expenses include all of our operating costs.
The increase is primarily due to the addition of employees to service the
rapidly growing network of our Owners and Area Directors. Although general and
administrative expenses will likely continue to increase as we grow, we expect
the rate of increase to continue to decline.

     We believe our general and administrative expenses are adequate and are
not excessive in relation to our size and growth.

     Company owned stores earned $618,190 on sales of $8,276,368 in 1999
compared to $579,385 on sales of $6,378,379 in 1998. During 1999, we operated
stores for a total of 257 store operating months. In 1998, we had a total of 189
store operating months. Sales per store month decreased 4.7% in 1999 to $32,166
from $33,748 in 1998.

     At September 30, 1999, we had 25 (24 at September 30, 1998) Company owned
stores. In 1999, we purchased from an Owner one Restaurant. During 1998, we
acquired and converted to Company owned Quizno's eight competitive sandwich
shops in Wichita, Kansas, built and opened six new Company owned Quizno's,
purchased from Owners four Restaurants, reclassified as stores held for resale
five Company owned Quizno's, and sold to an Owner one Company owned store.

     Stores held for resale lost $262,946 on sales of $997,583 in 1999 compared
to a loss of $213,234 on sales of $859,745 in 1998. At September 30, 1999 and
1998, we operated two and six stores held for resale, respectively. In 1999, we
closed two stores held for resale and sold two stores to an Owner. During 1998,
eight stores were classified as stores held for resale and two Bain's units were
returned to the seller.

                                       23

<PAGE>


     Japan master franchise income represents payments received in 1999 of
$1,423,348 for the master franchise rights of Japan. In the second quarter of
1999, we also received $22,000 for our share of an area director marketing
agreement sold in Japan. In 1999, we incurred direct costs related to the
revenue totaling $276,547 resulting in net revenue of $1,168,801. We received
$350,000 in 1998. The payments were recognized as revenue when received.
Although we plan to continue to enter into master franchise agreements
internationally, we do not expect such transactions to be of the magnitude of
the Japanese transaction.

     Provision for bad debts was $354,827 in 1999 compared to $115,141 in 1998.
The increase in the 1999 expense was primarily due to allowances for promissory
notes due for stores purchased from us and subsequently closed.

     Other expenses were $68,245 in 1999 compared to $16,261 in 1998. The
increase in the 1999 expense was primarily due to the loss on the sale of
assets. The 1998 expense was primarily subleasing losses related to one store
previously owned by us and sold to an Owner.

     Depreciation and amortization was $1,280,836 in 1999 and $564,766 in 1998.
The increase was due primarily to the depreciation related to assets of stores
held for resale, the acquisition and development of new Company owned
Restaurants in 1998 and certain other tangible and intangible assets with short
lives expensed beginning in late 1998. A portion of the increase is related to
certain intangible assets fully amortized in 1999 and thereafter not recurring.

     Privatization costs were $265,472 in 1999 and represents our costs
associated with a proposed going private transaction. As discussed in our 1998
Form 10-KSB, on December 29, 1998, we received a proposal from our majority
shareholders to merge the company into a new entity owned by them, pursuant to
which all of our shareholders other than themselves, would receive cash for
their company shares. On August 10, 1999, we announced that the proposal had
been withdrawn. An agreement regarding all the terms of the transaction could
not be reached with the Special Committee of the Board of Directors evaluating
the offer.

     Interest expense was $321,718 in 1999 and $330,779 in 1998. The decrease
was primarily attributable to a decrease in our effective interest rate. On
January 6, 1999, we paid $500,000 to redeem all of our outstanding Class B
Preferred Stock and paid off the remaining principal of our 12.75% convertible
subordinated debt. The funds used for this payoff were obtained through the
borrowing of $1,853,931 from an unrelated noteholder. This note accrues interest
at the rate of 7.75% per annum.

     Income tax expense was $353,135 in 1999. There was no income tax benefit
or expense recorded in 1998. Our taxable income has historically exceeded our
book income primarily because initial franchise fees we receive are taxable
income in the year received and are book income in the year the franchise opens.
Consequently, we will not pay income taxes on this income when it is recognized
for financial reporting purposes. As of December 31, 1998, we used all of our
tax net operating loss carryforwards and incurred a tax liability. Accordingly,
in the first quarter of 1999, we reduced the amount by which we had recorded an
impairment of our deferred tax asset in prior years and recorded the tax benefit
of prior years net operating losses of $368,553. Subsequent to December 31,
1998, our provision for income taxes was recorded at 37%.

                                       24

<PAGE>


     Cumulative effect of a change in accounting principle was $2,769,592. This
amount was composed of a $2,685,502 (net of $1,577,199 in income tax benefits)
change reflected by a decision made by the U.S. Securities and Exchange
Commission in December 1999 relative to the recognition of area director fees.
As previously discussed, effective January 1, 1999, we changed our accounting
policy related to the recognition of area director marketing agreement fees to
one that recognizes such fees as revenue on a straight-line basis over the term
of the agreement, which is ten years.

           Also,  during April 1998,  Statement of Position  98-5,  "Reporting
in the Costs of Start-Up  Activities"  was issued.  SOP 98-5 requires costs of
start-up activities  and  organization  costs to be  expensed as  incurred.  SOP
98-5 was required to be adopted in the second  quarter of 1999.  Upon  adoption,
we were required to write-off $84,090 (net of $41,417 in income tax benefits) in
preopening  related costs that were deferred on the balance sheet as of December
31, 1998.

Liquidity and Capital Resources

     Net cash provided by operating activities was $6,215,560 in 1999 compared
to $1,456,285 in 1998, an improvement of $4,759,275. The primary reasons for the
improvement were the increase in net deferred franchise fees of $2,911,644, the
increase of $1,729,927 in net income before depreciation, amortization, and the
cumulative effect of changes in accounting principles, and the increase in
accounts payable, accrued liabilities and the decrease in accounts receivable
totaling $637,794. These amounts were partially offset by an increase of
$859,816 in deferred income taxes less other changes totaling $339,629.

     Net cash used in investing activities was $6,471,136 in 1999 compared to
cash used by investing activities of $3,359,224 in 1998. Cash used by investing
activities for both years was primarily related to the acquisition or
development of company owned Restaurants. The primary reason for the increase in
funds used was the $1,857,499 increase associated with short-term investments.
In addition, in 1999, cash of $863,984 was used to acquire area director
territory repurchases.

     Net cash used by financing activities was $175,705 in 1999 compared to
cash provided by financing activities of $1,742,091 in 1998. The 1999 amount was
primarily from financing company owned Restaurants and the redemption of the
Class B Preferred stock. The amount provided in 1998 was primarily from the sale
of Class B and Class C preferred stock.

     At September 30, 1999, we had $192,923 invested in two stores held for
resale. The stores held for resale are expected to be sold or closed by December
31, 1999.

     In the second quarter of 1998, we tested a program under which our Area
Directors had the right to elect to have all future franchisee leases in the
Area Director's territory signed by The Quizno's Realty Company ("QRC"), a
wholly owned subsidiary of ours. As a condition of the lease, the landlord
agrees not to look beyond QRC for payments. These locations would then be
subleased by QRC to the Owner, whose personal liability is limited to one year.
The Owner pays QRC an indemnification fee of $165 per month, pays a one-time
lease-processing fee to QRC of $2,200, and pays a security deposit to QRC equal
to two months rent. Effective March 1, 1998, we transferred cash and other
assets having a book value of approximately $500,000 to QRC in exchange for
stock and a promissory note. As of September 30, 1999, 13 leases had been
executed under this program.

                                       25

<PAGE>

     On December 31, 1996, we completed a debt financing for $2 million of
which $500,000 was converted to preferred stock in December 1997. On January 6,
1999, we paid off the loan and redeemed the preferred stock at a cost of
$1,854,000. As required by the loan agreement, we issued a warrant to the lender
to purchase 372,847 shares of our common stock at an exercise price of $3.10.

     On October 1, 1999, our Board of Directors authorized the purchase of up
to 200,000 shares of our common stock. Subject to applicable security laws,
repurchases may be made at such times, and in such amounts, as we deem
appropriate. As of November 30, 1999, we had repurchased 61,300 shares at an
average price of $8.63.

     On October 5, 1999, we closed on a loan in the principal amount of
$14,000,000 from AMRESCO Commercial Finance, Inc. The loan bears interest at
10.1%, which may be adjusted to the ten-year Treasury note rate plus 4.25%
during the first 120 days, and is repayable in monthly installments of $193,344
for nine years and five months. The loan is secured by the assets of our company
owned stores and other assets of ours existing at September 30, 1999. The loan
is part of a securitized pool and includes a provision which could require us to
pay up to another $1,555,555 depending on the amount of defaults, if any, in the
loan pool. The proceeds of the loan were used to pay-off existing debt of
$3,320,956, pay costs and fees associated with the loan of $560,000, and prepay
interest and one payment of $304,624. The balance of $9,814,420 is available to
use, with certain restrictions, for general corporate purposes other than
working capital, dividends, or to repurchase the majority shareholder's stock.
Certain notes payable held by us at September 30, 1999 were repaid with the
AMRESCO note proceeds. See Note 9 of the Notes to the Consolidated Financial
Statements for the identification of the notes repaid with these proceeds.

     On October 11, 1999, our Board of Directors approved the purchase of a
corporate jet allowing for more efficient travel by management between areas of
franchise operations. For tax purposes, the airplane qualifies for accelerated
depreciation, resulting in the deferral of income tax payments. The $3,350,000
purchase was completed on October 13, 1999.

     On November 16, 1999, we announced that our subsidiary, QUIZ-DIA, Inc.
purchased the assets of ASI-DIA, Inc. ("ASI") for a total of $4.875 million in
cash. Assets purchased include two Quizno's restaurants and three bars,
including the WWW.COWBOY bar, and various other assets located on Concourses A
and B at the Denver International Airport. We intend to continue operating the
restaurants as Quizno's Classic Subs and the bars as operated by ASI.

     As discussed in our 1998 Form 10-KSB, on December 29, 1998, we received a
proposal from our majority shareholders to merge the company into a new entity
owned by them, pursuant to which all of our shareholders other than themselves
would receive cash for their company shares. On August 10, 1999, we announced
that the proposal had been withdrawn. An agreement regarding all the terms of
the transaction could not be reached with the Special Committee of the Board of
Directors evaluating the offer.

     As we have in the past, we will continue to consider acquisitions of other
chains, the purchase of Quizno's Restaurants from our Owners, and the purchase
of Quizno's area directorships from our Area Directors. From time to time, we
will make offers and enter into letters of intent for such transactions subject
to the completion of due diligence. In all such cases, we will identify the
sources of cash required to complete such transactions prior to entering into a
binding agreement.

                                       26
<PAGE>

     We have never paid cash dividends on our common stock and we do not
anticipate a change in this policy in the foreseeable future.

Year 2000 Disclosure

     Prior to December 1, 1999, we took various steps to address the year 2000
(or Y2K) issues as they related to our computer systems and operations in
general. We reviewed our internal systems to determine what steps we could take
to minimize Y2K's potential disruptive effect on our operations. We concluded
that we were not at material risk from Y2K issues. We use current versions of
widely used, publicly available software for our accounting and other data
processing requirements. The providers of the software utilized by us have
stated that there will be no failures in the programs used by us resulting from
the year 2000. We use a small amount of customized software, all of which has
been developed by us over the last two years, and has been written to be
functional in the year 2000. We did not determine the impact, if any, that year
2000 issues might have on our vendors. However, we believe there are adequate
alternative vendors that can supply products and services to us if necessary.
Finally, our business, quick service restaurants, is not highly dependent upon
electronic data processing.

                                       27
<PAGE>

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.








                    THE QUIZNO'S CORPORATION AND SUBSIDIARIES




                                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 - 5

    Consolidated Statements of Cash Flows.........................F - 6

Notes to Consolidated Financial Statements........................F - 8


<PAGE>









                          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 the September 30, 1999 and December 31, 1998
and 1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the nine months ended September 30, 1999 and the
years ended December 31, 1998 and 1997. 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 audit 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 September 30, 1999 and December 31, 1998 and
1997 and the results of their operations and their cash flows for the nine
months ended September 30, 1999 and the years ended December 31, 1998 and 1997,
in conformity with generally accepted accounting principles.




                                 /s/Ehrhardt Keefe Steiner & Hottman PC
                                    Ehrhardt Keefe Steiner & Hottman PC
December 13, 1999
Denver, Colorado

                                     F - 1



<PAGE>




                   THE QUIZNO'S CORPORATION AND SUBSIDIARIES

                          Consolidated Balance Sheets


<TABLE>
<CAPTION>

                                                                                          December 31,
                                                              September 30,     ------------------------------
                                                                   1999             1998               1997
                                                              -------------     ------------      ------------
                                     Assets
<S>                                              <C>        <C>        <C>
Current assets
   Cash and cash equivalents ............................     $    626,828      $    702,258      $    561,287
   Short-term investments ...............................        4,263,877         1,541,423           538,188
   Accounts receivable, net of allowance for
    doubtful accounts of $43,793 (1999),
    $20,000 (1998) and $38,231 (1997) (Note 8) ..........        1,047,438           857,280           545,109
   Current portion of notes receivable
    (Notes 3 and 8) .....................................          519,994         1,212,522           598,486
   Deferred tax asset (Note 12) .........................          128,718            81,260              --
   Other current assets .................................          373,578           266,100           375,902
   Assets held for resale (Note 4) ......................        1,082,310           690,030           593,675
                                                              ------------      ------------      ------------
     Total current assets ...............................        8,042,743         5,350,873         3,212,647
                                                              ------------      ------------      ------------

Property and equipment, net (Notes 2 and 5) .............        4,804,051         3,535,222         2,240,661
                                                              ------------      ------------      ------------

Other assets
   Intangible assets, net (Notes 2 and 6) ...............        1,662,265         1,553,522         1,651,637
   Other deferred assets (Note 7) .......................        1,726,984         1,119,371           739,762
   Deferred tax asset (Note 12) .........................        3,507,213           734,808           175,000
   Deposits and other assets (Note 2) ...................          361,189           119,883            76,294
   Notes receivables, net (Notes 3 and 8) ...............        1,670,329         1,375,872           734,495
                                                              ------------      ------------      ------------
     Total other assets .................................        8,927,980         4,903,456         3,377,188
                                                              ------------      ------------      ------------

Total assets ............................................     $ 21,774,774      $ 13,789,551      $  8,830,496
                                                              ============      ============      ============
                     Liabilities and Stockholders' Equity

Current liabilities
   Accounts payable .....................................     $  1,219,157      $  1,317,085      $  1,065,374
   Accrued liabilities ..................................          544,476           532,324           489,848
   Current portion of long-term obligations
    (Notes 8 and 9) .....................................          337,642           370,404           303,084
   Current portion of subordinated debt
    (Note 9) ............................................          218,546           244,084           110,912
   Income taxes payable (Note 12) .......................          851,469           200,000              --
                                                              ------------      ------------      ------------
     Total current liabilities ..........................        3,171,290         2,663,897         1,969,218

Long-term obligations (Notes 8 and 9) ...................        1,268,504           964,984           741,570
Subordinated debt (Note 9) ..............................        1,498,791         1,130,916         1,389,088
Deferred revenue ........................................       13,722,331         4,781,946         2,148,662
                                                                                ------------      ------------
     Total liabilities ..................................       19,660,916         9,541,743         6,248,538
                                                              ------------      ------------      ------------

Commitments and contingencies (Notes 4, 10,
13 and 15)

Minority interest in Subsidiary (Note 2) ................             --             151,601              --

Stockholders' equity (Notes 9 and 11)
   Preferred stock, $.001 par value,
    1,000,000 shares authorized;
    Series A issued and outstanding 146,000
    (1999, 1998 and 1997) ($876,000
    liquidation preference) .............................              146               146               146
   Series B issued and outstanding 0 (1999),
    100,000 (1998) and 100,000 (1997)
    ($500,000 liquidation preference) ...................             --                 100               100
   Series C issued and outstanding 167,000
    (1999, 1998 and 1997) ($835,000
    liquidation preference) .............................              167               167               167
   Common stock, $.001 par value; 9,000,000
    shares authorized; issued and outstanding,
    3,074,177 (1999), 3,054,459 (1998) and
    2,923,294                                                        3,074             3,054             2,923
   Capital in excess of par value .......................        4,485,949         5,065,247         4,663,744

   Accumulated deficit ..................................       (2,375,478)         (972,507)       (2,085,122)
                                                              ------------      ------------      ------------
           Total stockholders' equity ...................        2,113,858         4,096,207         2,581,958
                                                              ------------      ------------      ------------

Total liabilities and stockholders' equity ..............     $ 21,774,774      $ 13,789,551      $  8,830,496
                                                              ============      ============      ============

</TABLE>


                 See notes to consolidated financial statements.

                                      F - 2


<PAGE>


                    THE QUIZNO'S CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>



                                              For the Nine             For the Years Ended
                                              Months Ended                December 31,
                                              September 30,     --------------------------------
                                                  1999              1998               1997
                                              ------------      ------------        ------------
<S>                                           <C>               <C>                 <C>
Franchise operations
   Revenue (Note 8)
       Continuing fees ..................     $  8,682,783      $  5,836,822        $  2,747,955
       Initial franchise fees ...........        2,722,959         2,883,650           2,269,001
       Area director and master
        franchise fees (Note 1) .........          776,523         3,022,276           2,139,080
       Other ............................          370,374           604,172             593,771
       Interest .........................          238,790           259,193             137,640
                                              ------------      ------------        ------------
           Total revenue ................       12,791,429        12,606,113           7,887,447
                                              ------------      ------------        ------------

   Expenses
       Sales and royalty commissions ....       (3,877,691)       (4,266,024)         (2,346,476)
       Advertising and promotion ........          (53,943)         (191,755)           (245,953)
       General and administrative .......       (6,509,444)       (6,201,857)         (4,611,978)
                                              ------------      ------------        ------------
           Total expenses ...............      (10,441,078)      (10,659,636)         (7,204,407)
                                              ------------      ------------        ------------

Income from franchise operations ........        2,350,351         1,946,477             683,040
                                              ------------      ------------        ------------

Company store operations
   Sales ................................        6,420,563         6,848,737           4,070,666
                                              ------------      ------------        ------------
   Cost of sales ........................       (1,969,433)       (2,042,092)         (1,309,624)
   Cost of labor ........................       (1,747,029)       (1,683,225)         (1,037,101)
   Other store expenses .................       (2,169,465)       (2,562,540)         (1,432,290)
                                              ------------      ------------        ------------
           Total expenses ...............       (5,885,927)       (6,287,857)         (3,779,015)
                                              ------------      ------------        ------------

Income from Company stores operations ...          534,636           560,880             291,651

Other income (expenses)
   Research, development and new programs             --                --               (72,161)
   Sales by stores held for resale ......          566,841         1,281,904             149,549
   Loss and expenses related to stores
    held for sale .......................         (777,594)       (1,541,957)
   Loss on sale or closure of Company
    stores ..............................          (80,304)          (47,505)           (120,928)
   Sale of Japan master franchise .......        1,168,801              --                  --
   Provision for bad debts ..............         (220,536)         (285,308)            (49,540)
   Other expenses .......................          (26,287)          (47,838)            (64,544)
   Depreciation and amortization ........         (921,300)         (781,977)           (406,444)
   Privatization costs ..................         (265,472)             --                  --
   Interest expense .....................         (240,827)         (340,614)           (290,019)
                                              ------------      ------------        ------------

           Total other expenses .........     $   (796,678)     $ (1,763,295)       $ (1,064,309)
                                              ============      ============        ============

</TABLE>



                 See notes to consolidated financial statements.

                                      F - 3


<PAGE>


                    THE QUIZNO'S CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Operations


<TABLE>
<CAPTION>

                                                 For the Nine         For the Years Ended
                                                 Months Ended            December 31,
                                                 September 30,    ----------------------------
                                                     1999             1998              1997
                                                 -----------      -----------      -----------
<S>                                              <C>              <C>              <C>
Net income (loss) before income taxes ......     $ 2,088,309      $   744,062      $   (89,618)
Income tax (provision) benefit (Note 12) ...        (721,688)         368,553             --
                                                 -----------      -----------      -----------

Net income (loss) before preferred
 dividends and  cumulative effect of changes
 in accounting principle ...................       1,366,621        1,112,615          (89,618)
Preferred stock dividends ..................        (124,230)        (220,890)         (93,998)
                                                 -----------      -----------      -----------

Net income (loss) before  cumulative  effect
 of changes in accounting principle ........       1,242,391          891,725         (183,616)
Cumulative effect of changes in accounting
 principle (net of taxes) (Note 1) .........      (2,769,592)            --               --
                                                 -----------      -----------      -----------

Net income (loss) applicable to common
 stockholders ..............................     $(1,527,201)     $   891,725      $  (183,616)

Net income per share - basic
Net income per share before cumulative
 effect of changes in accounting principle .     $       .40      $       .30      $      (.06)
Cumulative  effect of changes in  accounting
 principle .................................            (.90)            --               --
                                                 -----------      -----------      -----------

Basic net income per share of common stock .     $      (.50)     $       .30      $      (.06)
                                                 ===========      ===========      ===========


Net income per share - diluted
Net income per share before cumulative
 effect of changes in accounting principle .     $       .35      $       .26      $      (.06)
Cumulative effect of changes in accounting
 principle .................................            (.90)            --               --
                                                 -----------      -----------      -----------

Diluted net income per share of common stock     $      (.55)     $       .26      $      (.06)
                                                 ===========      ===========      ===========


Weighted average common shares outstanding
Weighted average common shares outstanding
 - basic ...................................       3,060,878        3,014,042        2,878,310
                                                 ===========      ===========      ===========

Weighted average common shares outstanding
 - diluted .................................       3,816,549        3,445,972        2,878,310
                                                 ===========      ===========      ===========
</TABLE>


                 See notes to consolidated financial statements.

                                      F - 4



<PAGE>


                    THE QUIZNO'S CORPORATION AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>


                                     Convertible
                                   Preferred Stock               Common Stock           Additional
                            --------------------------    --------------------------      Paid-in      Accumulated
                               Shares         Amount        Shares         Amount         Capital        Deficit           Total
                            -----------    -----------    -----------    -----------    -----------    -----------      -----------
<S>                         <C>            <C>            <C>            <C>            <C>            <C>              <C>
Balance, December 31,
 1996                           146,000    $       146      2,864,757    $     2,865    $ 3,233,415    $(1,995,504)     $ 1,240,922

Issuance of convertible
 Series C preferred
 stock for cash, net
 of offering costs
 of $36,454 (Note 11) ....      167,000            167           --             --          798,379           --            798,546

Issuance of Series B
 convertible preferred
 stock for debt, net
 of offering costs
 of $44,277 (Note 9) .....      100,000            100           --             --          455,623           --            455,723

Inherent value of
 warrants granted to
 lender in connection
 with conversion at
 debt to Series B
 preferred stock
 (NOte 9) ................         --             --             --             --           44,277           --           44,277

Issuance of common stock
 for acquisition .........         --             --           18,182             18         99,982           --          100,000

Issuance of common stock
 for exercise of options
 pursuant to employee
 benefit plan (Note 11) ..         --             --           40,355             40         92,116           --           92,156

Inherent value of options
 granted to area
 directors (Note 11) .....         --             --             --             --           33,950           --           33,950

Preferred stock
 dividens (Note 11) ......         --             --             --             --          (93,998)          --          (93,998)

Net loss .................         --             --             --             --             --          (89,618)       (89,618)
                            -----------    -----------    -----------    -----------    -----------    -----------    -----------

Balance, December 31,
 1997                           413,000            413      2,923,294          2,923      4,663,744     (2,085,122)     2,581,958

Issuance of common stock
 for exercise of options
 pursuant to employee
 benefit plan (Note 11) ..         --             --           51,165             51        222,473           --          222,524

Issuance of common stock
 for exercise of options
 by underwriter (Note 11)          --             --           80,000             80        399,920           --          400,000

Preferred stock
 dividens (Note 11) ......         --             --             --             --         (220,890)          --         (220,890)

Net income ...............         --             --             --             --             --        1,112,615      1,112,615
                            -----------    -----------    -----------    -----------    -----------    -----------    -----------

Balance, December 31,
 1998                           413,000            413      3,054,459          3,054      5,065,247       (972,507)     4,096,207

Issuance of common stock
 for exercise of options
 pursuant to employee
 benefit plan (Note 11) ..         --             --           28,809             29         75,438           --           75,467

Tax benefit from exercise
 of stock options ........         --             --             --             --           14,840           --           14,840

Shares cancelled (Note 11)         --             --           (9,091)            (9)       (45,446)          --          (45,455)

Redemption of Series B
 Preferred Stock (Note 11)     (100,000)          (100)          --             --         (499,900)          --         (500,000)

Preferred stock
 dividends (Note 11) .....         --             --             --             --         (124,230)          --         (124,230)

Net income ...............         --             --             --             --             --       (1,402,971)    (1,402,971)
                            -----------    -----------    -----------    -----------    -----------    -----------    -----------

Balance, September 30,
 1999                           313,000    $       313      3,074,177    $     3,074    $ 4,485,949    $(2,375,478)   $ 2,113,858
                            ===========    ===========    ===========    ===========    ===========    ===========    ===========

</TABLE>

                 See notes to consolidated financial statements.

                                      F - 5


<PAGE>


                    THE QUIZNO'S CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                  For the Nine         For the Years Ended
                                                  Months Ended             December 31,
                                                  September 30,    ----------------------------
                                                      1999             1998            1997
                                                  -----------      -----------      -----------
<S>                                               <C>              <C>              <C>
Cash flows from operating activities
   Net income (loss) ........................     $(1,402,971)     $ 1,112,615      $   (89,618)
                                                  -----------      -----------      -----------
   Adjustments to reconcile net income
    (loss) to net cash provided by operating
    activities -
     Depreciation and amortization ..........         844,220          757,911          406,444
     Cumulative effect of a change in
      accounting principle ..................       4,388,208             --               --
      Provision for losses on accounts and
       notes receivable .....................         220,536          285,308          (12,846)
      Loss on disposal of Company stores ....          80,304           78,004          120,928
      Issuance of stock for services ........            --               --             16,349
      Inherent value of options granted .....            --               --             33,950
      Deferred income taxes .................      (2,819,863)        (641,068)            --
      Amortization of deferred financing
       costs ................................          77,080           24,066           54,072
      Issuance of notes receivable for
       master franchise and area director
       marketing agreements .................        (487,279)      (1,599,977)        (354,412)
      Other .................................          17,972             --               --
      Changes in assets and liabilities -
         Accounts receivable ................        (398,076)        (369,279)        (168,661)
         Other assets .......................         (77,735)         109,802         (192,997)
         Accounts payable ...................         (99,330)         251,711           12,346
         Accrued liabilities ................          12,152           42,476          319,120
         Deferred franchise costs ...........        (659,547)        (287,610)           6,085
         Deferred initial franchise fees and
          other fees ........................       4,672,693        2,633,284          573,191
         Accrued income taxes ...............         651,469          200,000             --
                                                  -----------      -----------      -----------
                                                    6,422,804        1,484,628          813,569
                                                  -----------      -----------      -----------
             Net cash provided by operating
              activities ....................       5,019,833        2,597,243          723,951
                                                  -----------      -----------      -----------

Cash flows from investing activities
   Cash paid for acquisition of Company store        (286,355)            --           (623,800)
   Purchase of property and equipment .......      (1,477,962)      (1,780,767)
   Proceeds from notes receivable ...........       1,221,099          889,671          553,007
   Investment in turnkey stores .............          (7,558)        (281,620)        (593,675)
   Short-term investments ...................      (2,722,454)      (1,003,235)
   Issuance of other notes receivable .......         (37,390)        (773,307)        (455,099)
   Investment by minority interest owners ...            --            151,601             --
   Purchase of minority interest owners .....        (150,000)            --               --
   Intangible and deferred assets ...........        (736,458)        (601,862)        (294,853)
   Proceeds from sale of assets and stores ..            --            213,000          135,000
   Deposits .................................         (89,749)         (43,589)         (38,665)
   Area director marketing territory
    repurchases .............................        (863,984)            --               --
   Other investments ........................         (15,000)            --               --
                                                  -----------      -----------      -----------
             Net cash used by investing
              activities ....................      (5,165,811)      (3,230,108)
                                                  -----------      -----------      -----------

Cash flows from financing activities
   Line-of-credit ...........................            --               --           (220,239)
   Principal payments on long-term
    obligations .............................      (1,733,697)        (505,440)        (347,799)
   Proceeds from long-term obligations ......       2,338,168          877,642          155,615
   Redemption of Class B Preferred Stock ....        (500,000)            --               --
   Loan costs ...............................            --               --            (37,469)
   Proceeds from issuance of common stock
    and preferred stock .....................          90,307          622,524          910,807
   Offering costs ...........................            --               --            (36,454)
   Preferred dividends paid .................        (124,230)        (220,890)         (93,998)
                                                  -----------      -----------      -----------
             Net cash provided by financing
              activities ....................          70,548          773,836          330,463
                                                  -----------      -----------      -----------

Net (decrease) increase in cash and cash
 equivalents ................................         (75,430)         140,971       (1,566,043)

Cash and cash equivalents - beginning of year         702,258          561,287        2,127,330
                                                  -----------      -----------      -----------

Cash and cash equivalents - end of year .....     $   626,828      $   702,258      $   561,287
                                                  ===========      ===========      ===========
</TABLE>


                 See notes to consolidated financial statements.

                                      F - 6


<PAGE>


                    THE QUIZNO'S CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (continued)


Supplemental disclosure of cash flow information:
     Cash paid during the year for interest was $240,827 (1999), $340,614 (1998)
     and $290,019 (1997). Cash paid during the year for income taxes was
     $1,198,275 (1999), $72,515 (1998) and $0 1997.

Supplemental disclosure of non-cash investing and financing activities:
     During 1999, the Company sold a store held for resale for $150,000, all of
     which was in the form of a promissory note, and recorded a loss on sale of
     $11,684. Also, the Company sold the franchising rights and obligations for
     all but 14 of its Bain's Deli's franchise agreements to Bain's Deli
     Corporation for $850,000, represented by a note receivable, a reduction of
     a related payable and other intangibles. In 1999, the Company recorded a
     gain of $12,071 related to this sale.

     Also, during 1999, the Company reached a settlement with Bain's Deli that
     resulted in the return to the Company of the 9,091 shares of Company stock
     originally issued as part of the purchase of the Bain's units in 1997 and
     the cancellation of the Company's note payable to Bain's Deli in the amount
     of $116,118.

     During 1998, the Company transferred $220,227 of property and equipment to
     assets of stores held for resale or under development.

     Additionally in 1998, the Company reduced notes payable, pursuant to the
     terms of the Bain's purchase agreements, in the amount of $437,553.
     Corresponding reductions in property and equipment ($150,000) and
     intangibles ($287,553) were also recorded.

     During 1999, 1998 and 1997, the Company acquired assets under capital
     leases totaling $124,742, $231,085and $77,942, respectively.

     During 1997, the Company converted $500,000 of subordinated debt to 100,000
     shares of Series B convertible preferred stock net of $44,277 of deferred
     offering costs.

     Additionally in 1997, the Company acquired the assets of Bain's Deli
     Franchise Associates, which included 52 franchise restaurants and three
     company owned deli restaurants as follows:

        Property and equipment                      $   225,000
        Non-compete agreement                         1,060,000
        Other assets                                    122,900
                                                    -----------

                                                    $ 1,407,900
                                                    ===========

        Acquisition costs                          $  (104,600)
        Cash paid                                     (623,800)
        Promissory note issued                        (579,500)
        Common stock issued                           (100,000)
                                                    ----------

                                                   $(1,407,900)
                                                   ===========

                See notes to consolidated financial statements.

                                     F - 7
<PAGE>


                    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, Canada, United
Kingdom, Australia, Japan and Central America 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, S & S, Inc.
("S&S") formerly the Quizno's Development Company ("QDC") incorporated in 1995
to develop stores to sell or lease to franchisees, The Quizno's Realty Company
("QRC") incorporated in 1995 to execute leases for store locations, The Quizno's
Acquisition Company ("QAC") incorporated in 1997 to purchase existing unrelated
quick service restaurants, the Quizno's Licensing Company ("QLC") incorporated
in 1998 to license companies who use the Quizno's logos and QUIZ-DIA, Inc.
("DIA") incorporated in 1999 to purchase restaurant assets at Denver
International Airport. In addition, in 1998, the Company organized Quizno's
Kansas LLC ("QKL"), and purchased the assets of Stoico Restaurant Group (see
below).

The following table summarizes the number of Quizno's restaurants open at
September 30, 1999:

                                        Sold But
                                        Not Yet In
                                        Operation   Operational    Total
                                        ---------   -----------    ------
Quizno's
Company owned restaurants ...........      --          17           17
Franchise restaurants - U.S. and
Puerto Rico .........................       505       527        1,032
Franchise Restaurants - International       159        72          231
Restaurants held for resale .........      --           2            2

Bain's
Franchise restaurants ...............      --           8            8

Quizno's Kansas
Company owned restaurants ...........      --           8            8
                                          -----     -----        -----

                                            664       634        1,298
                                          =====     =====        =====

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries QOC, S&S, QRC, QLC, QAC and QKL.

Change in Fiscal Year

In November 1999, the Company changed its fiscal year from December 31 to
September 30. All references in the financial statements to the year or period
ended September 30 relate to the nine months ended September 30, 1999.

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.

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 its franchisees. To
reduce credit risk for U.S. franchises, 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. As of the balance sheet date, balances of cash and
cash equivalents exceeded the federally insured limit by approximately
$1,140,779.

Short-Term Investments

The Company classifies its investment in corporate debt securities with original
maturities in excess of three months as short-term investments held-to-maturity.
The Company has the ability and intent to hold these securities until maturity.

Short-term investments are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Realized gains and losses
are recognized in earnings upon redemption. The specific identification method
is used to determine the cost of securities sold. Discounts or premiums are
accreted or amortized using the level-interest-yield method to the earlier of
the call date or maturity of the related security.

During 1999, unrealized gains and losses were immaterial as amortized cost
approximated market value.

Accounts Receivable/Royalties Receivable

At the time the accounts and royalties 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 that 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, ranging
from 3 to 10 years, and the related lease term for leasehold improvements and
equipment under capital leases.

Deferred Financing Costs

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

Intangible Assets

The amounts paid by the Company for non-compete agreements are being amortized
over the term of the non-compete agreements.

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 intangibles                   3 - 15
                                                   years

Area Director Territory Repurchases

Costs associated with repurchasing area directory territories are deferred and
amortized on a straight-line basis over 15 years.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recovered. The Company looks primarily to the undiscounted future cash flows
in its assessment of whether or not long-lived assets have been impaired. At
September 30, 1999, the Company determined no impairment was appropriate.

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 paid by U.S. franchisees 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 are recorded as
deferred franchise sales revenue. These franchise fees are non-refundable in
most circumstances. 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.

Area Director Marketing Agreements

The area director marketing agreement provides the area director a non-exclusive
right to sell and open franchises in a defined geographic territory in the U.S.
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 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 after
certain restrictive performance criteria are met. The area director is entitled
to receive commissions during the term of the area director marketing agreement
and, in certain circumstances, the area director is entitled to 1% of gross
sales for franchise restaurants operating in the territory as of the termination
date of the area director agreement. The area director marketing fee is $.07 per
person living in the area director's territory, plus a $10,000 training fee
which is deferred until training has been completed. Prior to January 1, 1999,
the Company recognized revenue when all material services and conditions
required to be performed by the Company had been substantially completed.

Change in Accounting Method for Area Director Marketing Agreements

Effective January 1, 1999, the Company changed its accounting policy related to
the recognition of area director marketing agreement fees to one that recognizes
such fees as revenue on a straight-line basis over the term of the agreement,
which is ten years. Direct expenses attributable to the fees are classified as a
prepaid and recognized as an expense over the same ten year term. The effect of
the change in fiscal 1999 resulted in the deferral of $4,262,701 of net revenue
previously recognized in prior years. Fiscal 1999 income before the cumulative
effect adjustment included $387,108 of amortized deferred net revenue related to
area director marketing agreement fees. This change was reported as a cumulative
effect of change in accounting principle for $2,685,502 (net of $1,577,199 in
income tax benefits) and is included in the net loss in fiscal 1999.

International Fees

The Company grants master franchise rights for the development of international
markets. The master franchisee will enter into individual franchise and area
director agreements for development within the franchised country, and will
assume all of the franchisor's obligations and duties under the agreement. The
Company is not a party to the individual franchise and area director agreements.
Generally, the master franchise agreement requires the master franchisee to pay
the Company a percentage, currently 30%, of all initial franchise fees,
royalties, and area fees collected by the master franchisee. The Company
recognizes these fees when received by the Company.

The master franchise agreement provides the master franchisee an exclusive right
to sell and open franchises and grant area directorships in a defined geographic
territory. The master franchisee is responsible for providing all franchisor
services in the territory and must sell and open a minimum of new franchised
restaurants each year. The fee for master franchise agreements is based on the
population of the territory and will vary depending on certain economic,
demographic and cultural factors. Revenue is recognized when all material
services and conditions required to be performed by the Company have been
substantially performed, which is generally the date the fee is paid.

Royalties and Advertising Fees

Pursuant to the various franchise agreements, U.S. 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 4% for advertising fees.

Royalties as required 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 as they are paid to and disbursed out of separate legal
advertising entities.

Income Taxes

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 and area director fee revenues and costs and net operating loss
carryforwards.

Basic and Diluted Loss Per Common Share

In accordance with FAS 128, basic earnings per share is computed by dividing net
income by the number of weighted average common shares outstanding during the
year. Diluted earnings per share is computed by dividing net income by the
number of weighted average common shares outstanding during the year, including
potential common shares, which for the nine months ended September 30, 1999 and
the years ended December 31, 1997 and 1998 consisted of preferred stock,
convertible debt, stock options and warrants outstanding (Note 14).

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, short-term investments, receivables, prepaids, current portion of
notes receivable, accounts payable and accrued expenses approximated fair value
as of September 30, 1999 because of the relatively short maturity of these
instruments.

The carrying amounts of long-term notes receivable approximate fair value as of
September 30, 1999 because the discounted cash flows at current rates
approximate the rates of the significant notes.

The carrying amounts of notes payable and debt issued approximate fair value as
of September 30, 1999 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, 1998 and 1997 to make them comparable to those presented for the
nine months ended September 30, 1999, none of which change the previously
reported net income or total assets.

Recently Issued Accounting Pronouncements

During April 1998, Statement of Position 98-5, "Reporting in the Costs of
Start-Up Activities" was issued. SOP 98-5 requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 was required to be
adopted by the first quarter of 1999. Upon adoption, the Company was required to
write-off $125,507 ($84,090 net of applicable taxes) in preopening related costs
that were deferred on the balance sheet as of December 31, 1998. This write-off
was reported as a cumulative effect of a change in accounting principle.


Note 2 - Acquisition of Assets

Effective July 31, 1999, the Company repurchased the 30% minority interest of
QKL for $150,000 in cash.

On July 1, 1999, the Company purchased, for cash, a Quizno's Restaurant from a
franchisee for a total purchase price of $286,355. The purchase was accounted
for under the purchase method.

The purchase price has been allocated to the assets purchased based on the fair
market values at the date of acquisition, as follows:

Equipment                                          $  65,000
Leasehold improvements                               105,000
Covenant not to compete                              100,000
Lease Agreement                                       10,087
Inventory and deposit                                  6,268
                                                   ---------

                                                   $ 286,355
                                                   =========

No pro forma statement of operations is presented as the effect is not material
to the Company's operations.


Note 3 - Notes Receivable

Notes receivable consist of the following:
                                                              December 31,
                                           September 30,  ---------------------
                                                1999        1998        1997
                                            -----------   ---------   ---------
Notes receivable  related to area director
marketing  agreements,   interest  ranging
from 6% to  15%,  due in  varying  amounts
through December 2010.                       $1,540,826  $1,878,855  $  853,028

Notes   receivable  for  sale  of  stores,
interest  ranging  from 6% to 15%,  due in
varying amounts through October 2012.           530,026     410,058     494,318

Note receivable from national  advertising
trust,  interest  at 10%,  paid in full in
February 1999.                                      -       267,058         -

Note    receivable    from   Bain's   Deli
Corporation,  interest  accrues  at  6% if
note  balance not paid down $25,000 in any
one year, due February 1, 2006                  150,000        -           -

Other  notes   receivable   with  interest
ranging  from  0% to 11%,  due in  varying
amounts   through   2011.    Includes   $0
(1999),  $21,524 (1998) and $35,524 (1997)
due from the Advertising Fund (Note 8).          11,213      32,423     125,635
                                            -----------   ---------   ---------
                                              2,232,065   2,588,394   1,472,981
Less current portion                           (519,994) (1,212,522)   (598,486)
                                            -----------   ---------   ---------
                                              1,712,071   1,375,872     874,495
Less allowance                                  (41,742)        -      (140,000)
                                            -----------   ---------   ---------

                                            $ 1,670,329  $1,375,872  $  734,495
                                            ===========  ==========  ==========

At the time 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. The Company collateralizes the notes with the area
directorship agreement, assets of the store sold or other related assets.

Future principal payments are as follows:

Year Ended September 30,
------------------------

          2000                               $ 519,994
          2001                                 360,189
          2002                                 378,702
          2003                                 331,937
          2004                                 205,829
          Thereafter                           435,414
                                             ---------
                                             2,232,065
Less allowance                                 (41,742)
                                             ---------

                                            $2,190,323
                                            ==========


Note 4 - Assets Held for Resale

Included in assets held for resale are the following:

                                                            December 31,
                                         September 30, ----------------------
                                              1999        1998        1997
                                          ----------   ----------  ----------
Furniture fixtures and equipment          $   65,421   $  221,034  $       -
Leasehold improvements                       108,056      383,771          -
Goodwill and other                            19,446       33,590          -
Area director territory repurchases          889,387       51,635          -
Stores under development                         -            -       593,675
                                          ----------   ----------  ----------

                                          $1,082,310   $  690,030  $   593,675
                                          ==========   ==========  ===========

During 1997, the Company acquired a store from a franchisee and also was in the
process of constructing four stores. At the end of 1997, three of the four
stores were operational and in 1998, the fourth store became operational. In
March 1998, one of the stores was sold as a franchise for a sale price of
$213,000. Cost incurred by the Company prior to the sale amounted to
approximately $234,000. In 1999, the Company sold another store as a franchise
for a sale price of $150,000 and closed one store. Costs incurred by the Company
prior to their disposal amounted to approximately $179,000 and $170,000,
respectively. The Company intends to close one store and sell the remaining
store by the end of 1999.


Note 5 - Property and Equipment

Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                 December 31,
                                            September 30, -------------------------
                                 Life          1999          1998          1997
                               ----------   ----------    ----------    -----------
<S>                            <C>          <C>           <C>           <C>
Equipment                      3-10 years   $2,014,698    $1,524,799    $   903,371
Furniture and fixtures         7-10 years    1,052,232       764,672        390,435
Leasehold improvements         Lease term
                               (Note 10)     2,286,344     1,712,215      1,297,334
Software                       3-5 years       681,238       313,540        113,506
                                            ----------    ----------    -----------
                                             6,034,512     4,315,226      2,704,646
Less accumulated
 depreciation and amortization              (1,230,461)     (780,004)      (463,985)
                                            ----------    ----------    -----------

Net property and equipment                  $4,804,051    $3,535,222    $ 2,240,661
                                            ==========    ==========    ===========
</TABLE>

Depreciation expense for 1999 included depreciation on certain assets sold, or
held for resale that will not recur in future years if these assets are sold, as
is the intention of the Company.


Note 6 - Intangible Assets

Intangible assets consist of the following:

                                                             December 31,
                                          September 30,-----------------------
                                             1999         1998        1997
                                          ----------   ----------  -----------
Covenants not to compete                  $  600,113   $1,667,546  $ 1,664,759
Franchise agreements                         792,796      310,506      292,395
Prepaid area director marketing
 commission                                  526,776          -            -
Trademarks and other                         455,339      442,813      318,827
                                          ----------   ----------  -----------
                                           2,375,024    2,420,865    2,275,981
Less accumulated amortization               (712,759)    (867,343)    (624,344)
                                          ----------   ----------  -----------

                                          $1,662,265   $1,553,522  $ 1,651,637
                                          ==========   ==========  ===========



Note 7 - Other Deferred Assets

Other deferred assets consist of the following:


                                                               December 31,
                                           September 30, -----------------------
                                               1999         1998        1997
                                            ----------   ----------  -----------
Deferred franchise costs                    $1,585,773   $  926,226  $   638,616
Deferred financing costs                       108,769       87,080      101,146
Other deferred costs                            32,442      106,065         -
                                            ----------   ----------  -----------

                                            $1,726,984   $1,119,371  $   739,762
                                            ==========   ==========  ===========


Note 8 - Related Party Transactions

The Company had notes receivable from the Advertising Fund of $0, $21,524 and
$35,524 at September 30, 1999 and December 31, 1998 and 1997, respectively. The
balances related to an off season build-up for advertising which was reimbursed
to the Company in the subsequent year.

In September 1999, two employees of the Company purchased an area directorship
for $200,000, of which $180,000 of which was in the form of a promissory note
and $20,000 was in cash.

Two directors of the Company own more than 50% in a company that owns an area
directorship. In 1999, 1998 and 1997, the Company paid the Area Director
$142,364, $139,358 and $85,577, respectively, in commissions and royalties. At
September 30, 1999, $55,547 was owed to the Company on a promissory note due
from the area director. During 1997, 1998 and 1999, payments on such notes were
$4,655, $6,212 and $8,000, respectively. An additional $10,000 was paid in
November 1999 to bring the note and all accrued interest current. The area
director is also indebted to the Company for $13,075 in connection with the
resale of a Quizno's restaurant once operated by the area director. The area
director is reducing this debt by offsetting commissions on royalty fees from
that location paid to the managing area director. The debt is expected to be
paid off in approximately 24 months.

In 1995, the Company sold an area directorship to a company owned by a director,
officer and shareholder for $150,000. During 1997 and 1998, the Company paid the
area director no sales commissions and $9,259 and $27,664 in royalties,
respectively. The area directorship was sold in 1998 to an unrelated third
party.

In 1997, the Company purchased a Quizno's restaurant from a company in which an
executive officer is a 50% shareholder. The restaurant paid royalties to the
Company of $2,027 in 1997 up to the date purchased by the Company. The purchase
price was $80,000 of which $15,000 was paid in cash and $60,000 paid by issuance
of the Company's promissory note bearing interest at 11% and payable over 4
years. During 1997, 1998 and 1999, the Company made payments pursuant to the
promissory note totaling $18,839, $18,993 and $14,245, respectively. In October
of 1999, this note was paid-off in full.


Note 9 - Long-Term Obligations and Convertible Subordinated Debt

                                                             December 31,
                                           September 30,-----------------------
                                               1999        1998        1997
                                            ----------  ----------   ----------
Various  capital   leases,   with  monthly
payments  totaling  approximately  $25,200
including  interest at rates  ranging from
9.74%  to 11% and  expiring  through  June
2004.  Collateralized  by  restaurant  and
office  equipment.   In  conjunction  with
Company's  loan  agreement  with  AMRESCO,
$852,982   of  the   September   30,  1999
balance  was   paid-off  in  October  1999
(Note 15).                                  $  970,999  $  986,077  $   127,770

Note  payable to a financial  institution,
$1,372    monthly    payments    including
interest  at the bank index rate (8.75% at
December  31,   1998)  plus  1%,   through
February 2001,  when any unpaid  principal
and   interest   is  due.   The   note  is
collateralized  by  restaurant  equipment.
In   conjunction   with   Company's   loan
agreement with AMRESCO,  the September 30,
1999  balance was paid-off in October 1999
(Note 15).                                      23,574      35,869       52,048

Note payable to a company,  with  interest
at  11%.   The  note  calls  for   monthly
payments  of $1,583 and  matures  November
2001.  Collateralized  by  the  assets  of
one  store   with  a  net  book  value  of
approximately   $68,000.   In  conjunction
with   Company's   loan   agreement   with
AMRESCO,  the  September  30, 1999 balance
was paid-off in October 1999 (Note 15).         35,220      46,056       59,188

Notes payable to a company,  with interest
at  11%.   The  notes  call  for   monthly
payments  of  $2,888  and  mature  through
July  2001.  Collateralized  by the assets
of  two  stores.   In   conjunction   with
Company's  loan  agreement  with  AMRESCO,
the   September   30,  1999   balance  was
paid-off in October 1999 (Note 15).             37,470      57,526       82,833

Note  payable to a company  with  interest
payments  at  10%.   The  note  calls  for
monthly  payments  of $10,736  and matures
in  January  2004.  Collateralized  by the
assets    acquired    from   Bain's   Deli
Franchise   Associates.   In   1998,   the
principal   balance   of  the   note   was
decreased  by  approximately  $431,000 due
to  provisions  in the purchase  agreement
which  allow for  quarterly  decreases  or
increases  in the  note  balance  based on
certain   performance   standards  of  the
franchises acquired.  In connection with a
settlement   with  Bain's  Deli  Franchise
Associates,  this  note was  cancelled  in
1999.                                              -       116,118      576,612

Note  payable to a financing  company with
interest  at  9.5%.  The  note  calls  for
monthly  principal  and interest  payments
of  $2,106  and  matures  July  15,  2003.
Collateralized  by  restaurant  equipment.
In   conjunction   with   Company's   loan
agreement with AMRESCO,  the September 30,
1999  balance was paid-off in October 1999
(Note 15).                                      81,072       93,742          -

Note payable to a financing  company  with
interest at  7.92%.  The  note  calls  for
monthly  principal  and  interest payments
of  $7,528  and  matures  March 23,  2006.
Collateralized  by  restaurant  equipment.
In   conjunction   with   Company's   loan
agreement  with AMRESCO, the September 30,
1999  balance was paid-off in October 1999
(Note 15).                                     457,811           -           -

Notes payable, paid in full in 1998.              -              -      146,203
                                            ----------  ----------   ----------
                                             1,606,146   1,335,388    1,044,654
Less current portion                          (337,642)   (370,404)    (303,084)
                                            ----------  ----------   ----------

                                            $1,268,504  $  964,984  $   741,570
                                            ==========  ==========  ===========

Subordinated debt consists of:


                                                               December 31,
                                           September 30, ----------------------
                                               1999        1998          1997
                                            ----------   ---------    ---------
Subordinated  debt  payable to a financing
company with an initial  principal balance
of $1,853,931.  The note accrues  interest
at  the  rate  of  7.75%   per  annum  and
requires   monthly  payments  of  $28,665.
The note is  collateralized  by all of the
restaurant  equipment  and  furniture  and
fixtures  existing at six of the Company's
stores.   The   Company  is   required  to
maintain    certain   annual   cash   flow
covenants   under   the   agreement.    In
conjunction  with Company's loan agreement
with  AMRESCO,   the  September  30,  1999
balance  was   paid-off  in  October  1999
(Note 15).                                  $1,717,337  $       -   $        -

12.75%   convertible   subordinated  debt,
paid in full during 1999.                         -      1,375,000    1,500,000

Less current portion                          (218,546)   (244,084)    (110,912)
                                            ----------   ---------    ---------

                                            $1,498,791  $1,130,916  $ 1,389,088
                                            ==========  ==========  ===========

In connection with the conversion of debt to equity, the Company granted the
note holder 42,209 warrants to purchase common stock at $5.00 per share. The
inherent value of the options of $44,277 was recorded as deferred offering costs
associated with the conversion.

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

                                  Long-Term
                               Obligations and
                                 Subordinated        Capital
Year Ending September 30,            Debt            Leases           Total
-------------------------        -----------      -----------      -----------
          2000                   $   344,172      $   302,724      $   646,896
          2001                       360,471          297,946          658,417
          2002                       344,462          281,196          625,658
          2003                       366,978          231,381          598,359
          2004                       511,326           33,725          545,051
          Thereafter                 425,075             --            425,075
                                  -----------      -----------      -----------
                                   2,352,484        1,146,972        3,499,456
Less amount representing interest        --           (175,973)        (175,973)
                                  -----------      -----------      -----------
Total principal                    2,352,484          970,999        3,323,483
Less current portion                (344,172)        (212,016)        (556,188)
                                  -----------      -----------      -----------

                                  $2,008,312      $   758,983      $ 2,767,295
                                  ==========      ===========      ===========

Included in equipment in the accompanying 1999, 1998 and 1997 balance sheets are
assets held under capital leases in the amount of $1,063,920, $1,278,925 and
$161,147, respectively and accumulated amortization of $149,372, 132,837 and
$65,079, respectively.


Note 10 - Commitments and Contingencies

The Company leases an office facility, twenty-nine restaurant locations
(including stores held for resale) and certain equipment and vehicles under
operating lease agreements which provide for the payment of rent totaling
approximately $64,000 per month plus common area maintenance costs. 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
$762,891, $642,447 and $636,874 during the periods ended September 30, 1999 and
December 31, 1998 and 1997, respectively.


Future minimum rental payments are as follows:

Year Ending September 30,
-------------------------

         2000                           $1,379,049
         2001                            1,394,739
         2002                            1,319,456
         2003                            1,167,023
         2004                              890,451
         Thereafter                      1,665,003
                                        ----------

                                        $7,815,721
                                        ==========

Minimum payments for the period ended September 30, 1999 have not been reduced
by minimum rentals of $1,653,278 due in the future under a noncancellable
sublease.

The Company has entered into employment agreements with two directors, officers,
and stockholders of the Company which provide for the payment of annual salaries
totaling $192,000 plus individual bonuses equal to six and ten percent of the
positive increase in net income before taxes, depreciation, amortization and
interest over the prior year. Bonuses accrued during 1997, 1998 and 1999 totaled
$291,260, $209,000 and $262,354, respectively. One agreement expires in December
2000 while the other agreement expires in December 2003.

On April 26, 1999, the Company signed a licensing agreement with the Coca Cola
Company to purchase certain amounts of fountain syrups in return for cash
incentives. The agreements requires the Company to purchase a total of
12,000,000 gallons of fountain products and 1,000,000 cases of bottled products.
If the Company cancels the agreement, the Company would be obligated to refund a
pro rata share of the licensing fee based upon contract product not purchased.

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.

On August 10, 1998, the Company terminated an area director agreement and
instituted an arbitration action alleging that the area director had breached
various provisions of the area director agreement. On September 1, 1998, the
area director denied that he breached the area director agreement, alleged
fraudulent termination of the area director agreement, alleged that the Company
failed to refund or pay certain amounts due him and alleged that the Company
violated various state and federal franchise and securities laws by misstating
revenues in publicly filed documents. Hearings in this matter were held before
the American Arbitration Association from March 8-16, 1999. The Company denied
each of the area director's claims and defenses.

On April 13, 1999, the arbitration panel issued its ruling. It found that the
area director had materially breached the area director agreement and that the
Company had properly terminated that agreement. The panel therefore denied all
of the area director's claims for breach of contract and refuted his allegations
of franchise and securities law violations. While the panel did award the area
director approximately $230,000 in pre-termination commissions and costs, those
related primarily to referral commissions that the Company owed the area
director, before the Company terminated him in August 1998, for previous master
franchise and area directorship sales made. The Company had no liability for its
lawful termination of the area director's area director agreement. The panel
also ordered the area director to abide by all of the post-termination covenants
in the area director agreement.


Note 11 - Stockholders' Equity

Convertible Preferred Stock

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

Series B convertible preferred stock bears a 12.75% cumulative dividend, payable
monthly and is convertible after five years at the then market value of the
common stock. The Series B convertible preferred stock is redeemable at the
Company's option and has a liquidation preference of $5.00 per share plus all
then accrued and unpaid cumulative dividends. All issued and outstanding Series
B convertible preferred stock was redeemed in full in 1999.

Series C convertible preferred stock bears a 12.00% cumulative dividend, payable
monthly and is convertible into common stock on a one-for-one basis at $5.00 per
share. The Series C convertible preferred stock is redeemable at the Company's
option at $5.00 per share anytime after October 8, 2000, and has a liquidation
preference of $5.00 per share plus all then accrued and unpaid cumulative
dividends.

During 1997, the Company sold 167,000 shares of Series C convertible preferred
stock at $5.00 per share. The Company incurred legal and accounting costs
related to the sale of $36,454.

Stock Options and Warrants

The Company has established an Employee Stock Option Plan (the Plan). The
Company has reserved 670,000 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 cannot be exercisable for more than 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
periods ended September 30, 1999 and December 31, 1998 and 1997, 250,500,
117,205 and 98,550, 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 200,000 shares of common stock for issuance upon the exercise of
options granted or available for grant to non-employee directors and advisors
under the Director Plan. The Director Plan provides that any person who becomes
a non-employee director or advisor of the Company may receive an option to
purchase 4,000 shares (or a pro rata portion thereof) at their fair market value
on the date such person becomes a non-employee director or advisor, and on the
first day of each year thereafter as long as the person continues as a
non-employee director or advisor, 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 periods ended
September 30, 1999 and December 31, 1998 and 1997, 29,000, 28,000 and 18,000
options were granted under the Director Plan, respectively.

In 1997, the Company granted stock options covering 48,500 shares to area
directors pursuant to individual contracts. The Company established an Area
Director Equity Participation Rights Stock Option Plan (AD Plan) providing for
grants of stock options to area directors beginning in 1998. During 1998, the
Company granted stock options covering 60,375 shares pursuant to the AD Plan.
Options are granted under the AD Plan at the market price of the common stock
for six month options or a 20% discount (not to exceed $1.20) if the grantee
exercises within seven business days of the grant. The Company recorded $33,950
related to the inherent value of the options granted to area directors in 1997.
No amounts were recorded for inherent value of the options for 1998. During
1999, the Company granted options under the AD Plan for 10,275 shares.

In 1996, the Company issued warrants to purchase 372,847 shares of its common
stock to a lender in connection with a $2,000,000 convertible subordinated loan
made to the Company. The warrants are exercisable at $3.10 per share and expire
on December 31, 2004. Additionally, in 1997, the Company issued warrants to
purchase another 42,209 shares of its common stock to the same lender in
connection with the lender's conversion of $500,000 of the convertible
subordinated debt to Class B preferred stock. The warrants are exercisable at
$5.00 per share and do not have an expiration date. These warrants are reduced
to 20,597 if the Company meets certain earnings goals through 2000.

In connection with the Company's 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. During 1998, 80,000 warrants were exercised and the remaining
20,000 were cancelled. Additionally in 1997, the Company issued 33,000 warrants
to consultants that allowed the holders to purchase 33,000 shares of common
stock at $5.40 to $5.50 per share. These warrants expire through December 2000.

In 1999, the Company reached a settlement with Bains Deli that resulted in the
return to the Company of the 9,091 shares of Company stock originally issued as
part of the purchase of the Bains units in 1997.

The Company 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
as they relate to options issued to employees and directors.

Had compensation cost for the Company's two employee stock option plans been
determined based on the fair value at the grant date for consistent with the
provisions of SFAS No. 123, the Company's net earnings and earnings per share
would have been reduced to the pro forma amounts indicated below:

                                                             December 31,
                                           September 30,----------------------
                                              1999        1998          1997
                                            ----------  ----------  ----------

Net income (loss) before cumulative
 effect of changes in accounting principle
 = as reported                              $1,242,391  $  891,725  $  (183,616)
Net income (loss) before cumulative effect
 of changes in accounting principle
 - pro forma                                $  662,806  $  586,960  $  (433,536)
Basic earnings (loss) per share - as
 reported                                   $      .40  $      .30  $      (.06)
Basic earnings (loss) per share - pro
 forma                                      $      .22  $      .19  $     (.15)

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants: dividend yield of 0%; expected volatility of 42%;
discount rate of 5.5%; and expected lives from 5 to 10 years.

   The following is a summary of options and warrants granted, exercised and
                                    expired:
<TABLE>
<CAPTION>

                                                Weighted                  Weighted
                                       Weighted  Average                   Average
                                        Average    Fair                   Exercise
                                       Exercise  Value of   Currently     Price of
                                       Price of  Options   Exercisable   Options and
                            Options      Options    and       Options     Warrants-
                               and         and    Warrants      and       Currently
                            Warrants    Warrants  Granted    Warrants    Exercisable
                          -----------  --------- --------   ----------   -----------
<S>                       <C>          <C>       <C>        <C>          <C>

Outstanding December 31,
 1997                         888,060     $3.82               568,283        $2.17
Granted                       205,580     $1.21    $1.80
Forfeited or exercised      (197,102)    $(1.06)

Outstanding December 31,
 1998                        896,538      $3.40               590,867        $2.52
Granted                      279,500      $1.81    $3.50
Forfeited or exercised       (60,695)     $(.25)

Outstanding September 30,
 1999                       1,115,343     $4.29               616,925        $3.54
                            =========

</TABLE>


                                              September 30, 1999
                     ----------------------------------------------------------
                                                               Options and
                      Options and Warrants Outstanding     Warrants Exercisable
                     ----------------------------------  ----------------------
                                              Weighted
                                Weighted       Average                 Weighted
Range of Options and             Average      Remaining                 Average
     Warrants          Number    Exercise    Contractual    Number     Exercise
 Exercisable Price  Outstanding    Price        Life     Exercisable     Price
-------------------  ---------  ---------   -----------  -----------  ---------

$3.00 - $5.50          819,043    $3.21       5.3 years      614,965    $3.53
$5.75 - $8.18          296,300    $7.28       5.8 years        1,960    $6.64
                     ---------                           -----------

                     1,115,343    $4.29       5.4 years      616,925    $3.54
                     =========                           ===========

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. In 1997, the Company waived the requirement for ten restaurants and the
area director exercised the right to purchase one percent of the outstanding
common stock for $50,000 and received approximately 28,900 shares of common
stock.


Note 12 - Income Taxes

The components of the provision for income tax benefit for the year ended
September 30, 1999 and December 31, 1998 are as follows:

                                                 September 30,     December 31,
                                                      1999              1998
                                                 ------------      -----------

Current income tax expense                        $ 1,951,848      $   213,500
Deferred income tax benefit                        (1,230,160)        (582,053)
                                                  -----------      -----------

                                                  $   721,688      $  (368,553)
                                                  ===========      ===========

For the period ended September 30, 1999, the net deferred tax benefit related to
the cumulative effect of changes in accounting of $1,589,703 is not reflected in
the table above.

Prior to 1998, the Company had provided for a valuation allowance against its
deferred tax asset as management had determined that it was more likely than not
that the Company would not realize its deferred tax asset. In 1998, management
determined it would be more likely than not that the Company would realize its
deferred tax asset and this has eliminated its valuation allowance against the
deferred tax asset resulting in a benefit of $582,053 reflected in the statement
of operations for the year ending December 31, 1998.

Deferred tax liabilities and assets are determined based on the difference
between the financial statement assets and liabilities and tax basis assets and
liabilities using the tax rates in effect for the year in which the differences
occur. In 1999, the Company's deferred income tax assets and liabilities result
primarily from differing depreciation and amortization periods of certain
assets, deferred franchise revenue and costs and the recognition of certain
expenses for financial statement purposes and not for tax purposes. For 1997,
the deferred income tax assets related primarily to net operating losses.

The net current and long-term deferred tax assets (liabilities) in the
accompanying balance sheet include the following items:


                                                              December 31,
                                            September 30,----------------------
                                                1999        1998       1997
                                            -----------  ---------  -----------
Current deferred tax asset                  $   128,718  $  81,260  $       -
Current deferred tax liabilities                     -        -             -
                                            -----------  ---------  -----------

Net current deferred tax asset              $   128,718  $  81,260  $       -
                                            ===========  =========  ===========

<TABLE>
<CAPTION>

                                                                December 31,
                                           September 30,  -----------------------
                                                1999         1998         1997
                                            -----------   ---------    ----------

<S>                                         <C>           <C>          <C>
Long-term deferred tax asset                $ 4,890,254   $1,673,620   $  900,000
Long-term deferred tax liability             (1,383,041)    (938,812)        -
                                            -----------   ----------   ----------
                                              3,507,213      734,808      900,000
Less impairment                                     -            -       (725,000)
                                            -----------   ----------   ----------
Net long-term deferred tax asset              3,507,213      734,808      175,000
                                            -----------   ----------   ----------

Net deferred tax asset                      $ 3,635,931    $ 816,068   $  175,000
                                            ===========   ==========   ==========
</TABLE>

Rate Reconciliation

The  reconciliation  of income tax expense  (benefit)  by  applying  the Federal
statutory tax rates to the Company's effective income tax rate is as follows:


                                                             December 31,
                                           September 30,  -----------------
                                               1999        1998       1997
                                             -------      ------     ------

Federal statutory rate                         37.0%       34.0%      (34.0)%
Nondeductible expenses                           .9          8.4        -
Other - deferred  including  utilization of
 NOL                                           (3.3)       (13.5)       -
Valuation allowance                               -        (78.0)      34.0
                                             -------      ------     ------

                                               34.6%       (49.1)%      - %
                                             ======       ======     ======


Note 13 - 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 $10,000 of the employee's salary. The maximum
amount will increase to $10,500 in 2000.

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

Years of Services           Percentage

          1                     0%
          2                    25%
          3                    50%
          4                    75%
          5                    100%



The Company has contributed $60,427, $31,675 and $33,251 to the Plan for the
periods ended September 30, 1999 and December 31, 1998 and 1997, respectively.


Note 14 - Earnings (Loss) Per Share

The following table sets forth the computation for basic and diluted earnings
per share:


                                             For the Nine   For the Years Ended
                                             Months Ended      December 31,
                                             September 30, --------------------
                                                  1999       1998        1997
                                              ----------   ---------  ---------
Numerator - net income (loss) before
 cumulative effect of changes in accounting
 principle
Numerator for basic earnings per share        $1,242,391   $ 891,725  $(183,616)
Preferred dividends (net of taxes)                78,265         -          -
                                              ----------   ---------  ---------

Numerator for diluted earnings per share      $1,320,656   $ 891,725  $(183,616)
                                              ==========   =========  =========


Numerator for basic and diluted earnings per
 share - cumulative effect of changes in
 accounting principle                        $(2,769,592)      N/A        N/A

Denominator  -  net  income  (loss)
 before cumulative effect of changes in
 accounting principle Denominator for
 basic earnings per share - weighted
 average shares                                 3,060,878  3,014,042  2,878,310
Effect of dilutive securities - convertible
 debt, options and warrants                       755,671    431,930      -
                                             ------------  ---------  ---------
Denominator for diluted earnings per share -
 adjusted weighted average shares               3,816,549  3,445,972  2,878,310
                                             ============  =========  =========


Denominator for basic and diluted earnings
 per share - cumulative effect of changes in
 accounting principle                           3,060,878      N/A          N/A

Basic earnings (loss) per share              $       (.50) $     .30  $    (.06)
                                             ============  =========  =========

Diluted earnings (loss) per share            $       (.55) $     .26  $    (.06)
                                             ============  =========  =========

Where the inclusion of potential common shares is anti-dilutive, such shares are
excluded from the computation.



Note 15 - Subsequent Events

On October 11, 1999, the Board of Directors of the Company approved the purchase
of a corporate jet by the Company allowing for more efficient travel by
management between areas of franchise operations. For tax purposes, the airplane
qualifies for accelerated depreciation, resulting in the deferral of income tax
payments. The $3,350,000 purchase was completed on October 13, 1999.

On October 5, 1999, the Company closed on a loan in the principal amount of
$14,000,000 from AMRESCO Commercial Finance, Inc. The loan bears interest at
10.1%, which may be adjusted to the ten-year treasury note rate plus 4.25%
during the first 120 days, and is repayable in monthly installments of $193,338
for nine years and five months. The loan is secured by the assets of Company
owned stores and other assets of the Company existing at September 30, 1999. The
loan is part of a securitized pool and includes a provision which could require
the Company to pay up to another $1,555,555 depending on the amount of defaults,
if any, in the loan pool. The proceeds of the loan were used to pay-off existing
debt of $3,320,956, pay costs and fees associated with the loan of $560,000, and
prepay interest and one payment of $304,624. The balance of $9,814,420 is
available to use, with certain restrictions, for general corporate purposes
other than working capital, dividends, or to repurchase the majority
shareholder's stock.

Certain notes payable held by the Company at September 30, 1999 were repaid with
the AMRESCO note proceeds. See Note 9 for the identification of the notes repaid
with these proceeds.

On November 16, 1999, the Company announced that its subsidiary, QUIZ-DIA, Inc.
purchased the assets of ASI-DIA, Inc. ("ASI") for a total of $4.875 million in
cash.

Assets purchased include two Quizno's Company restaurants and three bars,
including the WWW.COWBOY bar, and various other assets located on Concourses A
and B at Denver International Airport. The Company intends to continue operating
the restaurants as Quizno's Classic Subs and the bars as operated by ASI.

The purchase will be accounted for under the purchase method. The purchase price
will be allocated to the assets purchased based on the fair market values at the
date of acquisition.


Note 16 - Transition Reporting

In October 1999, the Company changed its fiscal year from December 31 to
September 30. As such, the 1999 financial statements are as of and for the nine
months ended September 30, 1999. The 1998 and 1997 financial statements are as
of and for the twelve months ended December 31, 1998 and 1997, respectively. For
comparative purposes, the following unaudited summarized consolidated statement
of operations is presented for the nine-month periods ended September 30, 1998
and 1997.


                                                   For the Nine Months Ended
                                                         September 30,
                                                   ---------------------------
(Unaudited)                                            1998           1997
-----------                                        ---------     -------------

Total revenue                                     $14,223,450     $8,108,457
Income from franchise operations                  $ 1,238,455     $  325,163
Income from Company store operations              $   477,326     $  189,592
Net income (loss) before taxes                    $   668,860     $ (163,205)
Net income (loss) applicable to common            $   502,891     $ (205,910)
shareholders

Net income (loss) per share - basic               $       .17     $     (.07)
Net income (loss) per share - diluted             $       .15     $     (.07)



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

Directors

      The names of and other  information about our Directors as of December 17,
1999, are set forth below:

       Name            Age      Position(s) with Company     Director Since
-------------------  -------    ------------------------     ---------------
Richard E. Schaden     35       President, Chief                 1991
                                Executive Officer
                                 and Director

Richard F. Schaden     61       Secretary and                   1991
                                 Director

Frederick H. Schaden   53       Director                        1993

J. Eric Lawrence       32       Director                        1997

Brad A. Griffin        49       Director                        1999

Mark L. Bromberg       48       Director                        1997


     Each director is currently serving a one year term that will end on the
date of our 2000 Annual Meeting of Shareholders.

Director's Biographical Information

     Mr. Richard E. Schaden has been President and a Director of our company
since its inception on January 7, 1991, and was appointed as Chairman of the
Board of Directors in November 1999. Mr. Schaden had been a principal and the
chief operating officer of Schaden & Schaden, Inc., a company that owned and
operated Quizno's franchised restaurants from 1987 to 1994 when it was sold to
our company. Mr. Schaden graduated Magna Cum Laude from the University of
Colorado with a degree in Business Management and Finance. See "Certain
Transactions."

     Mr. Richard F. Schaden has been Vice President, Secretary and a Director
of our company since its inception on January 7, 1991. Mr. Schaden had been a
principal of Schaden & Schaden, Inc., a company that owned and operated Quizno's
franchised restaurants from 1987 to 1994 when it was sold to our company. Mr.
Schaden is the founding partner of the law firm of Schaden, Katzman, Lampert &
McClune with offices in Bloomfield Hills, Michigan and Broomfield, Colorado. Mr.
Schaden graduated from the University of Detroit with a Bachelor of Science in
Aeronautical Engineering, received his Juris Doctorate from the University of
Detroit Law School and is an internationally known, well-published attorney,
specializing in aviation law. Prior to entering the legal profession, Mr.
Schaden was an aeronautical engineer for Boeing Aircraft and Continental
Aviation and Engineering. Mr. Schaden has been on the board of numerous private
companies. See "Certain Transactions."

     Mr. Frederick H. Schaden is an Executive Vice President of the Automotive
Consulting Group of Aon Consulting, Inc. Aon Consulting, Inc. is a subsidiary
of Aon Corporation, a publicly held company with annual revenues of nearly $6
billion. He has been employed by Aon for over 25 years and has served as a
senior officer of its affiliates since 1981. Mr. Schaden earned a B.S. in
Business Administration from Xavier University in Cincinnati, Ohio. See
"Certain Transactions."

                                       28
<PAGE>

     Mr. J. Eric Lawrence has been the General Partner of Retail & Restaurant
Growth Capital, L.P. ("RRGC"), a $60 million investment fund focused on
providing growth and expansion capital to small businesses in the retail and
restaurant industries, since December 1995. RRGC is a Small Business Investment
Company, federally licensed by the Small Business Administration. RRGC loaned us
$2,000,000 in 1996, and Mr. Lawrence serves on the Board pursuant to a
contractual arrangement between our company and RRGC. Mr. Lawrence has been
extensively involved in the analysis of the financial, operational and
managerial aspects of retail and restaurant companies throughout his career.
Prior to RRGC, he served as Vice President of Strategic Retail Ventures, Inc., a
boutique financial consulting and private investment firm focusing on the needs
of specialty retail and restaurant companies from December 1993 to December
1995. Prior to SRV, Mr. Lawrence was a Senior Consultant with Arthur Andersen,
in Dallas, Texas. Mr. Lawrence is a licensed C.P.A., and is a graduate of
Southern Methodist University with a B.B.A. in Accounting and Minor in
Economics, which included study abroad at Oxford University, Oxford, England.

     Mr. Brad A. Griffin has been the managing director of GriffCo Development,
which develops, builds, leases and manages commercial and retail real estate,
since 1994. He is also the managing director of Oasis Investment, a company that
manages investment assets and trades NASDAQ and Exchange stocks and options.

     Mr. Mark L. Bromberg has been a self-employed management consultant
providing strategic planning, positioning and senior management consulting
services to the hospitality industry, for over five years. Mr. Bromberg is the
former President & CEO of East Side Mario's Restaurants Inc., the Dallas based
subsidiary of PepsiCo, which he grew from one restaurant in 1988 to 30 in 1993
when it was sold to PepsiCo. Mr. Bromberg has been the founder and President of
a number of causal dining restaurant chains, including Mr. Greenjeans, Ginsberg
& Wong and Lime Rickey's and served as President of Prime Restaurant Group, the
largest privately-held restaurant chain in Canada. He holds a B.S. and an M.B.A.
from Cornell University and remains highly involved in foodservice education as
a curriculum advisor and guest lecturer. He is a past chairman of the Canadian
Restaurant and Foodservice Association and is a past director of the National
Restaurant Association of the U.S. Mr. Bromberg was elected to the Board of
Directors pursuant to a contractual arrangement with RRGC that required the
election of an additional Board member acceptable to RRGC.

     Richard F. Schaden is the father of Richard E. Schaden.  Frederick H.
Schaden is the brother of Richard F. Schaden and Richard E. Schaden's uncle.

                                       29
<PAGE>

Executive Officers

     The following table sets forth (i) the names of the executive officers,
(ii) their ages, and (iii) the capacities in which they serve our company:

       Name                Age        Position(s) with the Company
----------------           ---        ----------------------------
 Richard E. Schaden         35         President, Chief Executive Officer and
                                        Chairman of the Board
 Mark R. Laramie            48         Chief Operating Officer
 Robert W. Scanlon          53         Executive Vice President for Development
 Sue A. Hoover              54         Executive Vice President for Marketing
 Richard F. Schaden         61         Vice President, Secretary and Director
 Patrick E. Meyers          40         Vice President and General Counsel
 John L. Gallivan           52         Chief Financial Officer, Treasurer and
                                        Assistant Secretary

Executive Officer's Biographical Information

     See "Director's Biographical Information" above for a description of the
backgrounds of Richard E. Schaden and Richard F. Schaden.

     Mark R. Laramie joined us in 1998 as the Chief Operating Officer. Prior to
joining us, he was a managing member and owner of Great Lakes Restaurant Group,
LLC from November 1997 through August 1998. From July 1996 through October 1997,
Mr. Laramie was a managing member of Peer Group, LLC, a franchisee of Little
Caesars Pizza in Michigan. Mr. Laramie was also the Vice President of
Franchising for Little Caesars Enterprises, Inc. from August 1980 through June
1996. He received his B.S. degree from Eastern Michigan University in 1973.

     Robert W. Scanlon has been our Executive Vice President of Development
since October 1998. Mr. Scanlon served as our Senior Vice President of Real
Estate/Design & Construction from August 1997 through September 1998. He also
served as our Senior Vice President of Concept Development and Design from
January 1997 to July 1997 and as our Vice President of Nontraditional
Development from May 1996 to December 1996. From June 1990 through April 1996,
he was first Vice President of Sales and Marketing and later Vice President of
Business Development for Carts of Colorado, located in Commerce City, Colorado,
an equipment manufacturer. Mr. Scanlon graduated from the University of Texas,
with a B.S. degree in 1973.

     Sue A. Hoover joined our company as Director of Marketing in 1991. She was
named Senior Vice President of Marketing in 1997 and was named an Executive Vice
President in October 1998. Ms. Hoover graduated from the University of Iowa with
a B.A. in 1968.

     Patrick E. Meyers joined us in 1997. He had been an associate with the
Denver law firm of Moye, Giles, O'Keefe, Vermeire & Gorrell since September
1991, and was selected as a partner of that firm in 1996. Before that he served
as a judicial law clerk to a Justice of the Colorado Supreme Court from July
1990 to September 1991. Mr. Meyers received his J.D. degree from the University
of California, Hastings College of Law and his B.A. degree from the University
of Colorado-Denver. Mr. Meyers served as a Director of our company from 1993 to
1997, when he resigned to become a full-time employee of our company.

                                       30
<PAGE>

     John L. Gallivan joined us as Chief Financial Officer in 1994. He was
later elected Treasurer and Assistant Secretary. Prior to his joining our
company, he was a director and Executive Vice President of Grease Monkey Holding
Corporation of Denver, a franchisor, owner, and operator of over 200 ten minute
oil change and fluid maintenance centers in the U.S. and Mexico from 1979
through April 1994. He is a member of the Colorado Society and the American
Institute of CPAs. He graduated from the University of Colorado at Boulder with
a bachelors degree in accounting.

Compliance with Section 16(a) of  the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, our officers (including a person performing a policy-making function)
and persons who own more than 10% of a registered class of our equity securities
("10% Holders") to file with the Securities and Exchange Commission ("SEC")
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities. Directors, officers and 10% Holders are required by
SEC regulations to furnish us with copies of all of the Section 16(a) reports
they file. Based solely upon such reports, we believe that during fiscal 1999
our directors, advisors, officers and 10% Holders complied with all filing
requirements under Section 16(a) of the Exchange Act, except for Messrs. Mark R.
Laramie, Mark L. Bromberg, J. Eric Lawrence, Frederick H. Schaden, Brad A.
Griffin, Brownell E. Bailey (a former Director), and Lewis G. Rudnick, Bruce H.
Gulbus and Lyle B. Stewart (Advisory Board members), who inadvertently failed to
file their Forms 5 for fiscal 1999 in a timely manner, as a result of our change
of the date of our fiscal year end.

ITEM 10.   EXECUTIVE COMPENSATION

Executive Compensation

     Set forth below is information about compensation during fiscal 1999 of
our five most highly compensated executive officers, including our CEO ("Named
Officers").

     Summary Compensation Table. The following table provides certain summary
information for fiscal 1999 (1), 1998 and 1997 concerning compensation awarded
or paid to, or earned by, the Named Officers:

                                       31
<PAGE>
<TABLE>
<CAPTION>

                                                                 Long-Term and Other
                                  Annual Compensation               Compensation
                        ------------------------------------  --------------------------
                                                               Option    401(k) Plan
Name and Position          Year        Salary        Bonus    Shares(2) Contribution (3)
-------------------     -----------   ---------    ---------  --------  ----------------
<S>                       <C>          <C>          <C>       <C>       <C>
Richard E. Schaden        12/31/97     $108,500     $125,731     4000     $2,534
 President and            12/31/98     $181,452     $130,625    5,164     $2,000
 Chief Executive           9/30/99     $196,710     $  1,500   33,000     $2,329
 Officer (4)

Mark R. Laramie           12/31/98     $ 35,865     $      0    8,000     $    0
Chief Operating Officer    9/30/99     $112,450     $ 18,000   36,000     $    0

Robert W. Scanlon,        12/31/97     $ 79,998     $ 13,276    4,000     $1,168
Executive Vice President  12/31/98     $ 85,783     $ 28,115    5,164     $3,418
of Development             9/30/99     $ 78,000     $ 10,289    9,000     $5,885

Sue A. Hoover,            12/31/97     $ 33,000     $      0    4,000     $  654
Executive Vice President  12/31/98     $ 90,479     $ 13,968    9,164     $3,016
of Marketing               9/30/99     $ 73,125     $ 20,826    6,000     $3,962

Patrick E. Meyers,        12/31/97     $ 68,546     $  1,500    8,000     $    0
Vice President and        12/31/98     $ 84,000     $ 24,674    5,164     $    0
General Counsel            9/30/99     $ 72,768     $ 24,632   14,000     $2,500

Richard F. Schaden,       12/31/97     $ 83,500     $ 75,439        0     $    0
Vice President and        12/31/98     $ 83,500     $ 78,375        0     $    0
Secretary (4)              9/30/99     $ 62,625     $      0        0     $    0
     ----------
</TABLE>

(1) Fiscal 1999 contained only nine months because we changed our fiscal year
end to September 30 during 1999.

(2) As an incentive for our eligible employees to work to enhance our
performance and assure our future success, we grant options to purchase shares
of common stock to successful employees from time to time under our Employee
Stock Option Plan. All options indicated in this table have been granted under
that Plan.

(3) We provide our employees with a 401(k) Employee's Savings Plan, pursuant to
which we contribute to each eligible employee's account an amount equal to 50%
of such employee's annual contribution. Employees in 1999 were limited to a
maximum contribution of $10,000 by applicable provisions of the Internal Revenue
Code. That amount increases to $10,500 in 2000. Prior to 1999, we matched
employee contributions up to 6% of each employee's total annual compensation. We
have issued shares of Common Stock for 50% our annual contribution to each
account under the 401(k) Plan.

(4) Because of the change in our fiscal year end to September 30, and the fact
that Mr. Schaden's contractual bonus is calculated on a calendar year basis, he
has not yet earned (nor can the amount be calculated) the bonus that is expected
to be paid covering the 1999 fiscal year.

Stock Option Awards. We adopted our Employee Stock Option Plan (the
"Employee Plan") in 1993. The purposes of the Employee Plan are to enable us to
provide opportunities for certain officers and key employees to acquire a
proprietary interest in our company, to increase incentives for such persons to
contribute to our performance and further success, and to attract and retain
individuals with exceptional business, managerial and administrative talents,
who will contribute to our progress, growth and profitability. As of September
30, 1999, we had issued 22,963 shares upon exercise of options under the
Employee Plan and had 647,037 shares reserved for issuance under the Employee
Plan.

                                       32
<PAGE>

     Options granted under the Employee Plan include both incentive stock
options ("ISOs"), within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and non-qualified stock options ("NQOs").
Under the terms of the Employee Plan, all of our officers and employees are
eligible for ISOs. We determine which persons will receive ISOs, the applicable
exercise price, vesting provisions and the exercise term. The terms and
conditions of option grants differ and are set forth in the optionees individual
stock option agreement. Such options generally vest over a period of one or more
years and expire after up to ten years. ISOs must satisfy the statutory
requirements of the Code in order to qualify for certain preferential treatment.
Options that fail to satisfy those requirements will be deemed NQOs and will not
receive preferential treatment under the Code. Upon exercise, shares will be
issued upon payment of the exercise price in cash, by delivery of shares of
common stock, by delivery of options granted under the Employee Plan or a
combination of any of these methods.

     Option information for fiscal 1999 relating to the Named Officers is set
forth below:

Option Grants in Fiscal 1999


                       Number of
                       Shares of     Percentage of
                      Common Stock   Total Options
                       Underlying     Granted to
                         Options     Employees in
                       Granted in       Fiscal    Exercise   Expiration
       Name            Fiscal 1999       1999       Price       Date
--------------------  -------------   ---------   --------    -------
Richard E. Schaden        33,000         13.3%     $7.975      (1)

Mark R. Laramie           36,000         14.5%     $ 7.25      (1)

Robert W. Scanlon          9,000          3.6%     $ 7.25      (1)

Sue A. Hoover              6,000          2.4%     $ 7.25      (1)

Patrick E. Meyers         14,000          5.6%     $ 7.25      (1)


(1) One-third of all options granted to the Named Officers and others in 1999
vest on each of the second, third and fourth anniversary of the grant date,
February 4, 1999, if the optionee is still employed by us on that date. Vested
options terminate if not exercised on February 4, 2004 or 90 days after an
employee leaves our company.

                                       33
<PAGE>

<TABLE>
<CAPTION>

                                           Number of Shares           Value of Unexercised
                                        Underlying Unexercised        In-the-Money Options
                                          Options at Year-End             at Year-End (1)
                Shares        Value    --------------------------  ---------------------------
  Name         Exercised    Realized   Exercisable  Unexercisable   Exercisable  Unexercisable
------------  -----------  ----------  -----------  -------------  ------------ --------------
<S>           <C>          <C>         <C>          <C>            <C>          <C>
Richard E.
 Schaden           0            0         4,961         34,291        $13,656        $3,240

Mark R.
Laramie            0            0         1,600         42,400           $400       $24,280

Robert W.
Scanlon        3,873      $11,619         4,000         14,291        $17,800       $26,743

Sue A.
Hoover             0            0        16,273         12,891        $47,323       $19,269

Patrick E.
 Meyers            0            0        25,873         15,291        $97,979       $12,693
</TABLE>


(1) The dollar values are calculated by determining the difference between $
7.88 per share, the fair market value of the Common Stock at September 30, 1999,
and the exercise price of the respective options.

     Employment Contracts. Richard E. Schaden has entered into an Employment
Agreement with us that terminates on December 31, 2003. His contract provides
that he will serve as our President and Chief Executive Officer. Mr. Schaden
will devote his full time to company matters. His annual base salary is
$220,000. Such amount may be adjusted from time to time by mutual agreement
between Mr. Schaden and the Board of Directors. The contract provides an annual
bonus equal to 10% of any positive increase in earnings before interest, taxes,
depreciation and amortization for each full calendar year during the term of the
agreement over the level of such amount for the prior full calendar year. Mr.
Schaden will receive a monthly automobile allowance of up to $620.00 plus up to
$150.00 for insurance coverage. He will also receive a per diem travel allowance
of $30.00 per day while traveling on business. The contract provides that we
will pay one-half of Mr. Schaden's medical insurance coverage and one-half of
the cost of disability insurance. We will pay for $1,000,000 of term life
insurance for Mr. Schaden, payable to his designated beneficiary. We may
terminate the Employment Agreement for cause upon ninety days notice. Mr.
Schaden may terminate the Employment Agreement upon ninety days notice.

     Richard F. Schaden entered into an Employment Agreement with us in 1993
that terminated by its terms on December 31, 1998. At a Board Meeting on May 6,
1999, the Board of Directors approved the extension of Mr. Schaden's 1993
Employment Agreement for an additional two years, retroactive to January 1,
1999. This Agreement provides that he will serve as Vice President and Secretary
of our company. Mr. Schaden will not devote his full time to company matters,
but will devote such time to company matters as we request. His current base
salary is $83,500 per year, which may be adjusted from time to time by mutual
agreement between Mr. Schaden and the Board of Directors. Mr. Schaden may take
on special projects for us at the direction of the Board of Directors and
receive additional compensation for such projects. The Agreement provides an
annual bonus equal to 6% of any positive increase in earnings before interest,
taxes, depreciation and amortization for each full calendar year during the term
of the agreement over the level of such amount for the prior full calendar year.
We may terminate the Agreement for cause upon ninety days' notice. Mr. Schaden
may terminate the Employment Agreement upon ninety days' notice.

                                       34
<PAGE>

None of the other Named Officers have an employment agreement with us.

Director Compensation

     Directors who are not officers or employees are paid $500 per day for each
Board and Committee meeting they attend and they are reimbursed for their
reasonable expenses of attending such meetings. In addition, such directors
receive an annual grant of options to purchase 4,000 shares of common stock,
which immediately vest.

     During fiscal 1999, we paid each of our four non-employee directors,
$1,500 (except for J. Eric Lawrence who was paid $1,000), as compensation for
their attendance at regular Board and Committee meetings. For their service
during fiscal 1999, these outside Directors each received a grant of options to
purchase 4,000 shares of common stock that immediately vested. In addition,
during fiscal 1999, a Special Committee of the Board of Directors, composed of
two independent members of the Board of Directors, was constituted to review and
evaluate a proposal to take our company private. That proposal was ultimately
withdrawn. For their service on the Committee, Mr. Mark Bromberg was paid
$44,718.52 plus out-of-pocket disbursements, and Mr. Brownell Bailey was paid
$43,225.81 plus out-of-pocket disbursements.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding beneficial
ownership of our equity securities (common stock and three classes of preferred
stock) as of December 17, 1999, (a) by each person known to us to own
beneficially more than 5% of the Common Stock, (b) each of our Named Officers
and directors and (c) by all of our officers and directors named herein as a
group.

<TABLE>
<CAPTION>

                                               Class A                Class C               Class D
                                   Class A    Preferred    Class C   Preferred   Class D   Preferred
             Common     Common    Preferred     Stock     Preferred    Stock    Preferred    Stock
 Name and    Stock      Stock       Stock     Percentage    Stock    Percentage   Stock    Percentage
 Address    Owned (1) Percentage    Owned       Owned       Owned      Owned      Owned      Owned
----------  --------- ----------   --------   ----------   -------   --------    -------   ----------
<S>          <C>         <C>        <C>           <C>         <C>       <C>         <C>         <C>
Richard E.   856,877     27.4%      73,000        50%         0         0           0           0
Schaden       (2)
1415
Larimer St.
Denver, CO
80202

Richard F.   882,667   28.0%        73,000        50%      34,000     20.4%         0           0
Schaden       (2)
11870
Airport Wy.
Broomfield,
CO 80021

Retail       415,056   12.0%            0          0          0         0           0           0
Restaurant    (3)
& Growth
Capital,
L.P.
10000 N.
Central
Expressway
Suite 1060
Dallas, TX
75231

Mark L.      10,000      *              0          0          0         0           0           0
Bromberg      (4)
1801 Kings
Isle Dr.
Plano, TX
75093

                                       35
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                               Class A                Class C               Class D
                                   Class A    Preferred    Class C   Preferred   Class D   Preferred
             Common     Common    Preferred     Stock     Preferred    Stock    Preferred    Stock
 Name and    Stock      Stock       Stock     Percentage    Stock    Percentage   Stock    Percentage
 Address    Owned (1) Percentage    Owned       Owned       Owned      Owned      Owned      Owned
----------  --------- ----------   --------   ----------   -------   --------    -------   ----------
<S>            <C>    <C>          <C>        <C>          <C>       <C>         <C>       <C>
J. Eric      12,000      *              0          0          0         0          0           0
Lawrence      (4)
10000 N.
Central
Expressway
Suite 1060
Dallas, TX
75231

Frederick    24,000      *              0           0      2,000       1.1%        0           0
H. Schaden    (4)
100 S.
Wacker Drive
Suite 860
Chicago, IL
60606

Brad A.      1,000       *              0           0      5,000       2.7%        0           0
Griffin       (4)
207 Canyon
Blvd.
Suite 300
Boulder, CO
80302

Mark R.      1,600       *              0           0         0          0       1,000        25%
Laramie       (4)
1415
Larimer St.
Denver, CO
80202

Robert W.    5,948       *              0           0         0          0         0           0
Scanlon       (5)
1415
Larimer St.
Denver, CO
80202

Sue A.       24,982      *              0           0         0          0         0           0
Hoover 1415   (5)
Larimer St.
Denver, CO
80202

Patrick E.   26,131      *              0           0         0          0         0           0
Meyers        (5)
1415
Larimer St.
Denver, CO
80202

All          1,859,505  5.9%          146,000      100%    41,000      24.2%     1,000         25%
Executive
Officers
and
Directors
as a Group
(11 persons)
----------
</TABLE>

                                       36
<PAGE>

*  Indicates less than 1% of the shares outstanding

(1) The persons named in the table have sole voting power with respect to all
shares of common stock shown as beneficially owned by them. A person is deemed
to be the beneficial owner of securities that can be acquired by such person
within sixty (60) days from the filing date of this Report, upon the exercise of
options or warrants or conversion of convertible securities. The record
ownership of each beneficial owner is determined by assuming that such options
or warrants or convertible securities that are exercisable or convertible within
sixty (60) days, have been exercised or converted. The total outstanding shares
used to calculate each beneficial owner's percentage also assumes such options,
warrants or convertible securities have been exercised or converted. Our Class A
and Class C Preferred Stock are currently convertible into Quizno's common
stock.

(2) Richard E. Schaden and Richard F. Schaden beneficially own, through a voting
trust pursuant to which they are joint voting trustees, 1,547,334 shares of
common stock and 146,000 shares of Class A Convertible Preferred Stock of our
company, and 4,000 shares of common stock owned by a family member for which the
voting trust holds sole voting power. Each of them, individually, has been given
a proxy by the voting trust to vote 50% of the shares owned by the voting trust.
The remaining duration of the voting trust agreement is 4 years, subject to
extension. Richard E. Schaden, individually, beneficially owns 784 shares of
common stock allocated to him under our 401(k) Plan, 4339 shares of common stock
held in his own name, 1,087 shares of common stock represented by currently
exercisable stock options, and 2,000 shares of common stock owned by a family
member for which he holds sole voting power. Richard F. Schaden, individually,
beneficially owns 34,000 shares of our Class C Convertible Preferred Stock. Of
the shares of common stock indicated as owned by each of them, 73,000 may be
acquired by conversion of Class A Convertible Preferred Stock, and 34,000 may be
acquired by Richard F. Schaden by conversion of Class C Convertible Preferred
Stock.

(3) Retail & Restaurant Growth Capital, L.P. ("RRGC"), in connection with a loan
to our company that has since been repaid, has been issued two Warrants by us.
One is exercisable for 372,847 shares of common stock at an exercise price of
$3.10, subject to adjustment in certain circumstances. The other is exercisable
for 42,209 shares of Common Stock at an exercise price of $5.00 per share,
subject to adjustment in certain circumstances.

(4) All of the shares indicated as beneficially owned by Messrs. Lawrence,
Bromberg, Griffin and Laramie may be acquired through the exercise of options.
All of the shares indicated as beneficially owned by Mr. Frederick Schaden may
be acquired through the exercise of options or conversion of Class C Convertible
Preferred Stock.

(5) Robert W. Scanlon, individually, beneficially owns 473 shares of common
stock allocated to him under our 401(k) Plan, 1,475 shares of common stock held
in his own name, and 4,000 shares of common stock represented by currently
exercisable stock options. Sue A. Hoover, individually, beneficially owns 709
shares of common stock allocated to her under our 401(k) Plan, 11,873 shares of
common stock held in her own name, and 12,400 shares of common stock represented
by currently exercisable stock options. Patrick E. Meyers, individually,
beneficially owns 158 shares of common stock allocated to him under our 401(k)
Plan, 3,973 shares of common stock held in his own name, and 22,000 shares of
common stock represented by currently exercisable stock options.

                                       37
<PAGE>


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On December 31, 1996, Retail & Restaurant Growth Capital, L.P. ("RRGC")
made a $2,000,000 loan to our company, a portion of which was convertible into
372,847 shares of our common stock, and with interest accrued at 12.75% per
annum. If the loan were repaid before conversion, RRGC would receive a warrant
to purchase the same number of shares of our common stock at $3.10 per share. On
October 8, 1997, we and RRGC amended the loan agreement to provide for the
conversion of $500,000 of the principal amount of the loan into 100,000 shares
of our Class B Preferred Stock, reducing the outstanding principal amount of the
loan to $1,500,000. The Class B Preferred Stock was non-voting, with a
cumulative dividend of 12.75%. In connection with such amendment, we also issued
a warrant to RRGC that granted it the right to purchase up to 42,209 shares of
the common stock at $5.00 per share. Such number of shares of common stock is
subject to downward adjustment if we meet certain net income and other goals. In
no case will the warrant be exercisable for less than 30,041 shares of the
common stock. On January 6, 1999, we paid off the loan from RRGC, issued to RRGC
the warrant to purchase 372,847 shares of common stock referred to above and
redeemed the Class B Preferred Stock held by RRGC.

     Effective October 1, 1994, a wholly-owned subsidiary of our company
acquired by merger all of the assets and obligations of Schaden & Schaden, Inc.,
a Colorado corporation, or "SSI", owned by Richard E. Schaden and Richard F.
Schaden. The assets of SSI included interests in several Quizno's Classic Subs
restaurants and interests in two area directorships. The consideration paid by
us to the Schadens, included $876,000 that was paid in our Class A Preferred
Stock. The Class A Preferred Stock is non-voting, bears a 6.5% cumulative
dividend, and became convertible on November 1, 1997 into 146,000 shares of the
common stock. We may call the Class A Preferred Stock upon 60 days notice.
During fiscal 1999 and 1998 each preferred shareholder received dividends of
$28,470 annually.

     Richard F. Schaden and Frederick H. Schaden, directors of our company,
each own an interest in Illinois Food Management, Inc. ("IFM") that owns
approximately 50% of our Chicago Area Director. We also own approximately 12% of
IFM. In fiscal 1998 and 1999, respectively, we paid the Area Director $139,358
and $142,363.54 as commissions on the sale of new franchises and royalties. In
early 1996, IFM requested that we extend the payment terms relating to amounts
owed to us by IFM as a result of its operations as an Area Director. As a result
of that request, we agreed to defer payment of $63,547. IFM issued to us a
promissory note in that amount payable over 6 years with an interest rate of 12%
per annum. At September 30, 1999, $55,547.29 was owed to us on this promissory
note. During fiscal 1998 and 1999, accrued interest payments on the note were
$6,212 and $8,000, respectively. IFM is also indebted to us for $13,075.34 in
connection with the resale of a Restaurant once operated by IFM. IFM is reducing
this debt by offsetting commissions on royalty fees from that location paid to
the managing Area Director. The debt is expected to be reduced to zero in
approximately 26 months.

     In 1997, we purchased a Restaurant from a company in which Sue Hoover, our
Executive Vice President of Marketing, was a 42.5% shareholder. The purchase
price was $80,000 of which $15,000 was paid in cash and $65,000 paid by issuance
of a promissory note bearing interest at 11% and payable over four years. During
fiscal 1998 and 1999, we made payments pursuant to the promissory note totaling
$18,993 and $14,245, respectively.

     On October 13, 1999, we purchased a 1997 Cessna Citation 525. As of the
same date, we entered into an interchange agreement with Richard F. Schaden,
P.C., which is 100% owned by Richard F. Schaden. Mr. Schaden, through his
company, owns a 1980 Cessna 560 Citation V. Under the interchange agreement, the
parties agreed to lease each aircraft to each other, on an as-needed basis,
without charge, although the parties will pay the operational costs of the
airplane. We also will pay Mr. Schaden or his company to provide services
related to the airplane operations, including for pilot and management services.
We do not anticipate that such payments will be material.

                                       38
<PAGE>

     We anticipate entering into an agreement with Pink Sand Corporation, for
the development rights to United States Territory of Guam and the Commonwealth
of the Northern Mariana Islands. Pink Sand is principally owned by Richard F.
Schaden. The development agreement will require Pink Sand to open 5 Restaurants
during the term of the agreement. So long as Pink Sand meets the development
schedule, it will have the exclusive rights to develop Restaurants in the
territory. The development fee is $42,500, payable upon execution of the
agreement. The fee equals one hundred percent of the first initial franchise fee
and fifty percent of the aggregate initial franchise fees due for all of the
other Restaurants that Pink Sand must develop under the agreement. Each time
Pink Sand signs a franchise agreement for a Restaurant to be developed within
the territory, we will apply the Development Fee in increments equal to fifty
percent of the initial franchise fee due for that Restaurant to reduce the
additional amount Pink Sand must pay. We anticipate entering into the agreement
in December 1999 or early January 2000.

     In 1995, we sold the Area Director rights for the Detroit, Michigan area
to a company wholly-owned by Richard F. Schaden. The fee paid to us was
$150,000, which is consistent with the then fees received for the sale of area
directorships to unaffiliated parties, and was paid in cash. During 1998, we
paid the Area Director $27,664 in royalties. Mr. Schaden sold the area
directorship in 1998 to an entity owned by Scott Adams, a former employee of our
company, and we approved the transfer of the area director marketing agreement.

     Thomas Schaden, a brother of Richard F. Schaden and Frederick H. Schaden,
is in the insurance brokerage business and has acted as a broker for our
insurance policies, including the directors and officers policies that we have
purchased.

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits required by Item 601 of Regulation S-B. We will furnish to
our shareholders, a copy of any of the exhibits listed below upon payment of
$.25 per page to cover our costs of furnishing the exhibits.

Item No.    Exhibit Description

2.1         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.

2.2         Asset Purchase Agreement, among The Quizno's Acquisition Company,
            Bain's Deli Franchise Associates, through its General Partner,
            Gemini Enterprises, Ltd., Gemini One, Inc. and Jolles #4
            Partnership, dated November 12, 1997, incorporated by reference to
            Exhibit 2.1 to Firm 8-K, filed by the Company with the SEC on
            November 26, 1997.

2.3         Asset Purchase Agreement among Stoico Restaurant Group, Inc. d/b/a
            Stoico Food Service, Inc., Sub & Stuff, Inc. and Spaghetti Jack's
            Inc. and Quizno's Kansas LLC, incorporated by reference to Exhibit
            2.1 to the Company's Form 8-K, filed by the Company with the SEC on
            September 1, 1998

                                       39
<PAGE>
2.4         Asset Purchase Agreement, among Quiz-DIA, Inc., Airport services,
            Inc. and ASI-DIA, L.P., dated as of the 5th day of November, 1999,
            incorporated by reference to Exhibit 2.3 to Form 8-K, filed by the
            Company with the SEC on November 22,1999.

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. 33-72378-D).

3.2         Articles of Amendment to the Articles of Incorporation of the
            Company Authorizing 146,000 Shares of Class A Cumulative Convertible
            Preferred Stock, incorporated by reference to Exhibit 3.2 to the
            Company's Form 10-KSB, dated March 28, 1997.

3.3         Articles of Amendment changing the Company name, incorporated by
            reference to Exhibit 3.3 to the Company's Form 10-KSB, dated March
            28, 1997.

3.(I)       By-laws of the Company*

3.5         Articles of Amendment to the Articles of Incorporation of the
            Company, authorizing 100,000 shares of Class B Preferred Stock and
            200,000 shares of Class C Cumulative Convertible Preferred Stock,
            incorporated by reference to Exhibit 3.5 to the Company's Form
            10-KSB, dated March 26, 1998.

3.(II)      Articles of Amendment to the Articles of Incorporation of the
            Company, authorizing 10,000 shares of Class D Preferred Stock.*

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).

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 13-D, dated July 14, 1994, filed by Richard E.
            Schaden and Richard F. Schaden.

9.2         First Amendment to Voting Trust Agreement dated November 4, 1994,
            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,
            incorporated by reference to Exhibit 9.3 to the Company's Form
            10-KSB, dated March 28, 1997.

9.4         Third Amendment to Voting Trust Agreement dated as of September 1,
            1999*

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
            99.1 to the Company's Registration Statement on Form S-8 (Reg.
            No.333-45549).

10.4        Amended and Restated Stock Option Plan for 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).

                                       40
<PAGE>
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       Indemnity Agreement of J. Eric Lawrence, incorporated by reference
            to Exhibit 10.10 to the Company's Form 10-KSB, dated March 26, 1998

10.11       Indemnity Agreement of Mark L. Bromberg, incorporated by reference
            to Exhibit 10.11 to the Company's Form 10-KSB, dated March 26, 1998

10.12       Form of Franchise Agreement, incorporated by reference to Exhibit
            10.12 to the Company's Form 10-KSB, dated March 26, 1998.

10.13       Form of Area Director Marketing Agreement, incorporated by reference
            to Exhibit 10.12 to the Company's Form 10-KSB, dated March 28, 1997

10.14       Headquarters Office Lease for the Company, incorporated by reference
            to Exhibit 10.14(b) to the Company's Form 10-KSB, filed with the SEC
            on March 31, 1999.

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 10-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,
            incorporated by reference to Exhibit 10.18 to the Company's From
            10-KSB, dated March 28, 1997.

10.19       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 RRGC with the SEC on January 9, 1998.

10.20       First Amendment to Investment Agreement between RRGC and the
            Company, dated as of October 8, 1997, incorporated by reference to
            Exhibit 10.23 to the Company's Form 10-KSB, dated March 26, 1998.

10.21       Warrant to Purchase Shares of Common Stock of the Company, dated as
            of November 11, 1997 and issued to RRGC, incorporated by reference
            to Exhibit 10.24 to the Company's Form 10-KSB, dated March 26, 1998.

                                       41
<PAGE>

10.22       Warrant to Purchase Shares of Common Stock of the Company, dated as
            of December 31, 1998 and issued to RRGC.*

10.23       Asset Purchase Agreement between The Quizno's Acquisition Company
            and Bain's Deli Corporation dated as of February 1, 1999,
            incorporated by reference to Exhibit 10.28 to the Company's form
            10-KSB filed with the SEC on March 31, 1999.

10.24       Airplane Purchase Agreement, dated as of September 22, 1999, between
            the Company and Sacramento Aviation Management Company.*

10.25       Interchange Agreement, dated as of October 13, 1999, between the
            Company and Richard F. Schaden, P.C.*

10.26       Form of Master Franchise Agreement*

10.27       Investment letter agreement, dated as of October 4, 1999, between
            the Company and AMERESCO Commercial Finance, Inc.*

10.28       Form of Promissory Note, dated as of October 5, 1999, issued by the
            Company to AMERESCO Commercial Finance, Inc.*

10.29       Form of Pledge and Security Agreement, dated as of October 5, 1999,
            between the Company and AMERESCO Commercial Finance, Inc.*

20.1        Risk Factors Section from the Company's Prospectus dated January 9,
            1998 included in the Registration Statement on Form S-3 filed by the
            Company (Registration No. 333-38691), incorporated by reference to
            Exhibit 20.1 to the Company's 10-KSB, dated March 26, 1998.

21.1        List of Company subsidiaries.*


23          Consent of Ehrhardt Keefe Steiner & Hottman PC to the incorporation
            by reference of its report dated November 5, 1999 appearing
            elsewhere in this Form 10-KSB into two Registration Statements on
            Form S-8 of the Company, Reg. Nos. 333-45549 and 333-45205.*
----------

*     Filed with this Report.

     (b) Reports on Form 8-K. We filed three (3) reports on Form 8-K during the
fiscal quarter ending September 30, 1999. All three Form 8-K filings reported on
only Item 5 matters. Such filings where made on August 11, August 19, and
September, 1999, and related to press releases announcing the withdrawal of
proposed going private transaction, second quarter financial results and the
results of shareholder votes taken at our September 27, 1999 Annual Meeting,
respectively.

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<PAGE>


                                   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 December 21, 1999.

                               THE QUIZNO'S CORPORATION



                               By:/s/ 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      December 30, 1999
-----------------------    Officer and Director
Richard E. Schaden         (Principal Executive Officer)


/s/ Richard F. Schaden     Vice President,                 December 30, 1999
Richard F. Schaden         Secretary and Director


/s/ Mark L. Bromberg       Director                        December 30, 1999
Mark L. Bromberg

/s/ J. Eric Lawrence       Director                        December 30, 1999
J. Eric Lawrence


/s/ Frederick H. Schaden   Director                        December 30, 1999
Frederick H. Schaden

                           Director                        December 30, 1999
-------------------
Brad A. Griffin

/s/ John L. Gallivan       Chief Financial Officer         December 30, 1999
John L. Gallivan           and Treasurer (Principal
                           Financial and Accounting
                           Officer



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