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**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, 2000

    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, Colorado80202**
     (Address of Principal Executive Offices)               (Zip Code)

                                   **(720) 359-3300**
                   (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:  $41,924,232

The  aggregate  market  value  of  the  registrant's   common  stock  held  by
non-affiliates  of the  registrant  as of December 18, 2000 was  approximately
$5,963,198  (for  purposes  of the  foregoing  calculation  only,  each of the
registrant's officers and directors is deemed to be an affiliate).

There were 2,346,766  shares of  registrant's  common stock  outstanding as of
December 18, 2000.

                     **Documents incorporated by reference:**
                                     None

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

                              **TABLE OF CONTENTS****PART I**ITEM 1.     DESCRIPTION OF BUSINESSITEM 2.     DESCRIPTION OF PROPERTYITEM 3.     LEGAL PROCEEDINGS.ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF            SECURITY HOLDERS**PART II**ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED            STOCKHOLDER MATTERSITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS            OR PLAN OF OPERATIONITEM 7.     FINANCIAL STATEMENTSITEM 8.     CHANGES IN AND DISAGREEMENTS WITH            ACCOUNTANTS ON ACCOUNTING AND FINANCIAL            DISCLOSURE**PART III**ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND            CONTROL PERSONS; COMPLIANCE WITH            SECTION 16(A) OF THE EXCHANGE ACTITEM 10.    EXECUTIVE COMPENSATIONITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL            OWNERS AND MANAGEMENTITEM 12.    CERTAIN RELATIONSHIPS AND RELATED            TRANSACTIONSITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K**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  named below 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
or our  affiliates  operate,  and offer  franchises to individuals or entities
(“Franchisees”) to operate,  restaurants with carry-out  facilities which sell
submarine and other  sandwiches,  salads,  other food products and  beverages,
and related  services  (“Restaurants”).  As of November 30,  2000,  there were
1026  Restaurants in operation in the United States and  internationally,  and
agreements  were in place for the  opening  of an  additional  695  franchised
restaurants in the United States.  During the last three years,  we have grown
to become the third largest submarine 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,  Switzerland,   Netherlands,  Luxembourg,
Belgium,  Iceland,  Mexico,  Venezuela,  Peru,  Dominican  Republic  and other
Caribbean  Islands,  Taiwan,  and Central  America.  As of December  18, 2000,
there were 110 Quizno’s  Restaurants in operation in Canada, 8 in Japan, 4 in
Australia,  6 in  Central  America,  6 in  Puerto  Rico,  1 in Guam,  and 1 in
Iceland.

      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.

        On November  13,  2000,  we  commenced a self tender offer to purchase
all  outstanding  shares  of our  common  stock,  except  for  shares  held by
Messrs  Richard E.  Schaden,  Mr.  Richard F. Schaden and Frederick H. Schaden
(the  “Schadens”),  at a price of $8 per share, net in cash to the seller (the
“Tender  Offer”).  The Tender Offer expired at midnight  Monday,  December 11,
2000.   Shareholders   tendered  and  we  purchased   661,155  shares  of  our
outstanding  common  stock.  In  addition,   we  purchased   preferred  stock,
warrants and options  convertible or exchangeable into 1,056,906 shares of our
common  stock.  In  connection  with the  Tender  Offer,  we closed a loan for
$13.8  million with Levine  Leichtman  Capital  Partners II, L.P.  (“Levine”).
After the Tender Offer,  as of December 18, 2000,  we had 2,346,766  shares of
common stock issued and outstanding, 66.1% of which is held by the Schadens.

        In October  2000,  as part of the tender  offer we formed a new wholly
owned  subsidiary,  The Quizno’s  Franchise  Company (QFC),  which will be the
franchisor for all franchise agreements,  area director agreements, and master
franchise  agreements  entered into after  December 12, 2000. At some point in
the  future,  The  Quizno’s   Corporation  may  assign  all  of  the  existing
franchise, area director, and master franchise agreements to QFC.

**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.

      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 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.

      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  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 did in fiscal
2000. 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.

**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 deemed fully earned by us when paid and is not refundable.

      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  18, 2000,  we had 58 Area  Directors  whose  Territories
cover  approximately  60% of the population of the United States. We have also
sold master franchise  rights for Canada,  Japan,  United Kingdom,  Australia,
Netherlands,  Luxembourg, Belgium, Mexico, Venezuela, Peru, Dominican Republic
and  other  Caribbean   islands,   portions  of  Central   America,   Iceland,
Switzerland, Taiwan.

      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 the  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  opened
within the territory during the term of the area director marketing agreement.

      We have a program  under  which we will  finance up to 50% of the Master
Franchise and Area Director  marketing  fees for certain  approved  candidates
who have the  experience  and skill  requirement  sought by us for our  Master
Franchise’s  and Area  Directors,  but do not have  sufficient cash to pay the
fee in  full.  The  master  franchise’s  and  Area  Director  is  required  to
personally  sign a promissory  note due to us for the amount  financed,  which
typically  will bear  interest at 15% per year  (although we may offer a lower
interest rate in certain  circumstances) and be repaid in monthly installments
over five  years.  The  promissory  note is secured by the Master  Franchise’s
and 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 have 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  thereof.  Sales  tax  and  any  other  state  or  federal  tax  are
excepted.  The  Owner  also pays  advertising  fees to The  Quizno’s  National
Marketing  Fund Trust and one of three  Regional  Marketing  Fund Trusts in an
amount  equal to a total of 1% to 4% of the  gross  sales,  which are used 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 traditional
Restaurant  ranges  between  $170,150  and  $232,150   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.

      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. We have entered into
an  agreement  to change to a new National food products distributor effective
January  2001.  On  August 25, 2000,  we  formed a new wholly owned subsidiary
named  American  Food  Distributors,  Inc.,  a  Colorado corporation primarily
engaged  in  the business of purchasing proprietary products from  third-party
manufacturers and  then  reselling  those  products  to  a distributor for use
in the  Restaurants  (AFD).  We plan to purchase and resell virtually  all our
proprietary   products  through AFD. We  anticipate  that the organization  of
AFD may result in certain  cost  efficiencies and savings that would translate
to  reduced  product  prices  for our  franchisees, increased contributions to
our national and regional marketing funds, and increased revenue and  earnings
for us. At this point, it is impossible to predict the extent of those amounts
or how they will be allocated.

      We retain the right to approve the terms of the Owner's  lease.  We 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
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 be
responsible  for submitting all required  reports to us when and in the manner
or format required by us.

      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, including payroll.

      The Owner must submit copies of all proposed  advertising or promotional
materials for 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.  Many state  franchise  laws
limit the ability of a franchisor 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, which are discussed below.

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

      Toll  Free  Phone  Line.  We  have  installed  a toll  free  phone  line
(1-800-DELI-SUBS)  which rings directly into the Franchise  sales  department.
The  information  is  entered  into a data  base  of  Owner  inquiries  and an
informational package 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  continue  to  advertise  nationally  for new
franchisees on a regular and consistent basis in national,  regional and local
publications.

**Company-Owned Restaurants**

      As of December 15, 2000, we own and operate 33 Quizno's Restaurants,  22
of which are  located in  Colorado,  and 11 are  located in Kansas.  In fiscal
2000,  Company-owned  Restaurants  generated $ 1,193,730 in earnings.  We also
currently  own and  operate one  Quizno’s  Restaurant  held for resale,  which
incurred losses totaling $ 12,634 in fiscal 2000.

      While we may 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  Quizno’s  National
Marketing  Fund  Trust  and up to 3% of gross  sales to one of three  Regional
Fund  Marketing   Trusts.   All   company-owned   Restaurants   must  pay  the
advertising   fees  on  an  equal   percentage   basis  with  all   franchised
Restaurants.  We use  the  advertising  fees 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  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.

      Through  July 10,  2000,  each  traditional  Restaurant  was required to
spend 3% of sales for local  advertising  or  promotions.  Effective  July 11,
2000 this 3% of sales was  allocated  into one of three  Regional  Advertising
Trusts.

**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 to be 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  2,100  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.

      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.

      We  do  not  have   significant   costs  associated  with  research  and
development.

**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  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,  prohibiting  interference  with the
right of free  association  among  franchisees,  limiting  the  imposition  of
standards  of  performance  on  a  franchisee  and  regulating  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.

      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  Disability  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 would
increase labor costs to us and our franchisees.

      We do not  have any  significant  costs  related  to  environmental  law
compliance.

**Trademarks**

      We presently  own the  following  principal  trademarks or service marks
(the  “Marks”).  All of our  primary  Marks  (except  for the  last  one)  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

      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:

                                   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
                    Classics       App. # 789814        30 March 1999        Pending
                                          
                                          
    

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

                                          
                                          
                        Quizno's Subs

Canada              Oven Baked
                    Classics (and  App. # not yet
                     design)        available                                Pending
                                          
                                          
    

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

                    Quizno's Subs
Europe-CTM          Oven Baked     App./Reg. # 1057264  4 October 2000       Registration
                    Classics                                                  No. pending
                                          
                                          
    

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

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

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

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

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

Puerto Rico         Quizno's       None                23 September 1997     Pending
                                          
                                          
    

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

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

Iceland             Quizno’s       App. # 1909/2000    25 May 2000           Pending
                                          
                                          
    

Switzerland         Quizno’s       App. # 06203/2000   24 May 2000           Pending
                                          
                                          
    

      We have also filed trademark applications in several Central American
countries, all of which are currently pending.  There are no agreements
currently in effect which significantly limit our right to use or license the
use of the Marks.

**Employees**

      As of  December 15,  2000,  we employed  92  full-time  employees  and 2
part-time  employees.   In  addition,   we  employed  109  full-time  and  218
part-time  employees in our Company-owned  Restaurants.  Our employees are not
covered by any collective  bargaining  agreement and  management  believes our
employee relations are excellent.

**ITEM 2.     DESCRIPTION OF PROPERTY**

       We lease our  headquarters  office space of 14,866  square feet at 1415
Larimer  Street,  Denver,  Colorado.  We also lease the  premises  for each of
the 35  Company-owned  and operated  Restaurants  and the Cowboy Bar at Denver
International Airport, at September 30, 2000, as follows:

1.     12201 East Arapahoe Road, #B7    Englewood, CO 80112         2,486 sq. feet
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, #67      Greenwood Village, CO 80111 3,166 sq. feet
5.     2311 30th Street                 Boulder, CO 80301           1,400 sq. feet
6.     9425 South University Blvd.      Highlands Ranch, CO 80126   1,919 sq. feet
7.     1275 Grant Street                Denver, CO 80203            1,400 sq. feet
8.     1250 South Hover Road, Bldg. 8A  Longmont, CO 80501          2,350 sq. feet
9.     1660 Lincoln Street, # 105       Denver, CO 80264            1,660 sq. feet
10.    10450 West Colfax                Lakewood, CO  80215         1,992 sq. feet
11.    4495 North Washington            Denver, CO  80216           1,903 sq. feet
12.    14413  West Colfax               Lakewood, CO 80401          1,300 sq. feet
13.    999 18th Street,  # 136          Denver, CO 80202            1,360 sq. feet
14.    270 West 14th Street             Denver, CO 80204            1,700 sq. feet
15.    4403 South Tamarac Parkway       Denver, CO 80237            2,420 sq. feet
16.    818 17th Street                  Denver, CO 80202            1,800 sq. feet
17.    2401 West Central                El Dorado, KS 67042         1,800 sq. feet
18.    738 North Waco                   Wichita, KS 67203           1,151 sq. feet
19.    4100 East Harry, #55             Wichita, KS 67218           1,850 sq. feet
20.    3300 North Rock Road             Wichita, KS 67226           1,840 sq. feet
21.    2792 South Seneca                Wichita, KS 67217           1,700 sq. feet
22.    2407 West 21st Street            Wichita, KS 67203           1,225 sq. feet
23.    602 North Tyler                  Wichita, KS 67212           1,500 sq. feet
24.    678 East 47th Street South       Wichita, KS 67216           1,540 sq. feet
25.    1695 Larimer Street              Denver, CO 80202            2,981 sq. feet
26.    305 McCaslin Blvd. #6            Louisville, CO  80027       1,500 sq. feet
27.    12003 Pecos St.                  Westminster, CO  80234      2,400 sq. feet
28.    6765 W. 120th Ave.               Broomfield, CO  80020       2,100 sq. feet
29.    5131 S. Yosemite                 Greenwood Village, CO 80112 1,600 sq. feet
30.    1387 S. Boulder Rd., Unit G      Louisville, CO  80027       2,100 sq. feet
31.    12607 Metcalf                    Overland Park, KS  66213    2,000 sq. feet
32.    11029 Metcalf                    Overland Park, KS  66120    1,520 sq. feet
33.    1213 State Street, Unit A        Santa Barbara, CA  93101    1,485 sq. feet
34.    8700 Pena Blvd.                  Denver, CO  80249           4,209 sq. feet
35.    8900 Pena Blvd.                  Denver, CO  80249           1,761 sq. feet
36.    8700 Pena Blvd.                  Denver, CO  80249           2,724 sq. feet

**ITEM 3.  LEGAL PROCEEDINGS**Angela Wetzel v. Quizno's Subs, Ron Newman & Quiz-Subs,  Inc. (Court of
Common Pleas, Berkeley County, South Carolina,  No. 00-CP-08-123) (the Wetzel
Litigation).  Ron Newman is a former  area  director,  through  Quiz-Subs.  In
1999, Newman entered into  negotiations  with Wetzel (a Subway  franchisee) to
sell  the  area  directorship  for  approximately   $275,000.  We  tentatively
approved the sale,  which  approval  was subject to (among  other  conditions)
Wetzel's  transfer of her existing  Subway  units.  Subsequently,  Wetzel paid
Newman  $275,000 for the  territory.  Although  Wetzel had not sold her Subway
units and did not have written  consent from us for the  transaction,  she now
claims that our  representative  verbally approved the sale without the Subway
sale condition.  When we refused to acknowledge the sale,  Wetzel brought this
litigation in South  Carolina  state court,  on January 20, 2000,  against us,
Quiz-Subs,  and Newman.  Wetzel seeks  specific  performance  (i.e.,  an order
transferring the territory  rights to her) or, in the  alternative,  return of
the $275,000 payment and consequential damages.

      We  have  denied   liability  and   cross-claimed   against  Newman  and
Quiz-Subs.  We believe Wetzel could not have  reasonably  relied on any verbal
statement  by a  representative  to pay  Newman  for  the  territory.  We also
believe that the ultimate  liability rests with Newman,  who refused to return
the payment  after  being  notified  that we would not  approve the  transfer.
Wetzel has requested a jury trial.  No trial date has been set.

      The Quizno's  Corporation v. Quiz-Subs,  Inc., Ron Newman,  and Stephen
Gainous  (United  States  District  Court for the District of  Colorado,  No.
00-213) (the Newman  Litigation).  We additionally  terminated  Quiz-Subs area
director  agreement and territory  rights for failure to meet the  development
quota,  and commenced this  litigation in the United States  District Court on
February  1,  2000.  The  action  seeks  damages  arising  from  Newman's  and
Quiz-Subs'  failure to develop the territory as well as  indemnification  from
any damages or expenses  incurred by us as a result of the Wetzel  Litigation.
The  defendants  have not yet answered the  complaint or filed  counterclaims.
If any  counterclaims  are filed,  we will  assess  those  claims and  respond
accordingly.  We  believe  that any  loss in this  matter  would be a  covered
claim under our Errors and Omissions Insurance Policy.

      The Quizno's  Corporation  v. Quizno's of Tampa Bay, Inc.; The Quizno's
Corporation v. Quizno's of Central Florida,  Inc., Quizno's of Jacksonville,
Inc., David M. Black and Barbara Jill Black (United States District Court for
the District of Colorado,  No.  00-253)  (the Black  Litigation).  The Blacks,
through their various  entities,  were area  directors in Florida.  In January
2000, we discovered  that the Blacks had deposited  checks for franchise  fees
(made payable to The Quizno's  Corporation) into their business accounts.  The
Blacks then sent  reduced  amounts to Quizno's.  The Blacks also  defaulted on
payment  obligations  under  promissory  notes entered into in connection with
the sale of the area  directorships.  Upon learning of the Blacks' action,  we
terminated   the  underlying   area  director   agreements  and  commenced  an
arbitration  against Quizno's of Tampa Bay, Inc., and a federal district court
action  against the other  entities on January 4, 2000.  Both  actions  allege
claims  for  breach  of  the  area   director   agreements  as  well  as  seek
indemnification  arising from the Blacks' actions.  Both actions also name the
Blacks individually.

      On November 3, 2000,  the parties  entered into a  settlement.  Pursuant
to the settlement  agreement,  we paid the defendants  $20,000 and forgave the
balances owed under the promissory  notes.  The defendants  gave up all rights
to the area director territories,  and the parties exchanged a full release of
all claims.  On November  16,  2000,  the federal  district  court  action was
dismissed  with  prejudice.   The  arbitration   action  had  previously  been
dismissed.

      The Quizno’s  Corporation  v. Cy Thomas  Plyler  (American  Arbitration
Association,  Denver  Colorado,  No. 77 181 00203  00.  On July 10,  2000,  we
terminated an area director  agreement with Cy Thomas  Plyler,  for failure to
meet the required  development  schedule.  On the same day, we instituted this
action in the Denver office of the American Arbitration Association,  in which
we sought  damages  for  failure  to comply  with the  agreement  as well as a
declaration  that the agreement was properly  terminated.  On August 11, 2000,
Plyler filed and answering  statement denying our claims and counterclaims for
breach of contract.  Plyler claims  damages in excess of  $1,000,000  based on
lost future  revenue from the  territory.  He also seeks  indemnification  and
attorney  fees.  We believe that we  rightfully  terminated  the agreement and
intend to contest  the  counterclaims  and to pursue our  claims.  The case is
currently  in  pre-trial  discovery.  No trial  date has been set.  We believe
that any loss in this  matter  would be a covered  claim  under our Errors and
Omissions Insurance Policy.

      Danny  Markovitz & Lee McGowan v. The  Quizno’s  Corporation  (District
Court for the City & County of  Denver,  Colorado,  No.  00CV4134.  On June 2,
1999,  we terminated an area  director  agreement  with Danny  Markovitz & Lee
McGowan  for failure to meet the  required  development  schedule,  failure to
make payments on the promissory  note given in connection with the sale of the
area  directorship,  and  failure  to  comply  with  other  provisions  of the
agreement and related  documents.  On June 20, 2000, the plaintiffs  commenced
this action, alleging breach of contract, unjust enrichment,  violation of the
Colorado Consumer  Protection Act,  fraudulent  misrepresentation,  fraudulent
concealment,   negligent  misrepresentation,   intentional  interference  with
contract,  and violations of the Colorado Securities Act as well as securities
fraud.  The  claims  all  arise  from  the  plaintiffs’   allegation  that  we
wrongfully  terminated the agreement and in alleged  wrongful acts (failure to
timely  provide  a UFOC  or to  disclose  the  terms  of the  promissory  note
collateral)   taken   by  us  in   connection   with  the  sale  of  the  area
directorship.  We have  denied  those  claims  and  believe  that we  properly
terminated  the  agreement.  The case is currently in pre-trial  discovery and
is set for trial in June 2001.  We believe  that any loss in this matter would
be a covered claim under our Errors and Omissions Insurance Policy.

      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**

      No matters were  submitted to a vote of security  holders of the Company
during the fourth quarter of its fiscal year ended September 30, 2000.

                                    **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 18,  2000, the
stock closed at $ 7.50.

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

Fiscal Year Ended September 30, 2000

                            High                Low               Close
                          --------            -------            -------
First Quarter              $9.00               $7.25              $7.38
Second Quarter             $7.94               $5.88              $7.94
Third Quarter              $8.00               $5.88              $7.00
Fourth Quarter             $7.38               $5.88              $6.44

      There  were 93 holders of record of our  Common  Stock as of  December 18,
2000. This number includes shareholders of record who hold stock for the benefit
of others.

      The tender offer  reduced the number of our  outstanding  shares and the
number of our  shareholders.  Our Board of Directors  could take other actions
that would  result in a  second-step  transaction  in which all the  remaining
public  stockholders would receive cash for their shares.  However,  our Board
of Directors  has not made any  decision to take the company  private or as to
whether,  or when,  a  second-step  transaction  such as a merger or a reverse
stock  split would be  completed.  A  second-step  transaction  would  require
approval  by  our  Board  of  Directors  and  may  require   approval  by  our
stockholders,  depending  on the nature of the  second-step  transaction.  The
members of the  Schaden  family  owning  shares  would be able to control  the
outcome of any stockholder  vote on a second-step  transaction.  The Board may
also decide to deregister  our shares  (assuming that we meet the criteria for
such  delisting),  in which  case we would no  longer be a  reporting  company
under the  Securities  Exchange Act of 1934, nor would our shares be traded on
any public exchange.

      We  believe  that the tender  offer may result in our  company no longer
meeting the net tangible asset or other  requirements for continued listing on
the  Nasdaq  SmallCap  Market.  In that  event,  we  would  be  traded  on the
National  Association of Securities  Dealers,  Inc.  Electronic Bulletin Board
(the "OTCBB"),  which may provide less liquidity and less price  publicity for
remaining shareholders.

      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,  for use as working  capital or to
repurchase common stock.

      In October  1999,  we  announced a program to  repurchase  up to 200,000
shares of our common stock.  The program was terminated on or about  September
30,  2000,  and at such time we had  repurchased  144,005  shares  under  such
program.  The prices at which  shares  were  repurchased  ranged from $6.03 to
$8.875, and the average price was $8.38.

      During the last  quarter of the fiscal year ending  September  30, 2000,
we sold the following  securities without registration with the Securities and
Exchange Commission pursuant to the exemption noted:

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

Common Stock      8/8/00     2,918       $20,429 Plan     Quizno’s      Section 4(2)
                                          obligation       401(k) 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  and  master
franchise  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.

**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, 2000 and 1999 and December
31, 1998 and the related statements of operations, stockholders’ equity and cash
flows  for the  year  and  nine  months  ended  September  30,  2000  and  1999,
respectively,  and the year ended  December  31,  1998.  Included  below are the
statements of operations for the years ended September 30, 2000 and 1999 and the
statements  of cash  flows  for the years  ended  September  30,  2000 and 1999.
Amounts for the year ended  September  30, 1999 are  unaudited.  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 2000 and
1999 refer to the years ending September 30, 2000 and 1999, respectively.

                    **Consolidated Statements of Operations**

                                                 For the Year Ended September 30,
                                                 --------------------------------
                                                      2000             1999
                                                 --------------     -------------
                                                                   (Unaudited)
Franchise operations:
   Revenue
        Continuing fees ........................   $ 18,072,077    $ 10,412,414
        Initial franchise fees .................      5,730,662       3,610,042
        Area director and master franchise fees       1,361,901       2,131,882
        Other ..................................      1,064,646         508,240
        Interest ...............................        526,761         355,608
                                                   ------------    ------------
            Total revenue ......................     26,756,047      17,018,186
                                                   ------------    ------------

   Expenses
        Sales and royalty commissions ..........     (7,836,912)     (5,302,456)
        General and administrative .............    (12,867,738)     (8,657,357)
                                                   ------------    ------------
            Total expenses .....................    (20,704,650)    (13,959,813)
                                                   ------------    ------------

Income from franchise operations ...............      6,051,397       3,058,373
                                                   ------------    ------------

Company store operations:
   Sales .......................................     14,973,763       8,276,368
   Cost of sales ...............................     (4,373,303)     (2,511,086)
   Cost of labor ...............................     (3,318,489)     (2,222,855)
   Other store expenses ........................     (6,088,241)     (2,924,237)
                                                   ------------    ------------
            Total expenses .....................    (13,780,033)     (7,658,178)
                                                   ------------    ------------

Income from Company stores operations ..........   $  1,193,730    $    618,190
                                                   ============    ============

Other income (expenses):
   Sales by stores held for resale .............   $    194,422    $    997,583
   Loss and expenses related to stores
    held for sale ..............................       (387,576)     (1,260,529)
   Loss on sale or closure of Company stores ...        (43,596)       (127,809)
   Sale of Japan master franchise ..............            --        1,168,801
   Provision for bad debts .....................       (305,285)       (354,827)
   Other expenses ..............................        (41,820)        (68,245)
   Depreciation and amortization ...............     (1,994,887)     (1,280,836)
   Impairment of long lived assets .............       (579,246)          --
   Privatization and acquisition related costs .       (138,164)       (265,472)
   Interest expense ............................     (1,898,901)       (321,718)
                                                   ------------    ------------
            Total other expenses                     (5,195,053)     (1,513,052)
                                                   ------------    ------------

Net income before income taxes .................      2,050,074       2,163,511
Income tax provision ...........................       (747,835)       (353,135)
                                                   ------------    ------------

Net income .....................................      1,302,239       1,810,376
Preferred stock dividends ......................       (186,457)       (179,151)
                                                   ------------    ------------

Net income before cumulative effect of changed
 accounting principle ..........................      1,115,782       1,631,225
Cumulative effect of changed accounting principle
 (net of taxes) ................................            --       (2,769,592)
                                                   ------------    ------------
Net income (loss) applicable to common
 stockholders ..................................    $ 1,115,782    $ (1,138,367)
                                                   ============    ============

                    Consolidated Statements of Cash Flows

                                                     For the Year Ended September 30,
                                                     --------------------------------
                                                           2000             1999
                                                     ---------------     ------------
                                                                          (Unaudited)
Cash flows from operating activities
   Net income (loss) before preferred stock .......   $  1,302,239    $   (959,216)
   dividends
   Adjustments to reconcile net income (loss) to
    net cash provided by operating activities -
      Depreciation and amortization ...............      1,919,360       1,179,690
      Impairment of long lived assets .............        579,246            --
      Cumulative effect of changed accounting
       principle ..................................           --         4,388,208
      Provision for losses on accounts and notes
       receivable .................................        305,285         354,827
      Loss on disposal of Company stores ..........         43,596         158,308
      Deferred income taxes .......................       (795,877)     (3,395,416)
      Amortization of deferred financing costs ....         75,527         101,146
      Amortization of deferred area director fee
       revenue ....................................       (404,934)           --
      Area director expenses recognized ...........         40,493            --
      Promissory notes accepted for master
       franchise and area director fees ...........       (415,924)     (1,211,237)
      Other .......................................          9,375          17,972
      Changes in assets and liabilities -
          Accounts receivable .....................     (1,279,762)       (497,682)
          Other assets ............................        (82,339)        108,968
          Accounts payable ........................      1,395,280          95,453
          Accrued liabilities .....................        951,321         384,684
          Deferred franchise costs ................       (404,502)       (536,385)
          Deferred initial franchise fees and
           other fees .............................      3,085,559       5,174,771
          Income taxes payable ....................       (480,912)        851,469
                                                      ------------    ------------
                                                         3,184,645       5,581,278
                                                      ------------    ------------
          Net cash provided by operating activities      5,843,031       6,215,560
                                                      ------------    ------------

Cash flows from investing activities
   Acquisition of Company owned stores ............     (5,832,376)       (286,355)
   Purchase of property and equipment .............     (6,073,744)     (2,139,866)
   Principle payments received on notes receivable         453,931       1,355,282
   Investment in turnkey stores ...................           --            (7,558)
   Short-term investments .........................     (1,060,459)     (3,060,688)
   Acceptance of other notes receivable ...........     (1,159,761)       (362,578)
   Investment by minority interest owners .........           --           151,601
   Purchase of minority interest owners ...........           --          (150,000)
   Intangible and deferred assets .................       (125,958)     (1,262,185)
   Proceeds from sale of assets and stores ........        137,361         213,000
   Deposits .......................................         52,174         (42,805)
   Area director marketing territory repurchases ..     (2,497,945)       (863,984)
   Other investments ..............................           --           (15,000)
                                                      ------------    ------------
         Net cash used by investing activities ....    (16,106,777)     (6,471,136)
                                                      ------------    ------------

Cash flows from financing activities
   Principal payments on long-term obligations ....     (4,142,344)     (1,866,919)
   Proceeds from issuance of notes payable ........     17,548,000       2,242,187
   Financing costs ................................       (646,511)           --
   Redemption of Class B Preferred Stock ..........           --          (500,000)
   Proceeds from issuance of Common Stock and .....        302,380         128,479
   Preferred Stock
   Proceeds from sale of Class D and Class E
    Preferred Stock ...............................        478,611            --
   Repurchase of Class D Preferred Stock ..........         (3,000)           --
   Common Stock repurchased .......................     (1,219,785)           --
   Preferred dividends paid .......................       (186,457)       (179,452)
                                                      ------------    ------------
   Net cash provided by (used by) financing
    activities ....................................     12,130,894        (175,705)
                                                      ------------    ------------

Net increase (decrease) in cash and cash
 equivalents ......................................      1,867,148        (431,281)

Cash and cash equivalents - beginning of year .....        626,828       1,058,109
                                                      ------------    ------------

Cash and cash equivalents - end of year ...........   $  2,493,976    $    626,828
                                                      ============    ============

      In 2000 and 1999,  before the cumulative  effect of accounting  changes,
we were  profitable  for the year.  We ended the year  with 972  domestic  and
international  Restaurants  open,  another 669 domestic  Restaurants  sold and
scheduled  to  open in the  future,  35  Company  owned  Restaurants,  58 Area
Directors,  and  8  international  master  franchisees.  In  2000,  we  earned
$1,302,239  compared to $1,810,376 in 1999 (amounts are before preferred stock
dividends).

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

                                     For the year ended
                                        September 30,
                                   -----------------------
                                       2000        1999
                                   -----------  ----------
Revenue (000’s)
Continuing fees .................   $ 18,072     $ 10,412
Initial franchise fees ..........      5,731        3,610
Area director and master ........      1,362        2,132
franchise fees
Other ...........................      1,591          864
                                    --------     --------
Franchise revenue ...............     26,756       17,018
Sales by Company owned stores ...     14,974        8,276
Sales by stores held for resale .        194          998
                                    --------     --------
Total revenue ...................   $ 41,924     $ 26,292
                                    ========     ========
Percent increase ................         59%
                                    ========
Earnings before interest expense,
 income taxes, depreciation and
 amortization, preferred stock
 dividends, impairment of
 long-lived assets and cumulative
 effect of a change in accounting
 principle (EBITDA) .............   $  6,523     $  3,766
                                    ========     ========
Restaurants – Domestic and
International
Restaurants open, beginning .....        634          438
New Restaurants opened ..........        374          258
Restaurants closed, Bain’s ......         (4)        --
Restaurants sold, Bain’s ........       --             (31)
Restaurants closed ..............        (31)         (28)
Restaurants closed, scheduled to          (7)          (4)
reopen
Restaurants reopened ............          6            1
Restaurant open, end ............        972          634

Franchises sold, domestic .......        490          525
Franchises sold, international ..         63           52
                                    --------     --------
Total ...........................        553          577
                                    ========     ========

Initial franchise fees collected    $  8,462     $  6,986
(000's)
Systemwide sales, domestic ......   $    273     $    152
(millions)
Average unit volume, domestic (1)   $390,000     $369,000
Same store sales (2) (3)              Up 7.9%

(1)  Average unit volumes of $390,000 and $369,000 are for the nine months ended
September  30,  2000  and  1999,  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 year ended  September  30,  2000  compared  to the
comparable  period  in 1999 and is based on 350  stores  open all of 2000 and  1999.
Stores  that  transferred  ownership  during  this  period,  or were in  substantial
default of the franchise agreement at September 30, 2000, 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***Comparison of Years Ended September 30, 2000 and 1999*

      Franchise  revenue increased 57% in 2000 to $26,756,047 from $17,018,186
in 1999.  Total revenue  increased 59% in 2000 to $41,924,232 from $26,292,137
in 1999. The revenue  increase  resulted  primarily from  continuing  fees and
Company store sales.

   **Continuing  fees increased** 74% in 2000 to $18,072,077  from  $10,412,414 in
1999. Continuing fees are comprised of royalties and licensing fees.

      Royalty fees  increased 82% in 2000 to  $15,271,779  from  $8,386,050 in
1999.  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, 2000,  there were 937
franchises  open  (including  Bain's)  compared  to  607  franchises  open  at
September  30,  1999.  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.  The royalty for Quizno's  Express units is 8%. The
royalty  paid  to  us  by  master   franchisees  on  international   units  is
approximately  2.1%.  We have no  immediate  plans  to  further  increase  the
royalty rate.

        Licensing  fees  are  fees  generated  through  the  licensing  of the
Quizno's  trademark  for use by others,  which  includes  fees  received  from
product  companies  to sell  proprietary  products to our  restaurant  system.
Licensing fees are expected to increase as systemwide  sales and the awareness
and value of the  Quizno's  brand  increases.  For 2000,  licensing  fees were
$2,800,298  and  $2,026,364 in 1999.  There was no licensing fee revenue prior
to January 1, 1998.

   **Initial  franchise fees** increased 59% in 2000 to $5,730,662 from $3,610,042
in 1999.  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 2000, we opened 374  franchises,
including  52  international  Restaurants,  as compared to 258,  including  46
international  Restaurants,  opened in 1999.  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,  2000  were
$10,664,506  and  represent  669  domestic  franchises  sold  but  not  yet in
operation,  compared to  $7,910,648  at September  30, 1999  representing  505
domestic  franchises  sold but not open.  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 with respect to initial  franchise
fees  deferred at September  30, 2000 were  $1,990,275.  Approximately  50% of
all domestic initial  franchise fees received by us are paid to Area Directors
for sales and opening commissions.

   **Area  director  and  master  franchise  fees**  were  $1,361,901  in 2000 and
$2,131,882 in 1999. 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.

   Deferred  domestic  area fees are one-time fees paid to us for the right to
sell franchises on our behalf in a designated,  non-exclusive  area.  Domestic
area director fees were $672,333 in 2000 and $1,200,813 in 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 2000, we sold 6 area  directorships.  In 1999, we
sold 14 new  area  directorships  including  5  existing  Area  Directors  who
purchased  additional  territory.  At September 30, 2000, we had a total of 58
Area  Directors  who  owned  areas  encompassing   approximately  60%  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  $689,567 in 2000 and  $931,069 in 1999.  The 2000
fees received were for the Switzerland,  Netherlands, Luxembourg, and Belgium,
$300,000,  Iceland, $80,000, Mexico,  Venezuela,  Peru, Dominican Republic and
other Caribbean islands,  $100,000,  and Taiwan,  $219,567. A total of $40,000
of these fees was deferred until our training  obligations  are completed.  In
2000,  we  recognized  $30,000  of  previously  deferred  fees.  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  was  deferred  until  our  training  obligations  were
completed.

   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  ten  domestic  and
international  areas  sold  in  2000,  4 used  this  financing  for  $415,924,
representing  31% of the area  director  fees  recognized  in 2000. In 1999, a
total of $1,450,309 was financed, representing 68% of area revenue.

      The  area  director  and  master  franchise  agreements  set  increasing
minimum   performance   levels  that  require  the  area  director  or  master
franchisee to sell and open a specified  number of franchised  restaurants  in
each year  during  the term of the area  agreement.  Our  experience  with the
program  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 that will not meet their development
schedule.  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 area or
master  agreement if the area director or master  franchisee fails to meet the
development schedule,  and we then have the right to resell the territory to a
new area director or master franchisee or we can operate it.

      **Other revenue** increased by 109% in 2000 to $1,064,646  from $508,240 in
1999.  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  $566,158 in 2000  compared  to $324,139 in 1999.  This amount
will vary based on new store  openings.  Franchise  transfer fees increased in
2000 to $248,000 from $86,500 in 1999.  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 $121,755 in 2000 compared to $30,888 in
1999.  Bookkeeping  fees are paid by the  franchisee  to the  Company and then
remitted on to the bookkeeping  service designated by the Company.  These fees
represent the amounts  retained by the Company to administer  the  bookkeeping
function.

      **Sales  and  royalty  commissions** expense  increased  48% to  $7,836,912
(37.3% of royalty and initial  franchise fees) in 2000 from $5,302,456  (44.2%
of  royalty  and  initial   franchise   fees)  in  1999.   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 2000 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 48% 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.

       Our  foreign  master  franchisees  retain  70% of  initial  fees,  area
director fees and royalties paid from  franchises  sold, open and operating in
the master franchisee’s  territory,  except the Canadian master franchisee who
retained 100% of initial  franchise  fees in 1998 only, and the United Kingdom
master  franchisee  who will retain 85% of the initial  franchise fees through
December  31,  2001.  Under  the  master  franchise  agreement,   we  have  no
obligation  to provide  services that will result in any  incremental  cost to
us, other than an initial training trip to the country by an employee of ours.

      **General and  administrative** expenses  increased 49% to  $12,867,738  in
2000 from $8,657,357 in 1999. As a percent of franchise  revenue,  general and
administrative  expenses have  decreased  slightly from 50.9% in 1999 to 48.1%
in 2000.  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.  General
administrative  expenses include all of our operating costs.  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  $1,193,730 on sales of  $14,973,763 in 2000
compared to $618,190 on sales of $8,276,368 in 1999.  During 2000, we operated
stores for a total of 384 store operating  months.  In 1999, we had a total of
257 store operating  months.  Sales per store month increased 21.6% in 2000 to
$39,045 from $32,166 in 1999  primarily due to the  acquisition of Restaurants
and other operations at Denver International Airport in November 1999.

      At September  30, 2000,  we had 35 (25 at  September  30, 1999)  Company
owned stores,  including the Cowboy Bar at Denver  International  Airport.  In
2000, we purchased seven  Restaurants,  including the Cowboy Bar, and opened 3
new Restaurants. In 1999, we purchased from an Owner one Restaurant.

      **Stores  held for  resale** lost  $193,154  on sales of  $194,422  in 2000
compared to a loss of $262,946  on sales of  $997,583  in 1999.  At  September
30,  2000  and  1999,  we  operated  one  and  two  stores  held  for  resale,
respectively.  In 2000, we closed one store and sold one store held for resale
and purchased one store from an Owner.

      **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.  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  $305,285  in 2000  compared to $354,827 in
1999. As of September  30, 2000, we had an allowance for doubtful  accounts of
$272,293 that we believe is adequate for future losses.

      **Other  expenses** were $41,820 in 2000  compared to $68,245 in 1999.  The
decrease  in the 2000  expense  was  primarily  due to the loss on the sale of
assets in 1999.

      **Depreciation  and  amortization** was $1,994,887 in 2000 and $1,280,836 in
1999. The increase is primarily due to the  acquisition and development of new
Company owned  restaurants,  the acquisition of area director  territories and
the purchase of a corporate jet in fiscal 2000.

       **Impairment of long-lived  assets**was $579,246 in 2000. At September 30,
2000, we determined  that an impairment  related to our carrying  value of the
assets  purchased  in November  1997 from  Bain’s was  required  and  expensed
$579,246.

      **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. In 2000, we incurred  $138,164 of acquisition
related expenses.

      **Interest  expense** was  $1,898,901  in 2000 and  $321,718  in 1999.  The
increase is primarily  attributable  to the increase in  outstanding  debt. 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 10.9% (10.1%
through  January  31,  2000).  The  proceeds  of the loan were used to pay-off
existing debt of $3,320,956,  the majority of which accrued  interest at rates
of 10% to  12.75%.  Also,  on  January  26,  2000,  we closed on a loan in the
amount of $3,180,000  from GE Capital  Business Asset Funding.  The loan bears
interest at 9.53% and is payable in equal monthly  installment  of $52,023 for
5 years.

      **Income tax  expense** was  $747,835  in 2000 and  $353,135  in 1999.  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.  In the first  quarter  of fiscal  1999,  we used all of our tax net
operating loss  carryforwards  and incurred a tax liability.  Accordingly,  we
reduced the amount  recorded as an  impairment  of our  deferred  tax asset in
prior years and recorded the tax benefit of prior years net operating  losses.
Subsequent  to December 31, 1998,  our provision for income taxes was recorded
at 37%.

      **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  $5,843,031  in 2000
compared  to  $6,215,560  in 1999,  a decrease  of  $372,529.  The fiscal 2000
amount of $5,843,031 was primarily  related to net income before  depreciation
and  amortization  of $3,297,126,  an increase in deferred  initial  franchise
fees  of  $3,085,559  and an  increase  in  accounts  payable  of  $1,395,280,
partially  offset by an increase in accounts  receivable of $1,279,762  and an
increase in the deferred tax asset of $795,877.

      **Net cash used in investing  activities** was  $16,106,777 in 2000 compared
to cash used in investing  activities of  $6,471,136 in 1999.  The fiscal 2000
amount  of  $16,106,777   was  primarily   related  to  the   acquisition  and
development of Company owned  Restaurants  for  $11,906,120 and the repurchase
of area director territories for $2,497,945.

      **Net cash  provided  by  financing  activities**  was  $12,130,894  in 2000
compared to cash  provided by financing  activities  of $175,705 in 1999.  The
fiscal 2000 amount of  $12,130,894  was primarily  related to  $17,548,000  of
proceeds from the issuance of notes payable,  including the AMRESCO financing,
partially  offset by payments on long-term  obligations  of $4,142,344 and the
repurchase of Common Stock for $1,219,785.

      At September  30, 2000,  we had $194,579  invested in one store held for
resale.  We expect to sell the store held for resale by December 31, 2000.

      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,  2000,  12
leases had been executed  under this program and one other  guaranteed  lease.
The franchisee has defaulted on the rents due on two of these  locations,  for
which we do not have replacement  franchisees.  We expect to negotiate buyouts
of these leases between the landlords,  the franchisees and, possibly, us. Our
share of any such buyout is expected to be  immaterial.  A third  location has
closed due to a fire and the lease has been  cancelled  and the location  will
not re-open.

      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 September 30, 2000, we had  repurchased  144,005 shares at
an average price of $8.38.

      On  October  5,  1999,  we closed on a loan in the  principal  amount of
$14,000,000 from AMRESCO Commercial Finance,  Inc.  “AMRESCO”.  The loan bears
interest at 10.9%  (10.1%  through  January 31,  2000),  and is  repayable  in
monthly  installments of $199,201 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.  As of September 30, 2000, we had $1,528,212  available
to use for general corporate purposes.

      In  December of 2000,  AMRESCO  notified us that we may be in default of
the fixed cost coverage  ratio  requirement in our loan agreement with AMRESCO
as the  result of our loan with  Levine  Leichtman  Capital  Partners  II, L.P
(LLCP).  The LLCP  loan was made to us in  December,  2000,  and is  discussed
below.  We have  calculated the fixed cost coverage  ratio in accordance  with
the directions in our loan agreement with AMRESCO and have  demonstrated  that
we  are  not  in  violation  of  the   requirement.   We  have   provided  our
calculations to AMRESCO,  who has not agreed with our calculations,  nor given
us a notice of default.  We expect to resolve the issue with AMRESCO.

   On October 11,  1999,  our Board of  Directors  approved  the purchase of a
corporate  airplane  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.

      On January  26,  2000,  we closed on a loan in the amount of  $3,180,000
from GE Capital  Business Asset Funding.  The loan bears interest at 9.53% and
is payable in equal monthly  installment  of $52,023 for 5 years.  The loan is
secured by a first security interest in the assets of QUIZ-DIA, Inc.

      On  December  22,  1999 we  closed  on a line of  credit  loan and were
funded  $3,350,000 by Merrill Lynch  Business  Financial  Services,  Inc. The
loan  bears  interest  at the 30 day Dealer  Commercial  Paper Rate plus 2.5%
(equal to 8.13% at December  31,  1999).  The  maximum  amount of the line of
credit  loan is  $3,350,000,  which  maximum  is reduced  monthly  based on a
twelve-year  amortization.  The line of  credit  loan is  secured  by a first
security  interest in our jet aircraft.  In January 2000,  the line of credit
loan was paid down to zero.

      In March and April 2000,  we accepted  Subscription  Agreements  for the
issuance of 59,480 shares of Class E Cumulative  Convertible  Preferred  Stock
(”Class E Preferred Stock”). We had received cash proceeds of $512,718.  There
are  currently  150,000  authorized  shares of Class E Preferred  Stock.  Each
share of Class E Preferred  Stock is convertible  into one share of our common
stock,  at any time.  Shares of the Class E Preferred Stock may be redeemed by
us at any time on or after April 1, 2003,  at a redemption  price of $8.62 per
share.  Until  redeemed or converted to common  stock,  each Class E Preferred
stockholder  will receive a cumulative  monthly dividend of $0.0862 per share.
The Class E Preferred  Stock is junior in liquidation  preference to our Class
A Preferred Stock and our Class C Preferred  Stock,  but senior to our Class D
Preferred Stock and common stock.

      In July  2000,  the  National  Marketing  Fund  Trust  and the  Regional
Marketing  Fund  Trust,  which  collects  and  administers  the  national  and
regional   advertising  fees  received  from   franchisees,   entered  into  a
$2,000,000  revolving line of credit with Wells Fargo Bank West,  N.A. We have
guaranteed  this line of credit for the  National  Marketing  Fund Trust.  The
line of credit  bears  interest at 9.5% and matures on March 31,  2001.  As of
September  30,  2000,  $1.9  million had been drawn on the line of credit.  In
addition,  we loaned the National Marketing Fund Trust a total of $1,210,000 in
August of 2000,  $1,030,000  of which was  outstanding  at September 30, 2000.
The loan is expected to be fully repaid by March 2001.

      In 2000, we repurchased or reacquired fourteen area director territories
from 9 area directors for  $3,472,627,  inclusive  of legal and other  related
costs.  We issued notes payable for  $714,622  and offset  notes and  interest
receivable from three area directors in the amount of $315,850. The balance of
the purchase price was paid in cash.

      On November  13, 2000 we  commenced a self tender  offer to purchase all
outstanding  shares of our common  stock  except  for  shares  held by certain
insiders  at a price of $8 per share,  net in cash to the  seller.  The tender
offer  expired no December 11, 2000,  and we purchased  661,115  shares of our
common  stock for  $5,288,920.  In  addition  we  purchased  preferred  stock,
warrants and options  convertible  into  1,056,906  shares of common stock for
$4,205,706.  Costs related to the tender offer,  including  financing  related
costs, are approximately $2,500,000.

      The tender offer was financed  with a loan for  $13,862,260  from Levine
Leichtman  Capital  Partners  II, L.P.  (LLCP).  The proceeds of the loan were
used to  prepay  interest  for one  year in the  amount  of  $1,862,260 and to
repurchase shares and pay costs associated with the tender offer.

      The  promissory  note bears  interest at 13.25%,  interest only payable
monthly,  with the first twelve months prepaid, and is due in full in October,
2005. LLCP received  warrants for 14% of the equity  ownership of the Company.
The loan  may be paid  down to $7  million  by  September  12,  2001,  with no
penalty and with a corresponding reduction in the percent of warrants.

      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.

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

**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.

(..continued)

                            **THE QUIZNO'S CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Financial Statements and
                          Independent Auditors' Report
                Year Ended September 30, 2000, Nine Months Ended
             September 30, 1999 and the Year Ended December 31, 1998****THE QUIZNO'S CORPORATION AND SUBSIDIARIES****Table of Contents**Independent Auditors' Report

Consolidated Financial Statements

       Consolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statement of Stockholders' EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial Statements**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 September 30, 2000 and 1999 and December 31,
1998,  and the related  consolidated  statements  of  operations,  stockholders'
equity,  and cash flows for the year ended  September 30, 2000,  the nine months
ended  September  30,  1999  and  the  year  ended  December  31,  1998.   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, 2000 and 1999 and December 31,
1998 and the  results  of its  operations  and its cash flows for the year ended
September 30, 2000, the nine months ended  September 30, 1999 and the year ended
December 31, 1998, in conformity with generally accepted accounting principles.

                                          /s/Ehrhardt Keefe Steiner & Hottman PC
                                             Ehrhardt Keefe Steiner & Hottman PC
November 20, 2000
Denver, Colorado

                    **THE QUIZNO'S CORPORATION AND SUBSIDIARIES****Consolidated Balance Sheets**

                                                                                    September 30,    September 30,  December 31,
                                                                                        2000             1999           1998
                                                                                     -----------      ----------     -----------
                                                            Assets
Current assets
    Cash and cash equivalents ...................................................   $  2,493,976    $    626,828    $    702,258
    Short-term investments ......................................................      5,324,336       4,263,877       1,541,423
    Accounts receivable, net of allowance for doubtful accounts of
     $222,293 (2000) and $43,793 (1999) and $20,000 (1998) ......................      2,066,247       1,047,438         857,280
    Current portion of notes receivable .........................................      1,545,844         519,994       1,212,522
    Deferred tax asset ..........................................................        221,182         128,718          81,260
    Other current assets ........................................................        481,854         373,578         266,100
    Assets held for resale ......................................................        194,579         192,923         638,395
                                                                                     -----------      ----------     -----------
        Total current assets ....................................................     12,328,018       7,153,356       5,299,238
                                                                                     -----------      ----------     -----------

Property and equipment, net .....................................................     11,669,240       4,804,051       3,535,222
                                                                                     -----------      ----------     -----------

Other assets
    Investment in area directorships, net of accumulated amortization
    of $203,062 in 2000 and $26,232 in 1999 .....................................      4,236,151         889,387          51,635
    Intangible assets, net ......................................................      4,600,528       1,662,265       1,553,522
    Other deferred assets .......................................................      2,782,498       1,726,984       1,119,371
    Deferred tax asset ..........................................................      4,210,626       3,507,213         734,808
    Deposits and other assets ...................................................        130,837         361,189         119,883
    Notes receivables, net ......................................................      1,301,435       1,670,329       1,375,872
                                                                                     -----------      ----------     -----------
        Total other assets ......................................................     17,262,075       9,817,367       4,955,091
                                                                                     -----------      ----------     -----------

Total assets ....................................................................   $ 41,259,333    $ 21,774,774    $ 13,789,551
                                                                                     ===========      ==========     ===========

                                             Liabilities and Stockholders' Equity
Current liabilities
    Accounts payable ............................................................   $  2,614,437    $  1,219,157    $  1,317,085
    Accrued liabilities .........................................................      1,495,797         544,476         532,324
    Current portion of long-term obligations ....................................      1,550,501         337,642         370,404
    Current portion of subordinated debt ........................................           --           218,546         244,084
    Income taxes payable ........................................................        370,557         851,469         200,000
                                                                                     -----------      ----------     -----------
        Total current liabilities ...............................................      6,031,292       3,171,290       2,663,897
                                                                                     -----------      ----------     -----------

Long-term obligations ...........................................................     16,037,238       1,268,504         964,984
Subordinated debt ...............................................................           --         1,498,791       1,130,916
Deferred revenue ................................................................     16,402,957      13,722,331       4,781,946
                                                                                     -----------      ----------     -----------
        Total liabilities .......................................................     38,471,487      19,660,916       9,541,743
                                                                                     -----------      ----------     -----------

Commitments and contingencies

Minority interest in Subsidiary .................................................           --              --           151,601

Stockholders' equity
    Preferred stock, $.001 par value, 1,000,000 shares authorized;
     Series A issued and outstanding 146,000 (2000, 1999 and 1998)
     ($876,000 liquidation preference) ..........................................            146             146             146
    Series B issued and outstanding 0 (2000), 0 (1999) and 100,000
     (1998) ($500,000 liquidation preference) ...................................           --              --               100
    Series C issued and outstanding 167,000 (2000, 1999, and 1998)
     ($835,000 liquidation preference) ..........................................            167             167             167
    Series D issued and outstanding 3,000 (2000) and 0 (1999 and 1998)
     ($9,000 liquidation preference) ............................................              3            --              --
    Series E issued and outstanding 59,480 (2000) and 0 (1999 and 1998)
      ($512,718 liquidation preference) .........................................             59            --              --
    Common stock, $.001 par value; 9,000,000 shares authorized; issued
     and outstanding, 3,007,921 (2000), 3,074,177 (1999)
     and 3,054,459 (1998) .......................................................          3,008           3,074           3,054
    Capital in excess of par value ..............................................      3,857,702       4,485,949       5,065,247
    Accumulated deficit .........................................................     (1,073,239)     (2,375,478)       (972,507)
                                                                                     -----------      ----------     -----------
                  Total stockholders’ equity ....................................      2,787,846       2,113,858       4,096,207
                                                                                     -----------      ----------     -----------

Total liabilities and stockholders’ equity ......................................   $ 41,259,333    $ 21,774,774    $ 13,789,551
                                                                                     ===========      ==========     ===========

                 See notes to consolidated financial statements.

                    **THE QUIZNO'S CORPORATION AND SUBSIDIARIES****Consolidated Statements of Operations**

                                                                                    For the Nine       For the Year
                                                                For the Year Ended  Months Ended          Ended
                                                                   September 30,    September 30,      December 31,
                                                                       2000             1999               1998
                                                                   ------------      ------------      ------------
Franchise operations
   Revenue
     Continuing fees .........................................     $ 18,072,077      $  8,682,783      $  5,836,822
     Initial franchise fees ..................................        5,730,662         2,722,959         2,883,650
     Area director and master franchise fees .................        1,361,901           776,523         3,022,276
     Other ...................................................        1,064,646           370,374           604,172
     Interest ................................................          526,761           238,790           259,193
                                                                   ------------      ------------      ------------
       Total revenue .........................................       26,756,047        12,791,429        12,606,113
                                                                   ------------      ------------      ------------

   Expenses
     Sales and royalty commissions ...........................       (7,836,912)       (3,931,634)       (4,457,779)
     General and administrative ..............................      (12,867,738)       (6,509,444)       (6,201,857)
                                                                   ------------      ------------      ------------
       Total expenses ........................................      (20,704,650)      (10,441,078)      (10,659,636)
                                                                   ------------      ------------      ------------

Income from franchise operations .............................        6,051,397         2,350,351         1,946,477
                                                                   ------------      ------------      ------------
Company store operations
   Sales .....................................................       14,973,763         6,420,563         6,848,737
                                                                   ------------      ------------      ------------
   Cost of sales .............................................       (4,373,303)       (1,969,433)       (2,042,092)
   Cost of labor .............................................       (3,318,489)       (1,747,029)       (1,683,225)
   Other store expenses ......................................       (6,088,241)       (2,169,465)       (2,562,540)
                                                                   ------------      ------------      ------------
       Total expenses ........................................      (13,780,033)       (5,885,927)       (6,287,857)
                                                                   ------------      ------------      ------------

Income from Company stores operations ........................        1,193,730           534,636           560,880

Other income (expenses)
   Sales by stores held for resale ...........................          194,422           566,841         1,281,904
   Loss and expenses related to stores held for sale .........         (387,576)         (777,594)       (1,541,957)
   Loss on sale or closure of Company stores .................          (43,596)          (80,304)          (47,505)
   Sale of Japan master franchise ............................             --           1,168,801              --
   Provision for bad debts ...................................         (305,285)         (220,536)         (285,308)
   Other expenses ............................................          (41,820)          (26,287)          (47,838)
   Depreciation and amortization .............................       (1,994,887)         (921,300)         (781,977)
   Impairment of long lived assets ...........................         (579,246)             --                --
   Privatization and acquisition related costs ...............         (138,164)         (265,472)             --
   Interest expense ..........................................       (1,898,901)         (240,827)         (340,614)
                                                                   ------------      ------------      ------------

       Total other expenses ..................................       (5,195,053)         (796,678)       (1,763,295)
                                                                   ------------      ------------      ------------

Net income before income taxes ...............................        2,050,074         2,088,309           744,062
Income tax (provision) benefit ...............................         (747,835)         (721,688)          368,553
                                                                   ------------      ------------      ------------

Net income before preferred dividends and cumulative effect of
changes in accounting principle ..............................        1,302,239         1,366,621         1,112,615
Preferred stock dividends ....................................         (186,457)         (124,230)         (220,890)
                                                                   ------------      ------------      ------------

Net income before cumulative effect of changes in accounting
principle ....................................................        1,115,782         1,242,391           891,725
Cumulative effect of changes in accounting principle (net of
taxes) .......................................................             --          (2,769,592)             --
                                                                   ------------      ------------      ------------
Net income (loss) applicable to common stockholders ..........     $  1,115,782      $ (1,527,201)     $    891,725
                                                                   ============      ============      ============
Net income per share  basic
Net income per share before cumulative effect of changes in
    accounting principle .....................................     $        .37      $        .40      $        .30
Cumulative effect of changes in accounting principle .........             --                (.90)             --
                                                                   ------------      ------------      ------------
Basic net income (loss) per share of common stock ............     $        .37      $       (.50)     $        .30
                                                                   ============      ============      ============
Net income per share - diluted
Net income per share before cumulative effect of changes in
    accounting principle .....................................     $        .33      $        .35      $        .26
Cumulative effect of changes in accounting principle .........             --                (.90)             --
                                                                   ------------      ------------      ------------
Diluted net income (loss) per share of common stock ..........     $        .33      $       (.55)     $        .26
                                                                   ============      ============      ============
Weighted average common shares outstanding
Weighted average common shares outstanding – basic ...........        3,019,849         3,060,878         3,014,042
                                                                   ============      ============      ============

Weighted average common shares outstanding – diluted .........        3,728,761         3,816,549         3,445,972
                                                                   ============      ============      ============
                       See notes to financial statements .....

                  **THE QUIZNO'S CORPORATION AND SUBSIDIARIES****Consolidated Statement of Stockholders' Equity**

                                          Convertible
                                        Preferred Stock                Common Stock            Additional
                                    -------------------------    ---------------------------     Paid-in      Accumulated
                                      Shares        Amount         Shares         Amount         Capital        Deficit        Total
                                    ---------    ------------    -----------    ------------   ------------   ----------    -----------

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 and
  pursuant to employee benefit          --             --           51,165             51        222,473           --          222,524
  plan

Issuance of common stock for
  exercise of options by
  underwriter ................          --             --           80,000             80        399,920           --          400,000

Preferred stock dividends ....          --             --             --             --         (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 and
  pursuant to employee benefit          --             --           28,809             29         75,438           --           75,467
  plan

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

Shares canceled ..............          --             --           (9,091)            (9)       (45,446)          --          (45,455)

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

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

Net (loss) ...................          --             --             --             --             --       (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

Issuance of common stock for
  exercise of options and
  pursuant to employee benefit
  plan .......................          --             --           77,749             78        284,413           --          284,491

Issuance of Series D
  Convertible Preferred Stock,
  net ........................         4,000              4           --             --           11,396           --           11,400

Repurchase of Series D
Convertible Preferred Stock ..        (1,000)            (1)          --             --           (2,999)          --           (3,000)

Tax benefit from exercise of
  stock options ..............          --             --             --             --           17,889           --           17,889

Common Stock repurchased .....          --             --         (144,005)          (144)    (1,219,641)          --       (1,219,785)

Issuance of Series E
  Convertible Preferred Stock,
  net ........................        59,480             59           --             --          467,152           --          467,211

Preferred stock dividends ....          --             --             --             --         (186,457)          --         (186,457)

Net income ...................          --             --             --             --             --        1,302,239      1,302,239
                                    ---------    ------------    -----------    ------------   ------------   ----------    -----------

Balance, September 30, 2000 ..       375,480    $       375      3,007,921    $     3,008    $ 3,857,702    $(1,073,239)   $ 2,787,846
                                    =========    ============    ===========    ============   ============   ==========    ===========

                       See notes to financial statements.

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

                                                                       For the Year     For the Nine     For the
                                                                           Ended        Months Ended    Year Ended
                                                                        September 30,   September 30,   December 31,
                                                                            2000            1999           1998
                                                                        ------------    ------------    ------------
Cash flows from operating activities:
   Net income (loss) ................................................   $  1,302,239    $ (1,402,971)   $  1,112,615
   Adjustments to reconcile net income (loss) to net cash provided by
     operating activities -
     Depreciation and amortization ..................................      1,919,360         844,220         757,911
     Impairment of long lived assets ................................        579,246            --              --
     Cumulative effect of a change in accounting principle ..........           --         4,388,208            --
     Provision for bad debts ........................................        305,285         220,536         285,308
     Loss on disposal of Company stores .............................         43,596          80,304          78,004
     Deferred income taxes ..........................................       (795,877)     (2,819,863)       (641,068)
     Amortization of deferred financing costs .......................         75,527          77,080          24,066
     Amortization of deferred area director fee revenue .............       (404,934)           --              --
     Area director expenses recognized ..............................         40,493            --              --
     Promissory notes accepted for area director fees ...............       (415,924)       (487,279)     (1,599,977)
     Other ..........................................................          9,375          17,972            --
     Changes in assets and liabilities -
       Accounts receivable ..........................................     (1,279,762)       (398,076)       (369,279)
       Other current assets .........................................        (82,339)        (77,735)        109,802
       Accounts payable .............................................      1,395,280         (99,330)        251,711
       Accrued liabilities ..........................................        951,321          12,152          42,476
       Deferred franchise costs .....................................       (404,502)       (659,547)       (287,610)
       Deferred initial franchise fees and other fees ...............      3,085,559       4,672,693       2,633,284
       Income taxes payable .........................................       (480,912)        651,469         200,000
                                                                        ------------     -----------     -----------
                                                                           3,184,645       6,422,804       1,484,628
                                                                        ------------     -----------     -----------
         Net cash provided by operating activities ..................      5,843,031       5,019,833       2,597,243
                                                                        ------------     -----------     -----------

Cash flows from investing activities:
   Acquisition of Company owned stores ..............................     (5,832,376)       (286,355)           --
   Purchase of property and equipment ...............................     (6,073,744)     (1,477,962)     (1,780,767)
   Principle payments received on notes receivable ..................        453,931       1,221,099         889,671
   Investment in turnkey stores .....................................           --            (7,558)       (281,620)
   Short-term investments ...........................................     (1,060,459)     (2,722,454)     (1,003,235)
   Acceptance of other notes receivable .............................     (1,159,761)        (37,390)       (773,307)
   Investment by minority interest owners ...........................           --              --           151,601
   Purchase of minority interest owners .............................           --          (150,000)           --
   Intangible and deferred assets ...................................       (125,958)       (736,458)       (601,862)
   Proceeds from sale of assets and stores ..........................        137,361            --           213,000
   Deposits .........................................................         52,174         (89,749)        (43,589)
   Area director marketing territory repurchases ....................     (2,497,945)       (863,984)           --
   Other investments ................................................           --           (15,000)           --
                                                                        ------------     -----------     -----------
         Net cash used by investing activities ......................    (16,106,777)     (5,165,811)     (3,230,108)
                                                                        ------------     -----------     -----------

Cash flows from financing activities:
   Principal payments on long-term obligations ......................     (4,142,344)     (1,733,697)       (505,440)
   Proceeds from issuance of notes payable ..........................     17,548,000       2,338,168         877,642
   Redemption of Class B Preferred Stock ............................           --          (500,000)           --
   Financing costs ..................................................       (646,511)           --              --
   Proceeds from issuance of Common Stock and Preferred Stock .......        302,380          90,307         622,524
   Proceeds from sale of Class D and Class E Preferred Stock ........        478,611            --              --
   Repurchase of Class D Preferred Stock ............................         (3,000)           --              --
   Common Stock repurchased .........................................     (1,219,785)           --              --
   Preferred dividends paid .........................................       (186,457)       (124,230)       (220,890)
                                                                        ------------     -----------     -----------
         Net cash provided by financing activities ..................     12,130,894          70,548         773,836
                                                                        ------------     -----------     -----------

Net increase (decrease) in cash and cash equivalents ................      1,867,148         (75,430)        140,971

Cash and cash equivalents - beginning of year .......................        626,828         702,258         561,287
                                                                        ------------     -----------     -----------

Cash and cash equivalents - end of year .............................   $  2,493,976    $    626,828    $    702,258
                                                                        ============     ===========     ===========

Supplemental disclosure of cash flow information:

     Cash paid during the year for  interest  was  $1,716,772  (2000),  $240,827
     (1999) and $340,614 (1998).  Cash paid during the year for income taxes was
     $1,871,899 (2000), $1,198,275 (1999) and $72,515 (1998).

Supplemental disclosure of non-cash investing and financing activities:

     During  2000,  the  Company  accepted  a  promissory  note in the amount of
     $19,446 for equipment  previously held for resale.  Note receivables in the
     amount  of  $311,028  were   capitalized  in  exchange  for  area  director
     territories  repurchased  during the year.  Also,  the Company issued notes
     payable of $714,621 for partial  payment of five area director  territories
     repurchased  during the year and the Company purchased assets of a store in
     exchange for a note payable of $143,978.  Finally, a Company store held for
     resale was closed and the net assets of $35,633 were written-off.

     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 our 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 2000,  1999 and 1998,  the Company  acquired  assets  under  capital
     leases totaling $0, $124,742 and $231,085, respectively.

                    **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,  Switzerland,   Netherlands,  Luxembourg,  Belgium,
Iceland, Taiwan, Mexico, Venezuela, Peru, Dominican Republic 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") 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,  Quizno’s  Kansas LLC
(“QKL”)  organized in 1998 to purchase the assets of Stoico Restaurant Group and
QUIZ-DIA,  Inc. (“DIA”)  incorporated in 1999 to purchase  restaurant  assets at
Denver International Airport.

The  following  table  summarizes  the number of  Quizno's  restaurants  open at
September 30, 2000:

                                                  Sold But Not
                                                     Yet In
                                                   Operation   Operational    Total
                                                  ------------ -----------  ----------
Quizno’s
Company owned restaurants ........................    --            26          26
Franchise restaurants – U.S., Puerto Rico and Guam     669         811       1,480
Franchise Restaurants - International ............     170         122         292
Restaurants held for resale ......................    --             1           1

Bains
Franchise restaurants ............................    --             4           4

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

                                                       839         972       1,811
                                                   ========       ======    =======
Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiaries QOC, S&S, QRC, QLC, QAC, DIA 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, 1999 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  accounts  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  consist 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
$2,609,000.

Short-Term Investments

The  Company  classifies  its  investment  in  corporate  debt and  governmental
securities  with  original  maturities  in excess of three  months and less than
twelve 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 2000,  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 terms 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, 2000,  the Company  determined  that an impairment  related to its
carrying  value of the  assets  purchased  in  November  1997 from  Bain’s  Deli
Franchise Associates, L.P., (“Bains”) was required and expensed $579,246.

Initial Franchise Fees and Related Franchise Costs

The Company 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 are reduced.

Initial  franchise fees paid by U.S.  franchisees are recognized as revenue when
all material  services and  conditions  required to be performed by us 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,  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 *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. Fiscal 2000
income  included  $516,144 of  amortized  deferred  net revenue  related to area
director marketing agreement fees previously recognized prior to fiscal 1999.

*Costs of Start-up Activities*

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  pre-opening  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.

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.

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.

Basic and Diluted Loss Per Common Share

In accordance  with FAS 128,  basic  earnings per share are 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 year ended September 30,  2000, the nine
months ended  September 30, 1999 and the year ended  December 31, 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, 2000  because of the  relatively  short  maturity of these
instruments.

The carrying amounts of long-term notes receivable  approximate fair value as of
September  30,  2000  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, 2000 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 nine months
ended  September  30,  1999 and the year ended  December  31,  1998 to make them
comparable  to those  presented for the year ended  September 30, 2000,  none of
which change the previously reported net income or total assets.

Recently Issued Accounting Pronouncements

SFAS No. 133,  Accounting  for  Derivative  Instruments  and Hedging  Activities
requires  companies  to record  derivatives  on the  balance  sheet as assets or
liabilities,  measured at fair value.  Gains or loses  resulting from changes in
the values of those  derivatives  are  accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting.  The key criterion for
hedge  accounting is that the hedging  relationship  must be highly effective in
achieving  offsetting  changes  in fair  value or cash  flows.  SFAS No.  133 is
effective for fiscal years  beginning after June 15, 2000.  Management  believes
that the adoption of SFAS No. 133 will have no material  effect on its financial
statements.

In March 2000,  the FASB  issued  FASB  Interpretation  No. 44,  Accounting  for
Certain Transactions  Involving Stock Compensation (FIN 44), which was effective
July 1, 2000,  except that certain  conclusions  in this  interpretation,  which
cover specific  events that occur after either  December 15, 2998 or January 12,
2000  are   recognized  on  a  prospective   basis  from  July  1,  2000.   This
interpretation  clarifies the  application  of APB Opinion 25 for certain issues
related to stock issued to employees.  The Company  believes its existing  stock
based  compensation  policies and procedures  are in compliance  with FIN 44 and
therefore,  the  adoption  of FIN 44 had no  material  impact  on the  Company’s
financial condition, results of operations or cash flows.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  (SAB) 101,  which  provides  guidance on applying  generally  accepted
accounting  principles  to  selected  revenue  recognition  issues.   Management
believes that the Company’s revenue recognition  policies are in accordance with
SAB 101.

**Note 2 - Acquisition of Assets**

On November 16, 1999, the Company’s  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 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 was accounted for under the purchase method. The purchase price was
allocated to the assets purchased based on the fair market values at the date of
acquisition as follows:

        Restaurant and bar equipment   $  875,000
        Furniture and fixtures .....      370,000
        Leasehold improvements .....      265,000
        Concession agreements ......    3,365,000
                                       ----------

                                       $4,875,000
                                       ==========

On January 26, 2000,  the Company  closed on a loan in the amount of  $3,180,000
from GE Capital Business Asset Funding.  The loan bears interest at 9.53% and is
payable  in equal  monthly  installments  of  $52,023  for 5 years.  The loan is
secured by a first security interest in the assets of QUIZ-DIA, Inc.

The following  table  summarizes  the unaudited pro forma results of the Company
giving effect to the ASI  acquisition  as if it had occurred on January 1, 1998.
The unaudited pro forma information is not necessarily indicative of the results
of operations of the Company had this  acquisition  occurred at the beginning of
the years presented, nor is it necessarily indicative of future results.

                                   Nine Months Ended    Year Ended
                                      September 30,     December 31,
                                          1999              1998
                                   -----------------  ---------------

Revenue .........................   $   22,847,496    $   23,548,757

Net income ......................   $      662,806    $      (97,129)

Basic earnings (loss) per share .   $         (.54)   $         (.03)

Diluted earnings (loss) per share   $         (.59)   $         (.03)

In January 2000, the Company purchased, for cash, four Quizno’s Restaurants from
two  franchisees  for a total  purchase  price of  $741,000.The  purchases  were
accounted for under the purchase method.

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

        Equipment ............   $204,000
        Leasehold improvements    330,000
        Lease agreements .....    207,000
                                 --------

                                 $741,000
                                 ========

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

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 statements of operations are presented for these purchases,  as the
effect is not material to the Company’s operations.

**Note 3 - Notes Receivable**

Notes receivable consist of the following:
                                               September 30,   September 30,   December 31,
                                                   2000            1999           1998
                                               -------------   -------------  -------------
Notes receivable related to area director
 and master franchise agreements, interest
 ranging from 6% to 15%, due in varying
 amounts through December 2011  .............   $ 1,280,484    $ 1,540,826    $ 1,878,855

Notes receivable for sale of stores,
 interest ranging from 6% to 15%,
 due in varying amounts through October 2012        483,351        530,026        410,058

Note receivable from national advertising
 trust,  interest at 12%. (Note 8) ..........     1,030,000           --          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. At September 30, 2000, the
 Company impaired the outstanding balance on
 this note of $128,884  .....................          --          150,000           --

Other notes receivable with interest ranging
 from 8% to 11%, due in varying amounts
  through 2004  .............................       103,444         11,213         32,423
                                               -------------   -------------  -------------
                                                  2,897,279      2,232,065      2,588,394
       Less current portion .................    (1,545,844)      (519,994)    (1,212,522)
                                               -------------   -------------  -------------
                                                  1,351,435      1,712,071      1,375,872
       Less allowance .......................       (50,000)       (41,742)          --
                                               -------------   -------------  -------------

                                                $ 1,301,435    $ 1,670,329    $ 1,375,872
                                               =============   =============  =============

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,
         ------------------------

                  2001............  $ 1,595,844
                  2002............      415,270
                  2003............      262,104
                  2004............      201,181
                  2005............      110,073
                  Thereafter......      312,807
                                    -----------
                                      2,897,279
                  Less allowance..      (50,000)
                                    -----------

                                    $ 2,847,279
                                    ===========

**Note 4 – Assets Held for Resale**

Included in assets held for resale are the following:

                                 September 30,   September 30,   December 31,
                                     2000            1999           1998
                                 -------------   ------------    -----------

Furniture fixtures and equipment   $ 75,805        $ 65,421       $221,034
Leasehold improvements .........     78,117         108,056        383,771
Lease agreements and other .....     40,657          19,446         33,590
                                   --------        --------       --------

                                   $194,579        $192,923       $638,395
                                   ========        ========       ========

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.  In December 1999, the Company sold one store for a sales price of
$100,000 and in January 2000,  the Company closed the remaining  store.  In July
2000, the Company acquired a store from a franchisee that the Company intends to
sell by the end of December 2000.

**Note 5 - Property and Equipment**

Property and equipment consist of the following:
                                                           September 30,    September 30,   December 31,
                                        Life                   2000             1999            1998
                                                            -----------      ----------      ----------

  Equipment                           3-10 years            $ 4,175,095      $2,014,698      $1,524,799
  Furniture and fixtures              7-10 years              1,499,844       1,052,232         764,672
  Leasehold improvements              Lease term              3,776,503       2,286,344       1,712,215
  Corporate jet                       10% over 3 years        3,486,832           -                -
  Software                            3-5 years               1,164,603         681,238         313,540
                                                            -----------      ----------      ----------
                                                             14,102,877       6,034,512       4,315,226
  Less accumulated depreciation and
     amortization                                            (2,433,637)     (1,230,461)       (780,004)
                                                            -----------      ----------      ----------

  Net property and equipment                                $11,669,240      $4,804,051      $3,535,222
                                                            ===========      ==========      ==========

**Note 6 - Intangible Assets**

Intangible assets consist of the following:
                                                       September 30,    September 30,    December 31,
                                                           2000             1999             1998
                                                       -----------      -----------      -----------

    Covenants not to compete                           $   600,113      $   600,113      $ 1,667,546
    Franchise agreements                                   292,394          792,796          310,506
    Prepaid area director marketing commissions            486,283          526,776            -
    Trademarks and other                                   824,580          455,339          442,813
    Concession agreements and acquisition costs          3,501,804             -               -
                                                       -----------      -----------      -----------
                                                         5,705,174        2,375,024        2,420,865
    Less accumulated amortization                       (1,104,646)        (712,759)        (867,343)
                                                       -----------      -----------      -----------

                                                       $ 4,600,528      $ 1,662,265      $ 1,553,522
                                                       ===========      ===========      ===========

At  September  30,  2000,  the  Company  recorded an impaired of $450,362 to the
carrying  value of the franchise  agreement  related to the assets  purchased in
November 1997 from Bains.

**Note 7 – Other Deferred Assets**

Other deferred assets consist of the following:

                          September 30,  September 30,   December 31,
                              2000           1999           1998
                           ----------     ----------     ------------

Deferred franchise costs   $1,990,275     $1,585,773     $  926,226
Deferred financing costs      679,752        108,769         87,080
Other deferred costs ...      112,471         32,442        106,065
                           ----------     ----------     ----------

                           $2,782,498     $1,726,984     $1,119,371
                           ==========     ==========     ==========

**Note 8 - Related Party Transactions**

On May 18, 2000, the Company issued a note  receivable to the  Advertising  Fund
for $500,000.  On July 14, 2000, an additional  amount of $500,000 was loaned to
the Advertising  Fund. On July 31, 2000, the entire balance,  including  accrued
and unpaid interest at 12%, was repaid to the Company.

The Company had notes receivable from the Advertising Fund of $1,030,000, $0 and
$21,524 at September 30, 2000 and 1999 and December 31, 1998, respectively.  The
September 2000 balance related to an off-season build-up for advertising,  which
will be reimbursed to the Company in 2001.

In July 2000,  the  Quizno’s  National  Marketing  Fund  Trust and the  Quizno’s
Regional  Marketing Fund Trust  (together the “marketing  funds”) entered into a
$2,000,000  line of credit with Wells Fargo Bank West,  N.A. The marketing funds
collect a fee of 1% and 3%,  respectively,  of gross sales from our  franchisees
and  deposits  the  funds  into  advertising  funds  that  are  used to  develop
advertising to attract  customers to the Restaurants and to create  awareness of
the Quizno's  brand image.  The Company has guaranteed  this line of credit.  At
September 30, 2000, $1,900,000 had been drawn against this line of credit.

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.  During  2000,  no payments  were made on the note.  In
2000, the Company paid the Area Director $20,131, in commissions and royalties.

Two  directors  of the Company own more than 50% in a company  that owns an area
directorship.  In 2000,  1999  and  1998,  the  Company  paid the Area  Director
$459,496, $142,364 and $139,358,  respectively, in commissions and royalties. At
September  30, 2000,  $43,747 was owed to the Company on a  promissory  note due
from the area director.  During 1998, 1999 and 2000, payments on such notes were
$6,212, $8,000 and $11,800,  respectively. The area director is also indebted to
the Company for $7,216 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 15 months.

In 1995, the Company sold an area directorship to a company owned by a director,
officer and  shareholder  for $150,000.  During 1998,  the Company paid the area
director no sales  commissions and $27,664 in royalties.  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 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 1998,
1999 and 2000,  the  Company  made  payments  pursuant  to the  promissory  note
totaling  $18,993,  $14,245 and $35,219,  respectively,  In October of 1999 this
note was paid-off in full.

On October 13, 1999, the Company purchased a 1997 Cessna Citation 525. As of the
same date,  the Company  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 1996 Astra SPA. 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. The
Company also will pay Mr. Schaden or his company to provide  services related to
the airplane operations,  including for pilot and management services.  In 2000,
the Company incurred costs of $31,762 under this agreement.

In  December  1999,  the  Company  entered  into an  agreement  with  Pink  Sand
Corporation (“Pink Sand”), for the development rights to United States Territory
of Guam and the  Commonwealth  of the  Northern  Mariana  Islands.  Pink Sand is
principally owned by a director of the Company.  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,  the Company 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.

In February 2000,  the Company  entered into a $75,000  promissory  note with an
officer of The Quizno’s Corporation. The note accrues interest at an annual rate
of 9.25% and accrued  interest  and  principal  is due March 1, 2002.  As of May
2000, the Company no longer employed the officer.

In August 2000,  the Company  advanced a director of the Company  $300,000.  The
advance is expected to be repaid in January 2001.

**Note 9 - Long-Term Obligations and Convertible Subordinated Debt**

                                                           September 30,   September 30,   December 31,
                                                               2000           1999             1998
                                                            ------------    ----------      ----------
Various capital leases, with monthly payments
 totaling approximately $2,228 including interest
 at 5.6% and expiring in June 2004. Collateralized
 by 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.      $  99,485     $ 970,999      $  986,077

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 canceled in 1999.        -                -         116,118

Note payable to AMRESCO Commercial Finance,  Inc. See
 following  page for detail of transaction.                   13,300,732            -            -

Note payable to a financing company with interest at 9.53%.
 The note calls for monthly principal and interest payments
 of $52,023 through January 1, 2005 and a balloon payment
 of $1,184,717 in February 2005.  Collateralized by a first
 security interest in the assets of Quiz-DIA, Inc.             2,988,098            -            -

Note payable to a financing company with interest at 9.3%.
 The note calls for monthly principal and interest payments
 of $5,977 and matures August 16, 2007. Collateralized by
 restaurant equipment.                                           364,875            -            -

Note payable to a financing  company with interest at
 10.03%.  The note calls for monthly principal and interest
 payments of $1,985 and matures December 31, 2006.
 Collateralized by restaurant equipment.                         143,197            -            -

Note payable to an individual for the purchase of four
 area director territories.  Interest on the note accrues
 at 12%. The note calls for monthly principal and
 interest payments of $8,510 through May 1, 2002 and a
 balloon  payment of $264,664 on June 1, 2002.                   368,396            -            -

Note payable to a corporation for the purchase of an
 area director territory.  Interest on the note accrues
 at 12%. The note calls for monthly principal and interest
 payments of $8,000 through July 1, 2003 and a balloon
 payment of $100,000 on April 1, 2001.                           322,956            -            -

Various notes payable.   In conjunction with Company’s
 loan agreement with AMRESCO, the September 30, 1999
 balance was paid-off in October 1999.                              -          635,147         233,193
                                                            ------------    ----------      ----------
                                                              17,587,739     1,606,146       1,335,388
           Less current portion                               (1,550,501)     (337,642)       (370,404)
                                                            ------------    ----------      ----------

                                                            $ 16,037,238    $1,268,504      $  964,984
                                                            ============    ==========      ==========

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
10.9% (10.1% through January 31, 2000), and is repayable in monthly installments
of $199,201 for nine years and five months. The loan is secured by the assets of
Company  owned stores and other assets.  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 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  was  available  to  use,  with  certain
restrictions,  for  general  corporate  purposes  other  than  working  capital,
dividends,  or to repurchase the majority  shareholders’  stock. As of September
30, 2000,  the Company had  $1,528,212  available  to use for general  corporate
purposes.

On  December  22,  1999,  the  Company  closed on a line of credit loan and were
loaned $3,350,000 by Merrill Lynch Business  Financial  Services,  Inc. The loan
bears  interest at the 30-day Dealer  Commercial  Paper Rate plus 2.5% (equal to
8.13% at December 31,  1999).  The maximum  amount of the line of credit loan is
$3,350,000,   which   maximum  is  reduced   monthly   based  on  a  twelve-year
amortization. The line of credit loan is secured by a first security interest in
our jet aircraft.  In December 1999,  $3,350,000 was drawn on the line of credit
and in January 2000, the line of credit loan was paid down to zero.

Subordinated debt consists of:
                                                      September 30,   September 30,    December 31,
                                                           2000           1999             1998
                                                        ---------     -----------      -----------
Subordinated debt payable.  In conjunction with
 Company’s loan agreement with AMRESCO, the
 September 30, 1999 balance was paid-off in
 October 1999.                                           $  -         $ 1,717,337      $     -

12.75% convertible subordinated debt, paid in
 full during 1999.                                          -              -             1,375,000
                                                        ---------     -----------      -----------
      Less current portion                                  -            (218,546)        (244,084)
                                                        ---------     -----------      -----------

                                                         $  -         $ 1,498,791      $ 1,130,916
                                                        =========     ===========      ===========

Maturities of long-term obligations and capital leases are as follows:

                                                    Long-Term        Capital
                                                   Obligations        Leases          Total
    Year Ending September 30,                      ------------    -------------   ------------

              2001                                 $  1,528,767    $     26,739    $  1,555,506
              2002                                    1,838,355          26,739       1,865,094
              2003                                    1,687,489          26,739       1,714,228
              2004                                    1,789,051          31,733       1,820,784
              2005                                    2,810,222            --         2,810,222
              Thereafter                              7,834,369            --         7,834,369
                                                   ------------     -----------    ------------
                                                     17,488,253         111,950      17,600,203
              Less amount representing interest            --           (12,464)        (12,464)
                                                   ------------     -----------    ------------
              Total principal                        17,488,253          99,486      17,587,739
              Less current portion                   (1,528,767)        (21,734)     (1,550,501)
                                                   ------------     -----------    ------------

                                                   $ 15,959,486    $     77,752    $ 16,037,238
                                                   ============     ===========    ============

Included in equipment in the accompanying 2000, 1999 and 1998 balance sheets are
assets  held under  capital  leases in the amount of  $134,722,  $1,063,920  and
$1,278,925,  respectively, and accumulated amortization of $13,924, $149,372 and
132,837, respectively.

**Note 10 - Commitments and Contingencies**

The  Company  leases  an  office  facility,   thirty-nine  restaurant  locations
(including  one store held for resale) and certain  equipment and vehicles under
operating  lease  agreements  which  provide  for the  payment of rent  totaling
approximately  $169,000 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
$2,035,534,  $762,891 and $642,447  during the periods ended  September 30, 2000
and 1999 and December 31, 1998, respectively.

Future minimum rental payments for the years ending September 30 are as follows:

    2001          2002         2003          2004        2005      Thereafter      Total

 $2,330,961    $2,185,785   $1,891,866    $1,501,255  $1,000,171   $1,133,779   $10,043,817

Minimum  payments for the period ended  September 30, 1999 have not been reduced
by  minimum  rentals of  $1,450,446  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  $303,500 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 1998, 1999 and 2000 totaled
$209,000, $262,354 and $329,930, respectively. One agreement expires in December
2000 while the other agreement expires in December 2003.

The Company has entered into an employment agreement with another officer of the
Company that  terminates on January 16, 2003. The annual base salary is $180,000
in 2000,  $200,000 in 2001,  and  $220,000 for the  remainder of the term.  Such
amount may be adjusted from time to time by mutual agreement between the officer
and the Company.  The agreement  provides a $25,000 signing bonus payable on the
nine-month  anniversary,  and a second year signing  bonus of $10,000 due on the
second year anniversary date. The agreement provides an annual performance bonus
equal to a maximum of 20% of the officer’s base salary. Under the agreement, the
officer  received  options to purchase 20,000 shares of the Company's  stock. If
the Company  terminates the agreement without cause, the Company is obligated to
pay the officer a severance payment equal to 6 months base salary.

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 agreement 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.

The Company is obligated to pay an opening  commission  to the area director who
sold  the  franchise  at the  time  the  franchise  opens  for  business.  These
commissions  are expensed at the time the related  franchise  opens for business
and are not accrued as a liability  of ours until that time.  At  September  30,
2000,  there were 669  domestic  franchises  sold but not yet open with  related
opening commissions totaling $2,295,875 ($1,585,773 at September 30, 1999).

In 1999, the Company commenced a program called Owner in Training under which it
provides financial  assistance to store managers  interested in owning their own
franchise.  The  Company  provides  financial  guarantees  to such  persons  for
start-up  capital loans. To date, in fiscal 2000, the Company  guaranteed  three
such loans totaling $565,000.

Litigation

There are various  claims and lawsuits  pending by and against the Company.  The
settlement of some of these claims and lawsuits may result in the acquisition or
acquirement  of  certain  area  director  territories.  In  the  opinion  of the
management,  and  supported  by advice  from  legal  counsel,  these  claims and
lawsuits  will not result in any  material  adverse  effect in excess of amounts
accrued in the accompanying consolidated financial statements.

**Note 11 - Stockholders' Equity**Common Stock Repurchased

On October 1, 1999, the Company’s 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 the Company deems
appropriate.  As of September  30,  2000,  the Company had  repurchased  144,005
shares at an average price of $8.38.  The Company  incurred legal and accounting
costs related to the repurchase of $12,351.

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.

Each share of Class D Preferred Stock is convertible into twenty-five  shares of
our  common  stock,  at any time  after  (i) our  earnings  before  income  tax,
depreciation and amortization for a fiscal year (excluding such earnings derived
from  extraordinary  asset  acquisitions after June 1, 1999, and nonrecurring or
unusual  transactions,  as determined by the Company’s Chief Executive  Officer)
equal or exceed $12,000,000,  and (ii) the Company’s Chief Executive Officer has
approved such conversion.  The Class D Preferred Stock is not convertible before
March 31, 2001.

During 2000,  the Company sold 4,000  shares of Series D  convertible  preferred
stock at $3.00 per  share.  The  Company  repurchased  1,000  shares of Series D
convertible preferred stock at $3.00 per share.

There are currently 150,000 authorized shares of Class E Cumulative  Convertible
Preferred  Stock  (“Class E Preferred  Stock”).  Each share of Class E Preferred
Stock is  convertible  into one share of our  common  stock,  at any  time.  The
Company may redeem shares of the Class E Preferred Stock at any time on or after
April 1, 2003,  at a  redemption  price of $8.62 per share.  Until  redeemed  or
converted to common  stock,  each Class E Preferred  stockholder  will receive a
cumulative monthly dividend of $0.0862 per share. The Class E Preferred Stock is
junior in liquidation  preference to our Class A Preferred Stock and our Class C
Preferred Stock, but senior to our Class D Preferred Stock and common stock.

During 2000,  the Company sold 59,480 shares of Series E  convertible  preferred
stock at $8.62 per  share.  The  Company  incurred  legal and  accounting  costs
related to the sale of $45,537.

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, 2000 and 1999 and  December  31,  1998,  100,000,
250,500 and 117,205, 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  300,000  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, 2000 and 1999 and December 31,  1998,  37,000,  29,000 and 28,000
options were granted under the Director Plan, respectively.

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 2000 and 1999, the Company granted options under
the AD Plan for 0 and 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.  During 2000,  8,000 of these  warrants  were
exercised. These warrants expire through December 2000.

In 1999, the Company reached a settlement with Bains 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:

                                                              September 30,   September 30,   December 31,
                                                                  2000            1999           1998
                                                              -------------   ------------    ------------
Net income before  cumulative  effect of
 changes in accounting principle – as reported                 $1,115,782      $1,242,391      $891,725
Net income before cumulative effect of changes
 in accounting principle – pro forma                           $  643,327      $  662,806      $586,960
Basic earnings per share - as reported                         $      .37      $      .40      $    .30
Basic earnings per share - pro forma                           $      .21      $      .22      $    .19

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 37% in
2000,  40% in 1999 and 42% in 1998;  discount rate of 5.5%;  and expected  lives
from 3.5 to 10 years.

The  following  is a summary of options  and  warrants  granted,  exercised  and
expired:

                                                                     Weighted      Weighted                      Weighted Average
                                                                     Average       Average Fair                   Exercise Price of
                                                                     Exercise       Value of         Currently       Options and–
                                                                     Price of      Options and      Exercisable        Warrants
                                                  Options and      Options and      Warrants       Options and         Currently
                                                   Warrants          Warrants       Granted          Warrants        Exercisable
                                                --------------   ---------------  -------------  ---------------  -----------------

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
   Granted                                           141,305             $.99           $3.45
   Forfeited or exercised                           (198,245)           $(.66)
                                                 -----------

Outstanding September 30, 2000                     1,058,403            $4.85                          680,436               $3.32
                                                 ===========

                                                                                September 30, 2000
                                       ---------------------------------------------------------------------------------------------
                                                                                                               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                                    709,603             $3.68        4.8 years           629,116              $2.99
$5.75 - $8.18                                    348,800             $7.24        5.5 years            51,320              $7.31
                                              ----------                                            ---------

                                               1,058,403             $4.85        5.0 years           680,436              $3.32
                                              ==========                                            =========

**Note 12 - Income Taxes**

The components of the provision for income tax expense (benefit) are as follows:

                                                     September 30,       September 30,      December 31,
                                                          2000               1999               1998
                                                     -------------       -------------      ------------

Current income tax expense                             $1,369,395         $1,951,848         $ 213,500
Deferred income tax benefit                              (621,560)        (1,230,160)         (582,053)
                                                       ----------         ----------         ---------

                                                       $  747,835         $  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. The Company's  temporary  differences result primarily from depreciation,
deferred  franchise  fees and costs and area  director  fee  revenues and costs,
deferred bonuses and deferred rent.

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

                                                 September 30,    September 30,    December 31,
                                                     2000            1999              1998
                                                 ------------     -------------    ------------

Current deferred tax asset                        $  221,182       $  128,718       $   81,260
Current deferred tax liabilities                       -                 -                 -
                                                  ----------       ----------       ----------

Net current deferred tax asset                    $  221,182       $  128,718       $   81,260
                                                  ==========       ==========       ==========

Long-term deferred tax asset                      $6,242,732       $4,890,254       $1,673,620
Long-term deferred tax liability                  (2,032,106)      (1,383,041)        (938,812)
                                                  ----------       ----------       ----------
Net long-term deferred tax asset                   4,210,626        3,507,213          734,808
                                                  ----------       ----------       ----------

Net deferred tax asset                            $4,431,808       $3,635,931       $  816,068
                                                  ==========       ==========       ==========

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:
September 30, September 30, December 31, 2000 1999 1998

Federal statutory rate                              37.0%           37.0%        34.0%
Nondeductible expenses                                -               .9          8.4
Other – deferred including utilization of NOL        (.5)           (3.3)       (13.5)
Valuation allowance                                   -               -         (78.0)
                                                   -----            ----        -----

                                                    36.5%           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.  Effective  January 1, 2000,
the  Company  changed  its match  under  the  401(k)  plan to match  100% of the
participants’  elective  deferral  contributions  to the  plan,  up to a maximum
Company matching contribution equal to 6% of the participants’ compensation.

Starting  January 1,  2000,  the  Company  matching  contributions  will be 100%
vested,  regardless of the participant’s  years of service with the Company.  As
always,  the  Company  matching  contribution  is 50% in cash and 50% in Company
stock.

A participant is always 100% vested in their elective deferral  contributions to
the plan.

The  Company’s  matching  contributions  prior to  January  1,  2000 vest to the
participant according to the following vesting schedule:

        Years of Services                         Percentage
        -----------------                         ----------
                 1                                     0%
                 2                                    25%
                 3                                    50%
                 4                                    75%
                 5                                   100%

The Company has  contributed  $150,304,  $60,427 and $31,675 to the Plan for the
periods ended September 30, 2000 and 1999 and December 31, 1998, respectively.

**Note 14 – Earnings (Loss) Per Share**

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

                                                                          For the Year Ended    For the Nine Months   For the Year Ended
                                                                             September 30,       Ended September 30,      December 31,
                                                                                 2000                  1999                   1998
                                                                          ------------------    -------------------   ------------------
Numerator – net income before cumulative effect of changes in
    accounting principle
   Numerator for basic earnings per share                                   $ 1,115,782             $ 1,242,391            $  891,725
   Preferred dividends (net of taxes)                                            97,798                  78,265                    -
                                                                            -----------             -----------            ----------

   Numerator for diluted earnings per share                                 $ 1,213,580             $ 1,320,656            $  891,725
                                                                            ===========             ===========            ==========

Numerator for basic and diluted earnings per share – cumulative effect
    of changes in accounting principle                                           N/A                $(2,769,592)                N/A
                                                                                                    ===========
Denominator – weighted average shares
   Denominator for basic earnings per share – weighted average shares         3,019,849               3,060,878             3,014,042
   Effect of dilutive securities – convertible debt, options and
    warrants                                                                    708,912                 755,671               431,930
                                                                            -----------             -----------            ----------
   Denominator for diluted earnings per share – adjusted weighted
    average shares                                                            3,728,761               3,816,549             3,445,972
                                                                            ===========             ===========            ==========

Denominator for basic and diluted earnings per share – cumulative
    effect of changes in accounting principle                                    N/A                  3,060,878               N/A
                                                                                                    ===========
   Basic earnings (loss) per share                                          $       .37             $      (.50)           $      .30
                                                                            ===========             ===========            ==========

   Diluted earnings (loss) per share                                        $       .33             $      (.55)           $      .26
                                                                            ===========             ===========            ==========

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

**Note 15 – Area Director Territory Repurchases**

In  2000,  the  Company   repurchased  or  reacquired   fourteen  area  director
territories  from 9 area directors for $3,472,627,  inclusive of legal and other
related  costs.  The Company  issued notes payable for $714,622 and offset notes
and interest receivable from three area directors in the amount of $315,850. The
balance of the purchase price was paid in cash.

**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 2000 and 1998 financial  statements are as
of and for the twelve  months  ended  September  30, 2000 and December 31, 1998,
respectively.  For  comparative  purposes,  the following  unaudited  summarized
consolidated  statement of  operations  is presented for the twelve months ended
September 30, 1999.

                                                     For the Year Ended
(Unaudited)                                          September 30, 1999
                                                     ------------------

Total revenue                                          $  26,292,137
Income from franchise operations                       $   3,058,373
Income from Company store operations                   $     618,190
Net income before taxes                                $   2,163,511
Net (loss) applicable to common shareholders           $  (1,138,367)

Net (loss) per share – basic                           $        (.37)
Net (loss) per share – diluted                         $        (.43)

**Note 17 – Subsequent Events**

On November 13, 2000, the Company announced that it has commenced a tender offer
to purchase all outstanding shares of its common stock except for shares held by
certain insiders at a price of $8 per share, net in cash to the seller.

There are  approximately  three million shares of common stock  outstanding,  of
which approximately 51.6 percent currently are owned by Richard E. Schaden,  the
President  and  CEO  of The  Quizno’s  Corporation;  Richard  F.  Schaden,  Vice
President,  Secretary and a Director of The Quizno’s Corporation;  and Frederick
H.  Schaden,  a Director of The Quizno’s  Corporation.  All three  Schadens have
indicated they would not tender their shares at this time.

The tender offer will expire at midnight Monday,  December 11, 2000,  unless the
Company extends it.

The tender offer is conditioned, among other things, on 51 percent of the common
shareholders  besides the Schadens  accepting the tender offer.  The Company may
waive any such condition. It is also conditioned on the closing of a loan for up
to $12 million with Levine Leichtman  Capital  Partners.  The funding  agreement
combined  with $6.2  million in available  cash  provide the funds  necessary to
purchase all remaining common stock, all preferred shares and options  converted
into common stock and warrants held by Retail & Restaurant Growth Capital, L.P.

**ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL 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
18, 2000, are set forth below:

                                                                    Director
        Nominee           Age        Position(s) with Company        Since
--------------------   --------      ------------------------     -----------

Richard E. Schaden        36         President, Chief
                                     Executive Officer and          1991
                                     Director

Richard F. Schaden        62         Secretary and Director         1991

Frederick H. Schaden      54         Director                       1993

J. Eric Lawrence          33         Director                       1997

Mark L. Bromberg          49         Director                       1997

Brad A. Griffin           50         Director                       1999

John J. Todd              40         Director                       2000

      Each director is currently serving a one year term that will end on the
date of our 2001 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."

      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  $2,000,000  to our  company  in  1996,  and Mr.
Lawrence  was  elected  to the Board  pursuant  to a  contractual  arrangement
between  our  company  and  RRGC.  As a result  of the  Tender  Offer  and the
purchase of the  outstanding  warrants  held by RRGC,  such  contract has been
terminated.  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.  Mark L.  Bromberg is the  President of  Foodservice  of the viaLink
Company, a public company providing  synchronized database management services
to a wide  range of  retail  clients  since May 2000.  From  November  1997 to
May 2000,  he served as President of Pinnacle  Restaurant  Group,  a privately
held  company  that  owns  and  operates  casual  dining  restaurants  in  the
southwestern   United   States.    Mr. Bromberg   previously   served   as   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. As a
result of the Tender Offer and the purchase of the  outstanding  warrants held
by RRGC, such contract has been terminated.

      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. John J.  Todd was elected to the Board of Directors on September 26,
2000.  Mr. Todd is the Senior Vice  President and Chief  Financial  Officer of
Gateway  Inc.,  a position  he has held  since  October 1998.  Before  joining
Gateway,  he had held  financial  positions  with the Allied Signal  companies
from 1997 to 1998,  with Boston Market from 1996 to 1997 and with PepsiCo from
1988 to 1996.  He received his  bachelor's  degree from  Longwood  College and
his M.B.A. from William and Mary.

      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.

**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   36    President, Chief Executive Officer and Chairman of
                            the Board
 Steven B. Shaffer    49    Executive Vice President for Operations
 Robert W. Scanlon    54    Executive Vice President for Development
 Robert A. Elliott    43    Executive Vice President for Marketing
 Sue A. Hoover        54    Executive Vice President for Corporate Communications
 Richard F. Schaden   62    Vice President, Secretary and Director
 Patrick E. Meyers    41    Vice President and General Counsel
 John L. Gallivan     53    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.

      Steven B.  Shaffer has been our Executive  Vice President for Operations
since  May 22,  2000.  Prior to that he had been a  franchisee  of the Company
since  1992,  an Area  Director  of the  Company  since 1996 and a Senior Vice
President of the Company since  October 1998.  Mr. Shaffer  graduated from the
University of Georgia in 1972.

      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.

      Robert A. Elliott  became our Executive  Vice  President of Marketing in
February 2000.  Prior to  joining  us, he was a partner  at Bozell  Worldwide,
Inc., an advertising  agency in Detroit,  Michigan,  from 1997 to 1999, and on
the  marketing  staff of Little  Caesar  Enterprises,  Inc. for over 18 years,
including   serving   as  Vice   President - Marketing   from  1993  to  1997.
Mr. Elliott  graduated from Eastern Michigan  University with a B.B.A.  degree
in 1979.

      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.  In February of 2000,  she became
our  Executive  Vice  President  of  Corporate   Communications.   Ms.  Hoover
graduated from the University of Iowa with a B.A. in 1968.

      Patrick E.  Meyers  joined our company 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.

      John L.  Gallivan joined our company 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 the 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 2000 our directors,  advisors,  officers and 10%
Holders  complied  with all filing  requirements  under  Section  16(a) of the
Exchange Act,  except that Mr. Shaffer  inadvertently  failed to timely file a
Form 4. Such  failure  was  remedied  by the  timely  filing of his From 5 for
fiscal 2000.

**ITEM 10.    EXECUTIVE COMPENSATION****Executive Compensation**

      Set forth below is information about compensation  during fiscal 2000 of
our five most highly compensated  executive  officers,  including our CEO, and
two  non-executive  officers  who would have been in the top five most  highly
compensated  executive  officers if they had been executive  officers  ("Named
Officers").

      **Summary Compensation Table**.  The following table provides certain
summary information for fiscal 2000, 1999 and 1998 concerning compensation
awarded, paid to, or earned by, the Named Officers:

                            Annual Compensation      Long-Term and Other
                            -------------------          Compensation
                                                  ----------------------------
                                                    Option        401(k) Plan
Name and Position    Year(1)   Salary   Bonus      Shares(2)    Contribution(3)
-----------------   --------- -------- --------   ----------   ---------------

Richard E. Schaden, 12/31/98  $181,452 $130,625      5,164         $2,000
 President and       9/30/99  $196,710 $  1,500(4)  33,000         $2,329
 Chief Executive     9/30/00  $221,500 $301,500(4)   4,000         $3,997
 Officer

Steven B. Shaffer,  12/31/98  $ 22,611 $      0      4,000         $    0
 Executive Vice      9/30/99  $ 75,000 $  8,177     18,500         $    0
 President           9/30/00  $126,000 $113,044          0         $3,192
 For Operations

Patrick E. Meyers,  12/31/98  $ 84,000 $ 24,674      5,164         $    0
 Vice President and  9/30/99  $ 72,768 $ 24,674     14,000         $2,500
 General Counsel     9/30/00  $126,667 $120,146          0         $2,749

Robert W. Scanlon,  12/31/98  $ 85,783 $ 28,115      5,164         $3,418
 Executive Vice      9/30/99  $ 78,000 $ 10,289      9,000         $5,885
 President of        9/30/00  $118,334 $ 48,067          0         $3,977
 Development

Sue A. Hoover,      12/31/98  $ 90,479 $ 13,968      9,164         $3,016
 Executive Vice      9/30/99  $ 73,125 $ 20,826      6,000         $3,962
 President  of       9/30/00  $124,167 $ 36,120          0         $7,609
 Corporate
 Communications

John Fitchett,      12/31/98  $ 92,000 $  7,674      5,164         $1,051
 Senior Vice         9/30/99  $ 75,000 $ 11,233      9,000         $1,916
 President           9/30/00  $113,542 $121,324          0         $5,579

George Boedecker    12/31/98  $ 29,200 $  4,343      6,000         $    0
 Senior Vice         9/30/99  $ 75,000 $  6,212     13,000         $1,787
 President           9/30/00  $115,375 $118,451          0         $5,712

Richard F. Schaden, 12/31/98  $ 83,500 $ 78,375          0         $    0
 Vice President and  9/30/99  $ 62,625 $      0(4)       0         $    0
 Secretary           9/30/00  $ 86,979 $      0(4)   4,000         $    0

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

(2) During  fiscal 2000 and prior  years,  as an  incentive  for our  eligible
employees to work to enhance our  performance  and assure our future  success,
we granted 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 such 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
100% of such employee's annual  contribution up to 6% of each employee’s total
compensation.  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,  our  match  was 50% of each
employee’s  contribution.  We have issued  shares of Common  Stock for 50% our
annual  contribution  to each account under the 401(k) Plan. In December 2000,
our directors amended the 401(k) plan to provide for 100% of matches in cash.

(4) The Company is contractually  obligated to pay both Mr. Richard E. Schaden
and Mr.  Richard  F.  Schaden a bonus  based  upon any  positive  increase  in
earnings before interest,  taxes,  depreciation and amortization for each full
calendar  year over the level of such amount for the prior full  calendar year
during the term of their  respective  employment  agreements.  See “Employment
Contracts”  below.  During 1999,  there was a change in  accounting  principle
resulting from a change in the Securities and Exchange  Commission’s  position
regarding the  recognition of area director fees as income.  The  Commission’s
position  shifted from one permitting  immediate  recognition to one requiring
amortization  of such fees into income over  several  years.  As a result,  we
took a charge  against  earnings in fiscal 1999 of  $2,769,592.  The impact on
the Schadens from this change was that they received  virtually no bonuses for
fiscal 1999.  However,  in future years a portion of their bonuses will result
from  amortized  income  from  area  director  fees that had been  taken  into
income,  and  therefore  counted  towards  their bonuses in years prior to the
accounting  change and the charge against  income  described  above.  The next
bonus  calculation  for the Schadens  will be made for the calendar year 2000.
The Board of  Directors  has  approved  an advance of  $300,000  to Richard E.
Schaden  based on the  expectation  that his  bonus  will be in excess of such
amount.  In  addition,  the Board of Directors  has approved the  exclusion of
certain one time non-recurring  expense items in the amount of $2,916,536 from
the  calculation  of EBITDA  for the  purpose  of  determining  the  Schadens’
bonuses for 2000.

      **Stock  Option  Awards**.  We adopted our  Employee  Stock Option Plan (the
"Employee  Plan") in 1993.  The  purposes of the  Employee  Plan are to enable
our company 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 November  30,  2000,  we had issued  68,091  shares upon
exercise of options  under the  Employee  Plan and had  outstanding  grants of
options  covering  448,226  shares  currently  reserved for issuance under the
Employee Plan.

      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.

      In connection with our self-tender  offer that was completed on December
11, 2000,  our Board of Directors has approved a profit  sharing plan that all
Quizno’s  employees  will be able to  participate  in. Such plan will  replace
the Employee Plan beginning in 2001.

      Option information for fiscal 2000 relating to the Named Officers is
set forth below:

**Option Grants in Fiscal 2000**

                          Number of
                          Shares of
                        Common Stock    Percentage of
                         Underlying     Total Options
                           Options       Granted to
                         Granted in     Employees in               Expiration
         Name            Fiscal 2000     Fiscal 2000                  Date
--------------------   --------------  -------------- --------    ------------
Richard E. Schaden       4,000             2.3%        $7.375     1/1/10(1)
Richard F. Schaden       4,000             2.3%        $7.375     1/1/10(1)
Steven B. Shaffer            0              -             -          -
Patrick E. Meyers            0              -             -          -
Robert W. Scanlon            0              -             -          -
Sue A. Hoover                0              -             -          -
John Fitchett            8,000             4.6%        $6.38      8/8/05(2)
George Boedecker        10,000             5.7%        $6.57      8/8/05(2)
       

(1)   The  grants  of  these  options  were  included  in  the  grants  to all
       directors  under our Directors  and Advisors  Stock Option Plan and expire on
       the first to occur of the tenth  anniversary  of the grant  date or the third
       anniversary of the  termination of the  individual’s  status as a Director or
       Advisor.

(2)   These  options,   granted  under  the  Employee  Plan,   vest  in  equal
       proportions  on the  second,  third and  fourth  anniversaries  of the grant.
       They  terminate  on the fifth  anniversary  of the grant or ninety days after
       termination of employment, if earlier.

              **Option Exercises and Year-End Values in Fiscal 2000**
                                          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
-----------   ---------   --------   -----------   -------------   -----------   -------------

Richard E.      3,873     $12,122      5,087           34,291         $2,370         $1,381
 Schaden

Richard F.          0     $     0      4,000                0        $     0         $    0
 Schaden

Steven B.       4,000     $12,000          0           20,000        $     0         $6,260
 Shaffer

Robert W.           0     $     0      5,600           12,691        $16,764         $8,776
 Scanlon

Sue A. Hoover   3,873     $11,619     13,200           12,091        $20,556         $6,124

Patrick E.      3,873     $14,040     22,000           15,291        $54,700         $2,020
 Meyers

John Fitchett       0     $     0      5,600           20,691        $16,764         $9,256

George              0     $     0      1,800           25,700        $ 4,617         $5,426
 Boedecker
        

(1) The dollar values are calculated by determining the difference between $6.44
per share, the fair market value of the Common Stock at September 30, 2000, and the
exercise price of the respective options.

            **Employment  Contracts**.  On December 12, 2000, the Company  entered
into  a  new  employment  agreement  with  Richard E.  Schaden,  which  has  a
three-year  term and  provides  for an annual  salary of  $481,000.  Under the
agreement,  Richard E.  Schaden  will be entitled to an annual  bonus equal to
four percent of the Company's  earnings before interest,  taxes,  depreciation
and  amortization  ("EBITDA")  up to the  amount  of EBITDA  projected  in the
annual budget  approved by the Company's  Board of Directors for that calendar
year. To the extent actual EBITDA  exceeds  budgeted  EBITDA for that calendar
year,  Richard E.  Schaden  will be  entitled  to an  annual  bonus of  twelve
percent of the amount of such excess EBITDA.  In the event Richard E.  Schaden
is terminated by the Company without cause or his employment  agreement is not
renewed under terms at least as favorable as exists as of the expiration  date
of the  employment  agreement,  he would be entitled to  termination  payments
equal to three years' base salary plus bonus (which bonus  payment will not be
less  than  $400,000  for each year in which the  severance  payment  is due).
Either party may  terminate the agreement  with 30 days'  notice.  Mr. Schaden
will  devote  his full time to  company  matters.  Under his prior  employment
agreement,  his annual base salary was $220,000.  That  agreement  provided 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.  Both the old and new employment  agreements  provide that
Mr. Schaden also receive a monthly automobile  allowance of up to $620.00 plus
up to $150.00  for  insurance  coverage.  The  contracts  provide  that we pay
one-half of Mr. Schaden's  medical insurance coverage and one-half of the cost
of disability  insurance.  We also pay for  $1,000,000 of term life  insurance
for Mr. Schaden, payable to his designated beneficiary.

      On  December  12,  2000,  the  Company  entered  into  a new  employment
agreement with  Richard F.  Schaden,  which has a three-year term and provides
for an annual  salary of $100,000.  Under the  agreement,  Richard F.  Schaden
will be  entitled to an annual  bonus  equal to two  percent of the  Company's
EBITDA up to the amount of EBITDA  projected in the annual budget  approved by
the  Company's  Board of  Directors  for that  calendar  year.  To the  extent
actual  EBITDA  exceeds  budgeted  EBITDA for that calendar  year,  Richard F.
Schaden will be entitled to an annual bonus of eight  percent of the amount of
such excess  EBITDA.  In the event  Richard F.  Schaden is  terminated  by the
Company  without cause or his employment  agreement is not renewed under terms
at least as favorable as exists as of the  expiration  date of the  employment
agreement,  he would be entitled to termination payments equal to three years'
base salary plus bonus  (which bonus  payment  will not be less than  $400,000
for each  year in which  the  severance  payment  is due).  Either  party  may
terminate the  agreement  with 30 days'  notice.  Mr. Schaden  will not devote
his full  time to  company  matters,  but will  devote  such  time to  company
matters as we  request.  Mr.  Schaden may take on special  projects  for us at
the  direction of the Board of Directors and receive  additional  compensation
for such  projects.  Under his prior  employment  agreement,  his annual  base
salary was  $83,500.  That  agreement  provided 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.

      Robert  Elliott has entered into an  employment  agreement  with us that
terminates on January 16,  2003.  His contract  provides that he will serve as
our Executive Vice President for Marketing.  Mr. Elliott  will devote his full
time to  company  matters.  His  annual  base  salary  is  $180,000  in  2000,
$200,000 in 2001,  and  $220,000 for the  remainder  of the term.  Such amount
may be adjusted from time to time by mutual agreement between  Mr. Elliott and
the Company.  The  agreement  provides a $25,000  signing bonus payable on his
nine month anniversary,  and a second year signing bonus of $10,000 due on his
second year  anniversary  date. The agreement  provides an annual  performance
bonus equal to a maximum of 20% of  Mr. Elliott's  base salary,  as well as an
automobile  allowance  of  $650.00  per month.  The  agreement  provides  that
Mr. Elliott  will receive  options to purchase  20,000 shares of the Company's
stock.  He may receive  additional  options or be entitled to  participate  in
other employee  benefit or  compensation  programs as provided by us from time
to time.  Either party may terminate the agreement  with 30 days'  notice.  If
we terminate the agreement  without cause, we are obligated to pay Mr. Elliott
a severance  payment  equal to 6 months  base  salary.  During the term of the
agreement  and for 6 months  after it  terminates,  Mr. Elliott  agrees not to
work for any competitor.

      None of the other executive 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,  all
directors  receive  an annual  grant of options to  purchase  4,000  shares of
Common Stock, which immediately vest.

      During fiscal 2000,  we paid three of our  non-employee  directors,  who
served all year,  $2,500 each,  a fourth  director who attended  three meetings
$1,500,  and our new  director  John Todd,  $500,  as  compensation  for their
attendance at regular Board and Committee  meetings.  For their service during
fiscal  2000,  all  Directors  received a grant of options to  purchase  4,000
shares  of Common  Stock  that  immediately  vested,  except  John  Todd,  who
received a grant of  options to  purchase  1,000  shares of Common  Stock that
immediately vested.

**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  18,  2000,  (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  executive  officers  and  directors  named
herein as a group.

                                                              Preferred
                                                                Stock
                                Common Stock  Common Stock    Owned and
     Name and Address(1)          Owned(2)     Percentage    Percentage
 ----------------------------  -------------- ------------- -------------

     Richard E. Schaden.......   872,384(3)      35.8%           (7)

     Richard F. Schaden.......   921,470(3)      37.0%           (7)

     Levine Leichtman Capital
      Partners II, L.P,
      335 North Maple Drive,
      Suite 240, Beverly Hills,
      CA 90210................          (4)      14.0%            0

     Brad A. Griffin..........         0           *              0

     Mark L. Bromberg.........    14,000(5)        *              0

     J. Eric Lawrence.........         0           *              0

     Frederick H. Schaden.....    28,000(5)        *             (7)

     John J. Todd.............     1,000(5)        *              0

     Steven B. Shaffer........    27,300(6)        *             (7)

     Robert W. Scanlon........         0           *              0

     Sue A. Hoover............     3,873(6)        *              0

     Patrick E. Meyers........    15,723(6)        *              0

     John Fitchett............         0(6)        *             (7)

     George Boedecker.........         0(6)        *             (7)

     All Executive Officers
     and Directors as a Group
     (13 persons)(3),(5),(6).. 1,885,223         71.3%           (7)

_________________________

 *    Less than 1% of shares outstanding.

(1)   All addresses, unless otherwise stated, are 1415 Larimer Street,
      Denver, CO 80202.

(2)   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  60 days  from the date as of which the
      table is  presented,  upon the  exercise  of  options  or  warrants,  or
      conversion  of  convertible  securities.  The record  ownership  of each
      beneficial  owner is  determined by assuming that options or warrants or
      convertible  securities  that  are  held by such  person  and  that  are
      exercisable  or  convertible  within  60 days  have  been  exercised  or
      converted.   The  total  outstanding   shares  used  to  calculate  each
      beneficial owner's  percentage also assumes that such options,  warrants
      or  convertible  securities  have  been  exercised  or  converted.   Our
      Class A Cumulative  Convertible  Preferred Stock ("Class A  Preferred"),
      Class C  Cumulative  Convertible  Preferred Stock ("Class C  Preferred")
      and   Class E   Cumulative   Convertible   Preferred   Stock   ("Class E
      Preferred")  are  currently  convertible  into  our  common  stock  on a
      1-for-1 basis.

(3)  Richard E.  Schaden and  Richard F.  Schaden  beneficially  own,  through a
     voting   trust   pursuant  to  which  they  are  joint   voting   trustees,
     773,667 shares  of our  common  stock  and  146,000 shares  of our  Class A
     Preferred,  and  4,000 shares  of our common stock owned by a family member
     for which the voting trust holds sole voting power. The remaining  duration
     of the voting trust agreement is four years,  subject to extension.  In the
     table,  beneficial  ownership of shares,  other than the  773,667 shares of
     common  stock,   have  been  allocated   equally  to  each  of  them.  Such
     773,667 shares  of common stock are allocated to Richard F.  Schaden in the
     table,  and he has  been  given a proxy  to vote  such  shares.  Richard E.
     Schaden has withdrawn  773,667 shares of common stock from the voting trust
     to use to secure a personal  loan,  subject,  however,  to an  agreement to
     redeposit  those  shares  into  the  voting  trust  if they  are no  longer
     necessary to secure such loan. Otherwise, Richard E. Schaden, individually,
     4339 shares of our common stock held in his own name,  17,378 shares of our
     common stock  represented by exercisable  stock options and 2,000 shares of
     our 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  Preferred,  4,000 shares  of our common stock  represented  by
     currently  exercisable  stock  options  and  34,803 shares  of our  Class E
     Preferred.

(4)  We  issued  warrants  to Levine  in  connection  with a loan to us of $13.8
     million to finance our self-tender  offer for our own common stock that was
     completed on December 11, 2000.  Such warrants permit Levine to purchase up
     to 14% of each class of our capital  stock on a fully  diluted  basis as of
     the  completion of the tender  offer,  subject to certain  adjustments  for
     issuances,  exchanges or repurchases  of our capital stock,  at an exercise
     price of $.01 per share.

(5)  All the  shares  indicated  as owned by  Messrs.  Bromberg  and Todd may be
     acquired through the exercise of stock options. All the shares indicated as
     owned by Mr.  Frederick  Schaden  may be acquired  through the  exercise of
     stock options or conversion of Class C Preferred by the holder.

(6)  Steven  B.  Shaffer,   individually  and  through  an  affiliated   entity,
     beneficially  owns 27,300  shares of our common  stock.  Patrick E. Meyers,
     individually, beneficially owns 1,723 shares of our common stock and 14,000
     shares of our common  stock  represented  by  currently  exercisable  stock
     options.  In  connection  with our  self-tender  offer for our common stock
     completed on December 11, 2000, Messrs. Shaffer, Meyers, Gallivan, Fitchett
     and Boedecker and Ms. Hoover  converted the equity in their vested  options
     to  purchase  our  common  stock  into  pro-rata  interests  in a  deferred
     compensation  plan which became  effective on December 1, 2000. Ms. Hoover,
     individually beneficially owns 3,873 shares of our common stock.

(7)  The  Company  has  issued  and  outstanding  four  classes  of  Convertible
     Preferred  Stock,  the Class A Preferred,  Class C  Preferred,  the Class D
     Subordinated  Convertible  Preferred  Stock (the "Class D  Preferred")  and
     Class  E  Preferred.   There  are  146,000  shares  of  Class  A  Preferred
     outstanding:  50% are beneficially  owned by Richard F. Schaden and 50% are
     beneficially owned by Richard E. Schaden.  There are 57,000 shares of Class
     C  Preferred  outstanding:  34,000  shares or 60.0% are held by  Richard F.
     Schaden and 2,000 shares or 3.5% are held by Frederick  H.  Schaden.  There
     are 3,000  shares of Class D Preferred  outstanding:  1,000 shares each are
     held by each of Messrs. Shaffer,  Fitchett and Boedecker.  There are 59,480
     shares of Class E Preferred  outstanding:  34,803 shares or 59% are held by
     Richard F. Schaden and 1,473  shares or 2.5% are held by John L.  Gallivan.
     Among all  executive  officers  and  directors  as a group,  the  following
     preferred  shares are  beneficially  owned:  100% of the Class A Preferred,
     36,000  shares or 63.2% of the Class C Preferred,  1,000 shares or 33.3% of
     the Class D Preferred  and 36,276  shares or 61% of the Class E  Preferred.
     None of these classes of preferred  stock are publicly traded or registered
     under Section 12(b) or 12(g) of the Exchange Act.

**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.  In  connection  with an amendment to the loan  agreement,  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 was subject to downward  adjustment if we meet certain net income
and  other  goals.  On  January  6,  1999,  we paid off the loan from RRGC and
issued  to RRGC the  Warrant  to  purchase  372,847  shares  of  Common  Stock
referred  to  above.  In  connection  with the  Tender  Offer,  all of  RRGC’s
Warrants  were  purchased  by and a  Termination  Agreement  was  signed  that
terminated all of our obligations to 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  2000  and  1999  each  preferred
shareholder  received dividends of $28,470 annually.  In addition,  Richard F.
Schaden owns 34,000  shares of our Class C Preferred  Stock and 34,803  shares
of our Class E  Preferred  Stock and was paid  $36,386  in  dividends  on such
shares during fiscal 2000.

      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 2000 and 1999,  respectively,  we paid the Area Director
$459,496  and  $142,364  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 such  request,  we agreed to defer  payment of
$63,547.  IFM issued to us a  promissory  note in such amount  payable  over 6
years with an  interest  rate of 12% per  annum.  At  September  30,  2000,  $
55,550 was owed to us on this  promissory  note.  During fiscal 2000 and 1999,
payments  on such note were  $11,800  and  $8,000,  respectively.  IFM is also
indebted to us for $7,216 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 15 months.

      In 1997,  we  purchased  a  Restaurant  from a  company  in which Sue A.
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  2000 and 1999,  our  company  made  payments
pursuant to the promissory note totaling $35,219 and $14,245, respectively.

      In September 1999, Mr.  Fitchett and another  employee of ours purchased
an area  directorship  for  $200,000,  of which  $180,000 was in the form of a
promissory  note.  During fiscal 2000, no payments were made on the note,  and
we paid the Area Director $20,131 in commissions and royalties.

      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.  During fiscal 2000, we paid Mr. Schaden or an
affiliated company $46,162 for services related to our airplane.

      We entered into a Development  Agreement,  dated November 4, 1999,  with
Pink Sand Corporation,  which is principally owned by Richard F. Schaden,  for
the   development   rights  to  United  States   Territory  of  Guam  and  the
Commonwealth of Saipan.  The  development  agreement will require Pink Sand to
open five 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, paid upon execution of
the Agreement,  was $42,500.  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.  During  fiscal 2000, we received  payments of $14,764 in royalties  from
Pink Sand.

     We have  guaranteed  a  personal  loan to Richard E.  Schaden  from  Tucker
Anthony  Capital  Markets,  in the  approximate  amount of $2,100,000,  which is
secured  by shares  of common  stock in The  Quizno's  Corporation  owned by Mr.
Schaden and other personal assets, a personal  guaranty,  and a partial guaranty
by Mr.  Schaden's  father,  Richard F. Schaden.  In order to protect against the
potential loss of Mr.  Schaden's stock as a result of this  transaction (and the
potential negative effects to us), our Board of Directors  authorized a guaranty
from the  Company  by which we  assure  Tucker  Anthony  that upon an event of a
default in Mr. Schaden's loan, the Company will be responsible for the principal
and interest on the loan. We will enter into a reimbursement  agreement with Mr.
Schaden  which will  require Mr.  Schaden to  reimburse  us for any  expenses or
losses suffered by us in connection with the guaranty. We do not expect to incur
any such  expenses or losses,  as the  guaranty  would only be drawn  against by
Tucker Anthony if (a) Mr. Schaden's  shares of common stock became  insufficient
collateral  (in  combination   with  Mr.  Schaden's  other  collateral  and  the
guaranties  described  above)  and  (b) Mr.  Schaden  defaulted  on his  payment
obligations under the loan.

      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

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.

3.4           By-laws of the Company, incorporated by reference to Exhibit 3.
              to the Company’s Form 10-KSB, dated December 30, 1999.

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.

3.6           Articles of Amendment to the Articles of Incorporation of the
              Company, authorizing 10,000 shares of Class D Cumulative
              Convertible Preferred Stock, incorporated by reference to
              Exhibit 3.6 to the Company’s Form 10-KSB, dated December 30,
              1999.

3.7           Articles of Amendment to the Articles of Incorporation of the
              Company, authorizing 150,000 shares of Class E Cumulative
              Convertible 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, incorporated by reference to Exhibit 9.4 to the
              Company’s Form 10-KSB, dated December 30, 1999.

9.5           Agreement of Waiver and Modification of Voting Trust Agreement
              and Stock Purchase Agreement, dated August 8, 2000,
              incorporated by reference to Exhibit A to the Amendment No. 5
              to Schedule 13-D, dated November 15, 2000, filed on November
              21, 2000 by Richard E. Schaden and Richard F. Schaden.

10.1          Employment Agreement of Mr. Richard E. Schaden, dated December
              12, 2000, incorporated by reference to the form filed as
              Exhibit (e)(1) to the Company’s Schedule TO filed with the
              Commission on November 13, 2000.

10.2          Employment Agreement of Mr. Richard F. Schaden, dated December
              12, 20000, incorporated by reference to the form filed as
              Exhibit (e)(2) to the Company’s Schedule TO filed with the
              Commission on November 13, 2000.

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.333-46058), filed on September 19, 2000.

10.4          Amended and Restated Stock Option Plan for Directors and
              Advisors, incorporated by reference to Exhibit 99.2 to the
              Company's Registration Statement on Form S-8 (Reg.
              No.333-46058), filed on September 19, 2000.

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

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

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

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

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

10.10         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*

10.13         Form of Area Director Marketing Agreement*

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         The Director, Advisor and Executive Officer SAR and Deferred
              Compensation Plan, effective as of December 1, 2000*

10.16         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.

10.17         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.

10.18         Airplane Purchase Agreement, dated as of September 22, 1999,
              between the Company and Sacramento Aviation management Company,
              incorporated by reference to Exhibit 10.24 to the Company’s
              Form 10-KSB, dated December 30, 1999.

10.19         Interchange Agreement, dated as of October 13, 1999, between
              the Company and Richard F. Schaden, P.C., incorporated by
              reference to Exhibit 10.25 to the Company’s Form 10-KSB, dated
              December 30, 1999.

10.20         Form of Master Franchise Agreement, incorporated by reference
              to Exhibit 10.26 to the Company’s Form 10-KSB, dated December
              30, 1999.

10.21         Investment letter agreement, dated as of October 4, 1999,
              between the Company and AMERESCO Commercial Finance, Inc.,
              incorporated by reference to Exhibit 10.27 to the Company’s
              Form 10-KSB, dated December 30, 1999.

10.22         Form of Promissory Note, dated as of October 5, 1999, issued by
              the Company to AMERESCO Commercial Finance, Inc., incorporated
              by reference to Exhibit 10.28 to the Company’s Form 10-KSB,
              dated December 30, 1999.

10.23         Form of Pledge and Security Agreement, dated as of October 5,
              1999, between the Company and AMERESCO Commercial Finance,
              Inc., incorporated by reference to Exhibit 10.29 to the
              Company’s Form 10-KSB, dated December 30, 1999.

10.24         Securities Purchase Agreement between the Company, its
              subsidiaries and Levine Liechtman Capital Partners II, L.P.,
              incorporated by reference to Exhibit (b)(1) to the Company’s
              Schedule TO filed with the Commission on November 13, 2000

10.25         Form of Secured Senior Subordinated Note Due 2005 issued to
              Levine Liechtman Capital Partners II, L.P., incorporated by
              reference to Exhibit (b)(2) to the Company’s Schedule TO filed
              with the Commission on November 13, 2000

10.26         Form of Warrant to purchase Common Stock issued to Levine
              Liechtman Capital Partners II, L.P., incorporated by reference
              to Exhibit (b)(3) to the Company’s Schedule TO filed with the
              Commission on November 13, 2000

10.27         Form of Warrant to purchase Preferred Stock issued to Levine
              Liechtman Capital Partners II, L.P., incorporated by reference
              to Exhibit (b)(4) to the Company’s Schedule TO filed with the
              Commission on November 13, 2000

10.28         Form of Registration Rights Agreement between the Company and
              Levine Liechtman Capital Partners II, L.P., incorporated by
              reference to Exhibit (b)(5) to the Company’s Schedule TO filed
              with the Commission on November 13, 2000

10.29         Form of Investor Rights Agreement between the Company, Richard
              E. Schaden, Richard F. Schaden and Levine Liechtman Capital
              Partners II, L.P., incorporated by reference to Exhibit (b)(6)
              to the Company’s Schedule TO filed with the Commission on
              November 13, 2000

10.30         Form of Security Agreement between the Company, certain of its
              subsidiaries and Levine Liechtman Capital Partners II, L.P.,
              incorporated by reference to Exhibit (b)(7) to the Company’s
              Schedule TO filed with the Commission on November 13, 2000

10.31         Form of Pledge Agreement between the Company, certain of its
              subsidiaries and Levine Liechtman Capital Partners II, L.P.,
              incorporated by reference to Exhibit (b)(8) to the Company’s
              Schedule TO filed with the Commission on November 13, 2000

10.32         Form of Grant of Security Interest in Trademarks, Patents and
              Licenses between the Company, its subsidiaries and Levine
              Liechtman Capital Partners II, L.P., incorporated by reference
              to Exhibit (b)(9) to the Company’s Schedule TO filed with the
              Commission on November 13, 2000

10.33         Termination Agreement, dated November 6, 2000, between the
              Company and Retail & Restaurant Growth Capital, L.P.,
              incorporated by reference to Exhibit (d)(1) to the Company’s
              Schedule TO filed with the Commission on November 13, 2000.

10.34         Form of Guaranty Agreement between the Company and Tucker
              Anthony, Inc., incorporated by reference to Exhibit (d)(2) to
              the Company’s Schedule TO filed with the Commission on November
              13, 2000.

10.35         Reimbursement Agreement between Richard E. Schaden and the
              Company*

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 20,
              2000 appearing elsewhere in this Form 10-KSB into the
              Registration Statement on Form S-8 of the Company, Reg. No.
              333-46058.*
   __________
o  Filed with this Report.

      (b) Reports on Form 8-K.  We filed one report on Form 8-K during the
fiscal quarter ending September 30, 2000.  The Form 8-K filing reported on an
Item 5 matter, the press release announcing the election of John J. Todd to
our Board of Directors.  Such filing was made on September 29,
2000.

                             **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 29, 2000.

                                    THE QUIZNO'S CORPORATION

                                    By:/s/Richard E. Schaden
                                       Richard E. Schaden,
                                       President, Chief Executive
                                       Officer and Chairman of the

Board of Directors

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

                           President, Chief Executive               December 29, 2000
/s/ Richard E. Schaden     Officer and Chairman of the
Richard E. Schaden         Board of Directors
                           (Principal Executive Officer)

/s/ Mark L. Bromberg      Director                                  December 29, 2000
Mark L. Bromberg

/s/ J. Eric Lawrence      Director                                  December 29, 2000
J. Eric Lawrence

/s/ Frederick H. Schaden  Director                                  December 29, 2000
Frederick H. Schaden

/s/ Brad A. Griffin       Director                                  December 29, 2000
Brad A. Griffin

/s/ John J. Todd          Director                                  December 29, 2000
John J. Todd

/s/ John L. Gallivan      Chief Financial Officer                   December 29, 2000
John L. Gallivan           and Treasurer (Principal
                           Financial and Accounting
                           Officer)
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