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**UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  Form 10-KSB/A**

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, Colorado                                  80202
      -------------------------------                -------------------------
     (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 BUSINESS

ITEM 2.     DESCRIPTION OF PROPERTY

ITEM 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 MATTERS

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

ITEM 7.     FINANCIAL STATEMENTS

ITEM 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 ACT

ITEM 10.    EXECUTIVE COMPENSATION

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
            OWNERS AND MANAGEMENT

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED
            TRANSACTIONS

ITEM 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 DR,  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 1,026  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  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.

      Master  franchise  agreements  require a minimum  number of  openings  in the
defined  territory  after a certain  period of time from the date the  agreement is
signed.  The time for the first unit to be opened in the  territory  is usually one
y ear. Thus,  there are certain  countries for which a master  franchise  agreement
has been sold  that  either  have not  reached  the  first  date at which a unit is
required to be open or are included in a larger  defined  territory  which includes
other countries where units are open.

      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%.
The royalty  rate was 5% for  franchise  agreements  entered into prior to February
11, 1995,  and there were 23 such  franchises  operating at September 30, 2000. The
royalty rate was 6% for franchisee  agreements  entered into from February 11, 1995
through  March 31, 1998 and there were 283 such  franchises  operating at September
30,  2000.  There  was one  franchise  with a 4%  royalty  and one with 0%  royalty
operating  at September  30,.  2000.  The  proceeding  is for domestic  franchises.
The  remainder  of the  franchisees  pay a 7% or 8% royalty.  The 35 Company  owned
stores open at September  30, 2000 do not pay a royalty.  "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.

      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.

      The  following is a summary of the  information  required in the FTC offering
      circular:
         A description  of the  franchisor,  its  predecessors  and  affiliates,  and the
         business experience of the franchisors key employees.

         A summary of litigation involving the franchisor.

         The  initial  franchise  fee  and  other  fees  paid  by the  franchisee  to the
         franchisor,   the  total  estimated  initial   investment  by  franchisee,
         restrictions  on  franchisee's  sources  of  products  and  services,  and
         franchisee's and franchisor's obligations under the franchise agreement.

         Sources of financing available to franchisee.

         Whether or not the franchisee has a protected territory.

         The franchisor's trademarks patents, copyrights and proprietary information.

         Franchisee's  requirement  to operate  the  business,  restrictions  on what the
         franchisee can sell, requirements upon renewal,  termination,  or transfer
         of the franchise agreement, and provisions for dispute resolution.

         Any public  figures  paid by the  franchisors  and any sales or earnings  claims
         made by the franchisor.

         The offering  circular includes a list of locations,  franchisor's  financial
         statements and copies of the franchise agreement and related contracts.

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

            Quizno's Subs
Great       Oven Baked
Britain     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,  Englewood, CO 80112       2,486 sq. feet
              #B7
2.            6525 Gunpark Drive         Boulder, CO 80301         1,976 sq. feet
3.            191 Blue River Parkway     Silverthorne, CO 80498      931 sq. feet
4.            8081 East Orchard Road,    Greenwood Village, CO     3,166 sq. feet
              #67                        80111
5.            2311 30th Street           Boulder, CO 80301         1,400 sq. feet
6.            9425 South University      Highlands Ranch, CO 80126 1,919 sq. feet
              Blvd.
7.            1275 Grant Street          Denver, CO 80203          1,400 sq. feet
8.            1250 South Hover Road,     Longmont, CO 80501        2,350 sq. feet
              Bldg. 8A
9.            1660 Lincoln Street, # 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     1,600 sq. feet
                                         80112
30.           1387 S. Boulder Rd., Unit  Louisville, CO  80027     2,100 sq. feet
              G
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 an
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
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.  Amount
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
        Sale of Japan master franchise .........              -       1,168,801
        Other ..................................      1,064,646         508,240
        Interest ...............................        526,761         355,608
                                                   ------------    ------------
            Total revenue ......................     26,756,047      18,186,987
                                                   ------------    ------------

   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       4,227,174
                                                   ------------    ------------

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
                                                   ------------    ------------

                       Consolidated Statements of Operations (continued)

                                                  For the Year Ended September 30,
                                                    ----------------------------
                                                         2000            1999
                                                    ------------    ------------
                                                                     (Unaudited)
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)
     New company start-up costs ..................      (103,000)          --
   Provision for bad debts .......................      (305,285)      (354,827)
   Other expenses ................................       (41,820)       (68,245)
   Depreciation and amortization .................    (1,959,718)    (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                      (5,262,884)    (2,681,853)
                                                    ------------    ------------

Net income before income taxes ...................     1,982,243      2,163,511
Income tax provision .............................      (722,738)      (353,135)
                                                    ------------    ------------

Net income .......................................     1,259,505      1,810,376
Preferred stock dividends ........................      (186,457)      (179,151)
                                                    ------------    ------------

Net income before cumulative effect of changed
 accounting principle ............................     1,073,048      1,631,225
Cumulative effect of changed accounting
 principle (net of taxes) ........................          --       (2,769,592)
                                                    ------------    ------------

Net income (loss) applicable to common
 stockholders ....................................   $ 1,073,048    $(1,138,367)
                                                    ============    ============

                       Consolidated Statements of Cash Flows

                                                    For the Year Ended September 30,
                                                      --------------------------
                                                          2000          1999
                                                      -----------    -----------                                                                          1999
                                                                     (Unaudited)
Cash flows from operating activities
   Net income (loss) before preferred stock
    dividends .....................................   $ 1,259,505    $  (959,216)
   Adjustments to reconcile net income (loss) to
    net cash provided by operating activities -
      Depreciation and amortization ...............     1,884,191      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 ....................      (506,009)       851,469
                                                      -----------    -----------
                                                        4,480,526      7,174,776
                                                      -----------    -----------
          Net cash provided by operating activities   $ 5,740,031    $ 6,215,560
                                                      -----------    -----------

                 Consolidated Statements of Cash Flows (continued)

                                                   For the Year Ended September 30,
                                                     ----------------------------
                                                         2000             1999
                                                     ------------    ------------
                                                                      (Unaudited)
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 ................        (22,958)     (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 ...    (16,003,777)     (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
    Preferred Stock ..............................        302,380         128,479
   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  $1,259,505  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
Sale of Japan master franchise       --       1,169
Other .........................     1,591       864
                                  -------   -------
Franchise revenue .............    26,756    18,187
Sales by Company owned stores .    14,974     8,276
Sales by stores held for resale       194       998
                                  -------   -------
Total revenue .................   $41,924   $27,461
                                  =======   =======
Percent increase                       53%

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)                $   6,420    $   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
 reopen .........................        (7)          (4)
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 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 47% in 2000 to $26,756,047  from $18,186,987 in
1999.  Total  revenue  increased 53% in 2000 to  $41,924,232  from  $27,460,938  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.

      Since  1999,  we have  repurchased  17  area  directorships  for a  total  of
$4,439,213,  of  which 14 were  purchased  in  fiscal  2000  for  $3,472,627.  As a
result of such  repurchases,  we no  longer  have to pay the area  director  sales,
opening  and  royalty  commissions.  The  purchase  price is  recorded as a prepaid
commission and then expensed over the remaining  term of the  underlying  franchise
agreements.  If  the  franchise  closes,  or  the  royalty  from  any  location  is
impaired,  the remaining  prepaid royalty  commission  related to the specific unit
is  expensed.  At  September  30,  2000,  there  were  146  franchises  open and 88
franchises sold not open, in repurchased area director  territories.  During fiscal
2000, we expensed  $134,912 for amortization of prepaid  commissions  related these
franchises  and  expensed  another  $6,749  representing  the  unamortized  balance
related  to one such  franchise  closed.  At  September  30,  1999,  there  were 76
franchises  open and 93  franchises  sold not open,  in  repurchased  area director
territories.   During  1999,  we  expensed  $26,232  for  amortization  of  prepaid
commissions  related  these  franchises.  During  1999,  none of  these  franchises
closed.

      **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.

      **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  increased  slightly  from 47.6% 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
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.

      **New Company  start-up  costs** were  $103,000  in 2000  compared to $0 in 1999.
These costs  relate to the  start-up  of a new  operating  company to purchase  and
sell  food  products.  These  costs  were  primarily  consulting  costs  to  set-up
administrative and accounting systems and to finalize the distribution contracts.

      **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  $1,959,718  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 installments of $52,023 for 5 years.

      **Income tax expense** was  $722,738  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  $5,740,031 in 2000 compared
to  $6,215,560  in 1999,  a  decrease  of  $475,529.  The  fiscal  2000  amount  of
$5,740,031   was  primarily   related  to  net  income  before   depreciation   and
amortization  of  $3,219,223,  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,  003,777 in 2000 compared to
cash used in investing  activities of  $6,471,136  in 1999.  The fiscal 2000 amount
of $16,  003,777  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  installments 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
on 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
warrants will be adjusted to 14% of the equity  ownership  after  completion of any
merger  transaction  prior to September  12, 2001.  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.

      At September 30, 2000,  the Company had no material  commitments  for capital
expenditures but has a budget to spend  approximately  $2,014,000 for Company store
remodels and upgrades,  office, computer and telephone equipment,  and for computer
software  in fiscal  2001.  These  capital  expenditures  will be funded  with cash
generated from operations.  As a franchisor,  the Company's business is not capital
intensive.  The Company can continue to sell and open new franchised  units without
any  additional  capital  expense.  Company  owned  stores do  require  capital  to
develop,  but the Company has no commitments to add new Company  stores.  Over both
the short and long term the Company  expects cash flow from  operations to continue
to increase as new franchises are added.  Capital  expenditures  will be limited to
Company store upgrades and office and systems related  purchases.  The Company does
not  anticipate  using a  significant  amount  of  cash  for  acquisitions  or area
director  repurchases,  both of which are discretionary actions and can be timed to
occur when cash and  financing  are  available.  The Company  will  continue to use
cash to service  its debt to  Amresco,  will also use cash to  service  the debt to
LLCP funded in December  2000 for the purpose of  completing  the tender  offer and
merger,  and  will  use the  proceeds  of the LLCP  loan to fund  the  merger.  The
Company's  liquidity  and  cash  flow are  expected  to be  sufficient  to meet its
business needs and to pay its debts over both the short and long term.

**ITEM 7.     FINANCIAL STATEMENTS**

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

                            **THE QUIZNO'S CORPORATION
                                AND SUBSIDIARIES

                      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 Sheets

     Consolidated Statements of Operations

     Consolidated Statement of Stockholders' Equity

     Consolidated Statements of Cash Flows

Notes 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.

As described in Note 18, the financial statements for the year ended September 30,
2000 have been restated.

                                              /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
                                                                ------------      ------------    ------------
                                                                  Restated
                                        **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 $167,893 in 2000
   and $26,232 in 1999 ......................................      4,271,320           889,387          51,635
   Intangible assets, net ...................................      4,497,528         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 ....................................     17,194,244         9,817,367       4,955,091
                                                                ------------      ------------    ------------

Total assets ................................................   $ 41,191,502      $ 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 .....................................        345,460           851,469         200,000
                                                                ------------      ------------    ------------
      Total current liabilities .............................      6,006,195         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 .....................................     38,446,390        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 ......................................     (1,115,973)       (2,375,478)       (972,507)
                                                                ------------      ------------    ------------
            Total stockholders' equity ......................      2,745,112         2,113,858       4,096,207
                                                                ------------      ------------    ------------

Total liabilities and stockholders' equity ..................   $ 41,191,502      $ 21,774,774    $ 13,789,551
                                                                ============      ============    ============

                See notes to consolidated financial statements.

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

                                                   For the      For the Nine      For the
                                                 Year Ended     Months Ended     Year Ended
                                                September 30,   September 30,   December 31,
                                                    2000            1999           1998
                                                ------------    ------------    ------------
                                                  Restated
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
   Sale of Japan master franchise ...........           --         1,168,801            --
   Other ....................................      1,064,646         370,374         604,172
   Interest .................................        526,761         238,790         259,193
                                                ------------    ------------    ------------
     Total revenue ..........................     26,756,047      13,960,230      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       3,519,152       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       (387,576)       (777,594)     (1,541,957)
for sale
  Loss on sale or closure of Company stores .        (43,596)        (80,304)        (47,505)
   New company start-up costs ...............       (103,000)           --              --
  Provision for bad debts ...................       (305,285)       (220,536)       (285,308)
  Other expenses ............................        (41,820)        (26,287)        (47,838)
  Depreciation and amortization .............     (1,959,718)       (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 ...................   $ (5,262,884)   $ (1,965,479)   $ (1,763,295)
                                                ============    ============    ============

                See notes to consolidated financial statements.

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

                                                 For the     For the Nine      For the
                                                Year Ended   Months Ended     Year Ended
                                               September 30, September 30,   December 31,
                                                   2000          1999           1998
                                               -----------    -----------    -----------
                                                Restated

Net income before income taxes .............   $ 1,982,243    $ 2,088,309    $   744,062
Income tax (provision) benefit .............      (722,738)      (721,688)       368,553
                                               -----------    -----------    -----------

Net income before preferred dividends and
cumulative effect of changes in accounting
principle ..................................     1,259,505      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 ............     1,073,048      1,242,391        891,725
Cumulative effect of changes in accounting
principle (net of taxes) ...................          --       (2,769,592)          --
                                               -----------    -----------    -----------

Net income (loss) applicable to common .....   $ 1,073,048    $(1,527,201)   $   891,725
                                               ===========    ===========    ===========
stockholders

Net income per share - basic
Net income per share before cumulative
   effect of changes in accounting principle   $       .36    $       .40    $       .30
Cumulative effect of changes in accounting .          --             (.90)          --
                                               -----------    -----------    -----------
principle

Basic net income (loss) per share of common    $       .36    $      (.50)   $       .30
                                               ===========    ===========    ===========
stock

Net income per share - diluted
Net income per share before cumulative
   effect of changes in accounting principle   $       .31    $       .35    $       .26
Cumulative effect of changes in accounting .          --             (.90)          --
                                               -----------    -----------    -----------
principle

Diluted net income (loss) per share of .....   $       .31    $      (.55)   $       .26
                                               ===========    ===========    ===========
common stock

Weighted average common shares outstanding
Weighted average common shares outstanding -     3,019,849      3,060,878      3,014,042
                                               ===========    ===========    ===========
basic

Weighted average common shares outstanding -
diluted ....................................     3,728,761      3,816,549      3,445,972
                                               ===========    ===========    ===========

                See notes to consolidated financial statements.

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

                                    Preferred Stock                Common Stock           Additional        Accumulated
                              --------------------------    --------------------------      Paid-in           deficit         Total
                                Shares          Amount         Shares         Amount        Capital           Restated      Restated
                              -----------    -----------    -----------    -----------    -----------       -----------    -----------

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 plan .............          --             --           51,165             51        222,473              --          222,524

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 plan .............          --             --           28,809             29         75,438              --           75,467

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

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 ........          --             --             --             --           17,889              --           17,889
 options

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 ................          --             --             --             --             --           1,259,505      1,259,505
                              -----------    -----------    -----------    -----------    -----------       -----------    -----------

Balance, September 30, 2000       375,480    $       375      3,007,921    $     3,008    $ 3,857,702       $(1,115,973)   $ 2,745,112
                              ===========    ===========    ===========    ===========    ===========       ===========    ===========

                See notes to consolidated financial statements.

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

                                                    For the
                                                   Year Ended     For the Nine      For the
                                                  September 30,   Months Ended     Year Ended
                                                      2000        September 30,    December 31,
                                                    Restated          1999            1998
                                                  ------------    ------------    ------------
Cash flows from operating activities:
  Net income (loss) ...........................   $  1,259,505    $ (1,402,971)   $  1,112,615
  Adjustments to reconcile net income (loss) to
   net cash provided by operating activities -
   Depreciation and amortization ..............      1,884,191         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 .....................       (506,009)        651,469         200,000
                                                  ------------    ------------    ------------
                                                     4,480,526       6,422,804       1,484,628
                                                  ------------    ------------    ------------
      Net cash provided by operating activities      5,740,031       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 ..............        (22,958)       (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 ...    (16,003,777)     (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 ......      1,867,148         (75,430)        140,971
equivalents

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
                                                  ============    ============    ============

                See notes to consolidated financial statements.

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

Supplemental disclosure of cash flow information:

     Cash paid during the year for interest was $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.

                See notes to consolidated financial statements.

**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&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.

Short-Term Investments (continued)

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

The costs  associated  with  repurchasing  area director  territories are allocated at
the time of purchase to the existing  franchise  locations and  locations  sold and to
be opened in the area  director  territory.  The  acquisition  costs are recorded as a
prepaid  royalty  commission  and expensed on a straight line basis over the remaining
term  of  the  individual  underlying  franchise   agreements.   Franchise  agreements
typically  have a term of 15 years.  If the franchise  closes,  the remaining  prepaid
royalty  commission  related  to  that  specific  unit  is  expensed  in  the  current
period.

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.

Change in Accounting Method (continued)*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, 1998 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                               (2,433,637)    (1,230,461)      (780,004)
                                                 -----------    -----------    -----------
   amortization

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

Based upon market  values for the Company's  plane,  the Company has  determined  that
its residual  value will be  approximately  90% of cost after three years.  Therefore,
the Company is depreciating  10% of the cost of the plane over three years.  The plane
is expected to be disposed of at the end of three years.

**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                              721,580        455,339        442,813
   Concession agreements and acquisition costs     3,501,804             -              -
                                                 -----------    -----------    ----------
                                                   5,602,174      2,375,024      2,420,865
   Less accumulated amortization                  (1,104,646)      (712,759)      (867,343)
                                                 -----------    -----------    -----------

                                                 $ 4,497,528    $ 1,662,265    $ 1,553,522
                                                 ===========    ===========    ===========

At  September  30,  2000,  the  Company  recorded  an  impairment  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 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       368,396              -               -
 June 1, 2002.

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       322,956              -               -
April 1, 2001.

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
Year Ending September 30,                   Obligations      Leases          Total
-------------------------                  -------------  ----------      -----------

      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.

Convertible Preferred Stock (continued) 

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.

Stock Options and Warrants (continued)

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  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   $ 1,073,048    $ 1,242,391    $   891,725
 reported
Net  income  before  cumulative  effect of
 changes  in  accounting  principle  - pro   $   600,593    $   662,806    $   586,960
 forma
Basic earnings per share - as reported       $        .36   $        .40   $       .30
Basic earnings per share - pro forma         $        .20   $        .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
                                                       Average                 Weighted
                                            Weighted     Fair                   Average
                                            Average      Value                  Exercise
                                            Exercise      of     Currently     Price of
                                            Price of   Options   Exercisable Options and
                                 Options     Options     and      Options      Warrants -
                                   and         and     Warrants     and        Currently
                                 Warrants   Warrants   Granted    Warrants   Exercisable
                                 --------   --------   --------   --------   -----------

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 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           $ 1,344,298       $ 1,951,848       $   213,500
Deferred income tax benefit             (621,560)       (1,230,160)         (582,053)
                                     -----------       -----------       -----------

                                     $   722,738       $   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
                                                  ============   ============   ==========

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

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              (.5)          (3.3)        (13.5)
of NOL
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    For the Nine     For the
                                                      Ended       Months Ended    Year Ended
                                                  September 30,  September 30,   December 31,
                                                        2000           1999          1998
                                                  ------------   -------------   ----------
Numerator - net income before cumulative effect
-----------------------------------------------
   of changes in accounting principle
   ----------------------------------
  Numerator for basic earnings per share          $  1,073,048   $   1,242,391   $   891,725
  Preferred dividends (net of taxes)                    97,798          78,265            -
                                                   -----------    ------------    ---------

  Numerator for diluted earnings per share         $ 1,170,846    $  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                  $       .36    $      (.50)    $       .30
                                                   ===========    ===========     ===========

  Diluted earnings (loss) per share                $       .31    $      (.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                                                $      27,460,938
Income from franchise operations                             $       4,227,174
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.

**Note 18 - Restatement**

Net income has been restated to reflect the tax effected expensing of start-up costs
and the correction of the amortization of area director territories, which had the
following effect:
                                                                        Fully Diluted
                                            Net        Basic Earnings    Earnings Per
                                          Income         Per Share          Share
                                          ------         ---------          -----
As previously reported September 30,
2000                                     $1,115,782       $0.37            $0.33

Restatement adjustment                      (42,734)      (0.01)           (0.02)
                                            --------      ------           ------
As restated September 30, 2000           $1,073,048       $0.36            $0.31
                                         ==========       =====            =====

The effect of the restatement on the fiscal 2000 quarterly unaudited financial statements
was immaterial.

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

None.
                                    **PART III****ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT****Directors**

      The names of and other information about our Directors as of December 18,
2000, are set forth below

        Nominee           Age        Position(s) with Company       Director
                                                                    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  that 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:

                                                                Long-Term and Other
                            Annual Compensation                     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    $292,000     $  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

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

(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% of 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     Percentage of
                      Common Stock    Total Options
                       Underlying      Granted to
                    Options Granted   Employees in                 Expiration
      Name          in 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**

                                                             Value of
                                    Number of Shares        Unexercised
                                 Underlying Unexercised  In-the Money Options
                                   Options at Year-End       at Year-End(1)
                                   -------------------   ---------------------
               Shares    Value     Exercis-   Unexer-    Exercis-    Unexer-
  Name        Exercised Realized     able      cisable     able       cisable
-----------   --------- --------   ---------- --------   ---------- ----------

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,  $2,500each,  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
                                Common Stock  Common Stock      Stock
     Name and Address(1)          Owned(2)     Percentage     Owned and
                                                             Percentage

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

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

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

     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,  beneficially  owns  1,084 shares of our common stock allocated
      to him under our  401(k) Plan,  4,339 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  Messrs. 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 20000.

      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.  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, 2000, 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.*
   ----------
*Incorporated by reference to exhibit of same number as filed with the Company's
Form 10-KSB, dated December 29, 2000.

      (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 October 31, 2001.

                                    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               October 31, 2001
/s/ Richard E. Schaden              Officer and Chairman of the
Richard E. Schaden                  Board of Directors
                                   (Principal Executive Officer)

/s/ Richard F. Schaden              Vice President,                         October 31, 2001
Richard F. Schaden                  Secretary and Director

/s/ Mark L. Bromberg                Director                                October 31, 2001
Mark L. Bromberg

/s/ J. Eric Lawrence                Director                                October 31, 2001
J. Eric Lawrence

/s/ Frederick H. Schaden            Director                                October 31, 2001
Frederick H. Schaden

/s/ John J. Todd                    Director                                October 31, 2001
John J. Todd

/s/ John L. Gallivan                Chief Financial Officer                 October 31, 2001
John L. Gallivan                    and Treasurer (Principal
                                    Financial and Accounting
                                    Officer)
```