Source: http://www.freefranchisedocs.com/quiznos-UFOC.php
Timestamp: 2019-04-23 16:06:40+00:00

Document:
Quiznos Franchising II LLC (we or us) is offering franchises to operate a restaurant offering submarine sandwiches, salads, soups, and soft drinks under the service mark QUIZNOS and QUIZNOS SUB. The initial fee for a traditional QUIZNOS Restaurant can range from $112,943 to $131,143, including an initial franchise fee of $25,000. The estimated initial investment required for your traditional QUIZNOS Restaurant ranges from $203,640 to $279,500. (See Footnote 9, Item 7) This sum does not include rent for the Franchised Location.
The initial fee for a non-traditional QUIZNOS Restaurant can range from $67,943 to $91,393, including an initial franchise fee of $10,000. The estimated initial investment required for your non-traditional Quiznos Restaurant ranges from $85,540 to $350,050. This sum does not include rent for the Franchised Location.
1. THE FRANCHISE AGREEMENT PERMITS YOU TO SUE US ONLY IN COLORADO. ALSO, ANY LEGAL ACTION THAT WE BRING AGAINST YOU WILL BE FILED ONLY IN COLORADO. OUT OF STATE LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT ALSO MAY COST YOU MORE TO SUE US IN COLORADO THAN IN YOUR HOME STATE.
2. THE FRANCHISE AGREEMENT STATES THAT COLORADO LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.
3. SOME STATE FRANCHISE LAWS PROVIDE THAT CONSENT TO JURISDICTION AND CHOICE OF LAW PROVISIONS ARE VOID OR SUPERSEDED. YOU MIGHT WANT TO INVESTIGATE WHETHER YOU ARE PROTECTED BY A STATE FRANCHISE LAW. YOU SHOULD REVIEW ANY ADDENDA OR RIDERS ATTACHED TO THIS OFFERING CIRCULAR FOR DISCLOSURES REGARDING STATE FRANCHISE LAWS.
4. AS OF DECEMBER 31, 2005, 2940 QUIZNOS FRANCHISEES HAD NOT OPENED THEIR RESTAURANTS WITHIN 12 MONTHS OF SIGNING THE FRANCHISE AGREEMENT. THIS NUMBER REPRESENTS APPROXIMATELY 66.7% OF ALL FRANCHISEES WHO HAD NOT OPENED A RESTAURANT AS OF THAT DATE.
5. WE MAY TERMINATE YOUR FRANCHISE AGREEMENT IF YOU DO NOT OPEN YOUR RESTAURANT WITHIN 12 MONTHS AFTER YOU SIGN THE FRANCHISE AGREEMENT. THE FRANCHISE FEE IS NONREFUNDABLE.
6. THE FRANCHISE AGREEMENT PERMITS US AND OUR AFFILIATES TO ESTABLISH OTHER FRANCHISED OR COMPANY-OWNED LOCATIONS AT ANY LOCATION OTHER THAN YOUR FRANCHISED LOCATION, TO SELL OR DISTRIBUTE ANY PRODUCT OR SERVICE TO THE GENERAL PUBLIC, OR TO ESTABLISH OTHER CHANNELS OF DISTRIBUTION WHICH MAY COMPETE WITH YOUR FRANCHISE.
7. WE WILL REQUIRE YOUR SPOUSE (OR, IF YOU ARE AN ENTITY, THE SPOUSE OF EACH OF YOUR OWNERS) TO SIGN A GUARANTY AND ASSUMPTION OF FRANCHISEES OBLIGATIONS CAUSING YOUR SPOUSE (OR THE SPOUSE OF EACH OF YOUR OWNERS) TO BECOME INDIVIDUALLY LIABLE FOR ALL OBLIGATIONS OF THE FRANCHISE AND BOUND BY THE RESTRICTIVE COVENANTS, CONFIDENTIALITY PROVISIONS, AND INDEMNIFICATION PROVISIONS OF THE FRANCHISE AGREEMENT, EVEN IF YOUR SPOUSE IS (OR YOUR OWNERS SPOUSES ARE) NOT INVOLVED IN THE OPERATION OF THE FRANCHISE BUSINESS. THIS REQUIREMENT PLACES THE PERSONAL ASSETS OF OWNERS AND SPOUSES AT RISK.
8. IF THE FRANCHISE AGREEMENT IS TERMINATED BECAUSE OF YOUR DEFAULT, YOU WILL BE LIABLE TO US FOR A LUMP SUM AMOUNT EQUAL TO THE NET PRESENT VALUE OF THE ROYALTIES, MARKETING AND PROMOTION FEES, LOCAL ADVERTISING FEES, AND REGIONAL ADVERTISING FEES THAT WOULD HAVE BECOME DUE FOLLOWING TERMINATION OF THE FRANCHISE AGREEMENT FOR THE PERIOD THE FRANCHISE AGREEMENT WOULD HAVE REMAINED IN EFFECT BUT FOR YOUR DEFAULT. ROYALTIES AND MARKETING AND PROMOTION FEES WILL BE CALCULATED BASED ON YOUR RESTAURANTS AVERAGE MONTHLY GROSS SALES FOR THE 12 MONTHS PRECEDING THE TERMINATION DATE.
9. IT MAY TAKE 8 TO 18 MONTHS TO FIND AN ACCEPTABLE SITE AND/OR OBTAIN AN ACCEPTABLE LEASE.
10. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
Information comparing franchisors is available. Call the state administrators (as applicable) listed in Exhibit A or your public library for sources of information.
The effective dates of this Offering Circular in the states with franchise registration laws are in Exhibit A.
(d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisees inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (i) the term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisors intent not to renew the franchise.
(i) The failure of the proposed franchisee to meet the franchisors then current reasonable qualifications or standards.
If the franchisors most recent financial statements are unaudited and show a net worth of less than $100,000, the franchisor shall, at the request of a franchisee, arrange for the escrow of initial investment and other funds paid by the franchisee or subfranchisor until the obligations to provide real estate, improvements, equipment, inventory, training, or other items included in the franchise offering are fulfilled. At the option of the franchisor, a surety bond may be provided in place of escrow.
APPLICABLE STATE LAW MIGHT REQUIRE ADDITIONAL DISCLOSURES RELATED TO THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. THESE ADDITIONAL DISCLOSURES, IF ANY, APPEAR IN EXHIBIT I.
The Franchisor. The franchisor is Quiznos Franchising II LLC (referred to as we or us in this Offering Circular). We refer to the person or entity who buys the franchise as you throughout this Offering Circular. If you are a corporation, partnership, limited liability company, or other entity, certain terms of the Franchise Agreement also apply to your owners (noted where applicable).
We were formed as a limited purpose Delaware limited liability company on October 28, 2004 (although we did not commence operations until early February 2005). Our principal business address, and that of all but 3 of our affiliated and predecessor companies, is 1475 Lawrence Street, Suite 400, Denver, Colorado 80202. The principal business address for our affiliates SOD, KSS and Ba-Bing! (defined below) is 540 Gallatin Place N.W., Albuquerque, New Mexico 87121. We were formed to be the franchisor of all new QUIZNOS franchises offered and granted beginning February 5, 2005. We do business under our limited liability company name and the QUIZNOS and QUIZNOS SUB trademarks (together QUIZNOS). We disclose our agents for service of process in Exhibit A.
As a result of an internal corporate restructuring process completed in July 2002, Quiznos Franchising LLC (QF) an affiliate of both TQC and TQFC, was formed to be the franchisor of all QUIZNOS franchises granted beginning in July 2002. TQFC remained the franchisor of all QUIZNOS franchises granted before July 2002. As part of this restructuring process, TQC assigned all of its remaining assets and liabilities to The Quiznos Master LLC (TQM), formed in May 2002 and currently a Delaware limited liability company. TQM licensed the QUIZNOS trademarks, copyrights, confidential information, and other intellectual property (QUIZNOS IP) to QF and TQFC for use in the QUIZNOS franchise program. TQFC and QF therefore collectively were the franchisors of the QUIZNOS franchise system from December 2000 until early February 2005.
formed limited purpose Delaware limited liability company called QIP Holder LLC (QIP), and the then-existing United States and Puerto Rico Franchise Agreements and Area Director Marketing Agreements were transferred (in November 2004) to a newly formed limited purpose Delaware limited liability company called QFA Royalties LLC (QFA) which is a wholly owned subsidiary of QIP. We were formed as the new wholly-owned subsidiary of QFA to grant new QUIZNOS franchises and area director rights beginning in February 2005.
Under certain Servicing Agreements (signed as part of the Securitization) between us and QFA, and between QFA and TQSC LLC (TQSC), an affiliated Delaware limited liability company (originally formed in June 2002), TQSC will, on our behalf and at our direction, perform our obligations under the QUIZNOS Franchise Agreements we issue for QUIZNOS Restaurants located in the United States and Puerto Rico, including managing the QUIZNOS system operating under our authority; marketing and offering new and successor Franchise Agreements; assisting our QUIZNOS franchisees operating in the United States and Puerto Rico; implementing our quality assurance programs; and otherwise fulfilling our duties under QUIZNOS Franchise Agreements. TQSC will perform similar functions for QFA and its franchisees. TQSC also will act as our franchise sales agent. (In that capacity, TQSCs agents for service of process are the same as ours disclosed in Exhibit A.) We will pay weekly franchise servicing fees for these services. If TQSC fails to perform its obligations under its Servicing Agreement, then TQSC may be replaced as the franchise servicer. However, as the franchisor, we always are responsible and accountable to you to make sure that all services we promise to perform under our Franchise Agreement with you are performed in compliance with the Franchise Agreement, regardless of who performs those services on our behalf.
LLC) (KSS), formed in June 2003, sells uniforms, supplies, printing, and other services to Franchisees; and QFH LLC (QFH), formed in September 2004, provides fountain equipment for carbonated beverages and bubbler equipment to Franchisees; The Millwork Company LLC, formed in October 2005, fabricates and sells to Franchisees certain millworks used in the construction and fit-out of QUIZNOS Restaurants; QCE Gift Card LLC, formed in Arizona in August 2006 to provide stored value card services to Franchisees; 123 Fit Franchising, LLC, formed in Colorado in February 2005, offers and sells franchises for fitness clubs under the name 123 Fit; Quiz-Can LLC (formerly known as Quiz-Can Ltd.) (Quiz-Can), an affiliate owned by TQM formed in May 2002, owns 100% of Quiznos Canada Restaurant Corporation (formerly known as Quiznos Canada Corporation), the master franchisee in Canada. Quiz-Can operates the master franchise through a management agreement with Quiznos Canada Restaurant Corporation. Quiz-DIA LLC, an affiliate, formed in 1999, operates Restaurants at the Denver International Airport. QAFT, Inc. (QAFT), formed in June 2005 serves as the Trustee of our national and regional advertising funds. TQM also grants master franchises outside the United States, including in Canada. Except as provided above, we have no predecessors or affiliates required to be disclosed in this Item 1.
The Franchises. We offer franchises to individuals or entities for restaurants with carry-out facilities that sell submarine and other sandwiches, salads, other food products and beverages, and related services (QUIZNOS Restaurants or Restaurants) under the form of Franchise Agreement attached as Exhibit B (the Franchise Agreement). We refer to each QUIZNOS Restaurant as a traditional QUIZNOS Restaurant unless it is located in a non-traditional facility (see next paragraph).
If your QUIZNOS Restaurant is located in a non-traditional facility (like a hotel, airport, university, stadium, gas station, or convenience store), it will be referred to as a Non-Traditional Restaurant. If you sign a Franchise Agreement for a Non-Traditional Restaurant, you will sign (in addition to our standard Franchise Agreement) the Addendum in Exhibit J. Non-Traditional Restaurants have no protected area (just like any traditional QUIZNOS Restaurant) (see Item 12).
We may (but currently do not) offer certain supplemental programs (Special Products). Special Products are co-branded products like frozen yogurt or donuts sold through or from the Restaurants. Special Products might be sold under trademarks that QIP owns or trademarks licensed to us by third parties. In deciding whether to offer a Special Product, we review factors like demographics for each market, Restaurant location, and competitors within the market. If we offer you any Special Product, we also might give you a separate franchise Offering Circular from the third-party licensor.
Also offered as franchises are area director marketing businesses (Area Director Businesses), in which the area director (Area Director) acts as a sales representative within a defined geographic area (Territory) to solicit and identify prospective Franchisees, to assist in locating and securing sites for QUIZNOS Restaurants within that Territory, and to provide additional support before, during, and after the Restaurant opens. The Area Director Business is offered in a separate franchise Offering Circular. (See Exhibit D for information on Area Directors operating in your state.) Area Directors operating under existing agreements with our affiliates also will assist us on the same terms. (See Item 5) Upon completion of the Securitization, we became the Area Director in several market areas in the United States.
Restaurants and Area Director Businesses are licensed to use the service mark QUIZNOS and related trademarks (Marks) and other QUIZNOS IP owned by QIP that make up the QUIZNOS marketing plan and proprietary business methods (collectively, System), all of which have been sublicensed to us for our franchise program. As noted above, the support made available to you under a Franchise Agreement will be provided directly by an Area Director or TQSC. When a franchise is sold, the Franchise Agreement is signed by the Franchisee and us. The Area Director and TQSC are obligated to perform services as we promise you in the Franchise Agreement those services will be performed. As the franchisor, we are contractually responsible to you if the services are not properly performed.
At times, we engage third parties like mall consultants to locate sites for Restaurants in non-traditional venues, such as airports and regional malls. These third parties are Segment Specialists. They carry on local, regional, or national segment development activities at non-traditional locations, including locations within Area Director territories. In addition, we sometimes engage third-parties to assist in the sale of franchises and in performing certain site selection services on our behalf. These third-parties, which we refer to as Green Jackets, typically operate in small, rural markets.
Market Competition. In your market, you might compete with submarine and other sandwich restaurants and fast food restaurants (including other QUIZNOS Restaurants) that offer similar items. Our Restaurants appeal to a broad range of customers because of the perceived variety and quality of our products.
Regulations. There are no regulations specific to the operation of a QUIZNOS Restaurant, although you must comply with all local, state, and federal health and sanitation laws. Franchisees also must comply with all local, state, and federal laws of a more general nature that affect the Restaurant, including employment, workers compensation, insurance, corporate, tax, licensing, the Americans with Disabilities Act, and similar laws and regulations. You should familiarize yourself with these laws.
franchises in 1991 and area director franchises in March 1993 (and stopped offering both in December 2000). TQFC, QF, and/or TQM has offered international master franchises since 1999. After the Securitization, QFA became the franchisor (through assignment) under all QUIZNOS Restaurant Franchise Agreements and Area Director Marketing Agreements in the United States and Puerto Rico that became effective before February 2005. Except as described above, neither we nor any of our affiliates has offered franchises in any other line of business. We have never operated any QUIZNOS Restaurants. However, certain of our, QFs, TQMs, and TQFCs affiliates have operated QUIZNOS Restaurants on and off since 1991. (See Item 20) Where appropriate, this Offering Circular refers to all QUIZNOS Restaurants, including those for which we, QFA, and any other affiliate are (or have been) the franchisor.
Greg. B. Brenneman has been our Chief Executive Officer since January 8, 2007. Since November 1994, Mr. Brenneman has been the Chairman and Chief Executive Officer of TurnWorks, Inc., located in The Woodlands, Texas. He was Chief Executive Officer and a director of Burger King Corporation, located in Miami, Florida, from August 2004 to April 2006. He was also Chairman of Burger King Corporation from February 2005 to April 2006. From June 2002 to October 2002, Mr. Brenneman was President and Chief Executive Officer of PricewaterhouseCoopers Consulting located in New York, New York. Prior to that, he was President and Chief Operating Officer of Continental Airlines, Inc., located in Houston, Texas, from 1995 to 2001. Mr. Brenneman has also served on the board of directors of The Home Depot, Inc., located in Atlanta, Georgia and ADP located in Roseland, New Jersey each for over five years.
Patrick E. Meyers has been our, QFAs and TQFCs Chief Legal Officer since October 2006 and served as our, QFAs and TQFCs Executive Vice President of Finance, Planning and Support from February 2005 to October 2006. Mr. Meyers has also been a member of our Board of Managers since February 2005. He has held the same positions with QF and TQFC since July 2002. He is also Secretary of QFII, QF and TQFC. He was TQFCs Vice President until July 2002, when he became Executive Vice President. He has held these positions with us since February 2005, QF since QFs organization in June 2002, and TQFC since October 2000. Mr. Meyers held the same officer positions with TQC from January 1997 until June 2002. He was one of TQCs Directors from 1993 to 1997. Before becoming TQCs General Counsel, Mr. Meyers was an attorney at the Denver, Colorado law firm of Moye, Giles, OKeefe, Vermeire & Gorrell from September 1991 to January 1997.
Sandra M. Buffa has been our Chief Financial Officer since June 2005. From 2001 to May 2005, Ms. Buffa was Senior Vice President, Chief Financial Officer and Treasurer for Mrs. Fields Original Cookies in Salt Lake City, Utah. From 1998 to 2001 she was President and a member of the Board of Directors for Crabtree and Evelyn, LTD.
Richard E. Schaden has been a member of our Board of Managers since February 2005. He was also the Chief Executive Officer of QFII, QFA and TQSC from February 2005 to January 2007. He was Chief Executive Director of QF from July 2002 to January 2007 and TQFC from October 2000 to January 2007. He also held these positions with TQC from its inception in 1991 until June 2002. He was QFs President from June 2002 to February 2004, TQFCs President from October 2000 to February 2004, and TQCs President from January 1991 until June 2002. He was Chairman of TQCs Board of Directors from September 1999 until June 2002. Mr. Schaden was a principal and the chief operating officer of Schaden & Schaden, Inc., located in Denver, Colorado, a company that owned and operated franchised QUIZNOS Restaurants from 1991 until November 1994, when it merged with TQC and became TQOC.
Philip A. Martone has been our independent manager since May 2006. He has served as Vice President of Lord Securities Corporation in New York, New York since February 2006. From April 2004 through February 2006, he was self-employed as an Attorney in Sea Cliff, New York. From February 1981 to March 2004, he served as Vice President of The Bank of New York in New York, New York.
As discussed in Item 1 above, TQSC will act as our Franchise Sales Agent and also will, on our behalf, perform our duties and obligations under QUIZNOS Franchise Agreements. In additional to the principals of TQSC listed below, all of the principals of QFII (with the exception of Steven B. Shaffer) also hold the same positions with TQSC.
John Todd was a member of the board of directors of various Quiznos entities from 1999 until May 2006. In September 2005, he began consulting with respect to various operational initiatives for Quiznos and functions as our Chief Operating Officer. From March 2001 to March 2002, he served as Executive Vice President and Chief Operating Officer of Sonic Blue Corp. in San Jose, California; from April 2002 to April 2003, Mr. Todd was a partner in Partners ASAP in Dallas, TX; from April 2003 to September 2005, he was Chief Executive Officer and Chairman of Metromedia Restaurant Group in Dallas, TX. Mr. Todd has also served on the board of directors of Watchguard Securities in Seattle, Washington from September 2001 to September 2003. He also has served on the board of MSMC, Inc. in Seattle from January 2003 to present.
2004 to February 2005. From July 2002 through February 2005, Mr. Shaffer was QFs and TQFCs Executive Vice President of Brand Expansion. He served as QFs and TQFCs Executive Vice President of Franchise Support Services from June 2002 and October 2000, respectively, to July 2002. He also held various positions with TQC from October 1998 until June 2002. Additionally, Mr. Shaffer has been a QUIZNOS franchisee since 1992 and an area director in the St. Louis Market since 1996.
2005 to October 2006. He was TQFCs, as Deputy Chief General Counsel from August 2001 through July 2002. From July 2002 through July 2005, he served as Executive Vice President Development / Chief Counsel of Barnies Coffee & Tea Company, Inc., in Orlando, Florida. From June 2000 to February 2002, he developed, owned and operated a restaurant in Boulder, Colorado. He has also served as general counsel for Boston Market, Inc., located in Denver, Colorado, from August 1996 to June 2000.
Amy Powers has been TQSCs Senior Vice President and Assistant General Counsel since October 2006 after having served as Senior Vice President and Senior Counsel from February 2005 to October 2006. She was QFs Senior Vice President and Senior Counsel from September 2004 to February 2005. From September 2003 to September 2004, she served as Vice President and Senior Counsel-Franchising and was Deputy Chief General Counsel of QF from June 2002 through September 2003. Prior to joining Quiznos she was in private practice at the law firm of Holland & Hart in Denver, Colorado from December 2000 through June 2002. Ms. Powers also served as General Counsel of Boston Market, Inc. in Golden, Colorado from November 1999 through December 2000.
Patrick W. Knotts was appointed as TQSCs Executive Vice President Operations in October 2006 after having served as TQSCs Executive Vice President of Internal Operations from July 2005 to October 2006. From January 2001 to October 2004 he served as an Executive Vice President for Dominos Pizza, Inc. in Ann Arbor, Michigan. Mr. Knotts was a Senior Vice President of Operations for Mrs. Fields Original Cookies, Inc. in Salt Lake City, Utah from September 1996 until January 2001.
Tom Ryan became President of Quiznos Ventures, a division of TQSC, in October 2006 after serving as TQSCs Executive Vice President of Branding since February 2005. He held the same position with QF from July 2003 to February 2005. From June 1997 to June 2003, Mr.
Ryan held various positions with McDonalds Corporation in Oakbrook, Illinois, including Executive Vice President/Chief Concept and Innovation Officer, Executive Vice President/Chief Marketing Officer, and Senior Vice President/Menu Management.
Frank A. Hood has been the Chief Information Officer for TQSC since May 2005. He was previously Senior Vice President and Chief Information Officer for Krispy Kreme Doughnut Corporation in Winston-Salem, North Carolina from June 1997 through May 2005.
John C. Teza was appointed TQSCs Senior Vice President Sales and Transfers in October 2006 after having served as TQSCs Senior Vice President of Construction from October 2005 to October 2006. He served as Senior Vice President of Development and Operations from February 2005 to October 2005. He was QFs and TQFCs Vice President of Development (Northeast) from July 2002 to January 2005. He had served as QFs and TQFCs Vice President of Sales (Northeast) since June 2002 and January 2002, respectively. He was TQFCs Regional Vice President of Development (Washington DC) from April 2001 until January 2002 and TQFCs Regional Vice President of Development East Region from October 2000 until April 2001. He held a similar position with TQC from October 1999 until April 2001. From October 1998 through September 1999, Mr. Teza was TQCs Director of Field Operations. He also served as TQCs Franchise Consultant from August 1997 through September 1998. Before joining QUIZNOS, Mr. Teza worked as a Marketing Associate for a marketing firm in Richmond, Virginia from May 1997 until August 1997.
2000 until June 2002. Mr. Vala was TQCs Vice President of International Operations from November 1998 until July 2000. Before joining QUIZNOS, Mr. Vala was the Manager of Franchise Services in Denver, Colorado for Little Caesars Pizza for over 11 years.
2001 to December 2001. From January 1999 to February 2001, Mr. Belmont was Regional Director of Operations and Plant Manager for Cintas, located in Philadelphia, Pennsylvania and, from January 1991 to December 1998, a Captain in the US Marine Corps.
David Biederman was appointed TQSCs Senior Vice President of Operations Platforms in October 2006 after serving as TQSCs Senior Vice President of Concept/Platform Innovation from June 2005 to October 2006. He was a Senior Vice President of Operations for QF from October 2004 until February 2005 and for TQSC from February 2005 through June 2005. Mr. Biederman was the Senior Vice President of Branding for QF from March 2004 through October 2004, and also served as the Vice President of Development for QF from September 2003 through March 2004. Prior to joining QF. Mr. Biederman was a Senior Director of Concept Development, for McDonalds Corporation in Oak Brook, Illinois from January 2000 through September 2003.
George W. Wooten was appointed TQSCs Senior Vice President of Franchise Support in October 2006 after serving as TQSCs Senior Vice President of Field Operations from May 2005 to October 2006. From May 1993 until May 2005, Mr. Wooten served in numerous positions with Arbys LLC, including SYBRA, Inc., a division of Arbys. From March 2004 until April 2005 he was Senior Vice President of SYBRA operations in Ft. Lauderdale, Florida. From 2002 until 2004 Mr. Wooten was the Vice President of Franchise Management and Operations for Arbys also in Ft. Lauderdale, Florida. From 2001 to 2002 he was Arbys Senior Director of Franchise Management and a Director of Franchise Management. From 1993 to 2000 Mr. Wooten held a variety of field operations positions with Arbys. Prior to joining Arbys in 1993, Mr. Wooten held a number of positions with Hardees Food Systems, Inc. located in Winston-Salem, North Carolina.
Bonnie Warschauer has been TQSCs Senior Vice President of Public Relations since August 2005. Before joining TQSC, she was the Director of Public Relations for KFC Corporation in Louisville, Kentucky from March 2003 through July 2005. Ms. Warschauer was a Senior Vice President of Public Relations for The MWW Group in New York, New York from January 2002 through January 2003. She was also a Senior Vice President of Public Relations for PR 21, Inc. in New York, New York from December 2000 though December 2001.
Corporate Operations/Training. She was TQCs Vice President of Training from August 1997 through September 1998 and Director of Training from August 1996 to July 1997.
Louis Urbano was appointed TQSCs Vice President of Accelerated Transfers in October 2006 after serving as TQSCs Vice President of Special Projects from June 2006 to October 2006. From April 2006 to the present, he has also been self-employed as a Consultant in San Diego, California. From August 2005 to April 2006, Mr. Urbano served as Chief Executive Officer for Safemed in San Diego, California. From June 2000 to April 2006, he served as Chief Executive Officer for Autofusion in San Diego, California; and from January 1999 to June 2000, he served as Chief Operating Officer for Autofusion.
Kyle Gjersee became TQSCs Vice President of SNO Management in October 2006 after having served as TQSCs Vice President of Franchise Relations from March 2006 to September 2006. Mr. Gjersee also served as TQSCs Vice President of Development and Operations from February 2005 until March 2006. He held the same position with QF in January 2005 and was QFs Regional Operations Director from January 2004 to December 2004. Mr. Gjersee was Director of Operations for Arbys, located in Atlanta, Georgia from March 2001 to December 2003. He was Franchise Business Manager for Taco Bell, located in Irvine, California, from January 1990 to February 2001.
Mark Heller has been TQSCs Vice President of Accounting and the Controller since February 2005. From May 2001 to February 2005, he served in the same capacity for TQC, TQFC and QF. Mr. Heller previously served as the Controller for TQC from January 1999 until May 2001.
Exhibit D lists the current QUIZNOS Area Directors and Green Jackets, the states in which they operate, their (and their principals) business experience, and their (and their principals) litigation histories (if any).
QUIZNOS Restaurants. The Quiznos entities were served with the complaint on June 1, 2005. The complaint alleges fraudulent inducement, violation of the implied covenant of good faith and fair dealing, breach of the franchise agreement, negligent misrepresentation, fraudulent conversion, and violation of the New Jersey Franchise Practices Act (the NJFPA). The complaint seeks an unspecified amount of damages and injunctive relief preventing future sales of QUIZNOS franchises in New Jersey. Defendants filed a motion to dismiss all claims on July 1, 2005 and plaintiffs filed their opposition on July 25, 2005. Prior to oral argument on this motion, the case was settled and subsequently dismissed by order entered on August 26, 2005. Without admitting any wrongdoing, Quiznos agreed to refund plaintiffs a portion of their initial franchise fees in an aggregate amount of $295,000. Quiznos entities agreed to the settlement solely to avoid the inherent costs of litigation.
Bhupineer Bob Baber and Ratty Baber v. Quiznos, QFA Royalties LLC, The Quiznos Franchise Company LLC, The Quiznos Corporation and Does 1-50, Case No. NCO36893 (Superior Court of California, County of Los Angeles, South District). On April 22, 2005, the plaintiff, a former franchisee whose franchise agreements were terminated for repeated operational non-compliance, filed a complaint seeking to have the court declare that the termination was wrongful and seeking preliminary and permanent injunctive relief. The plaintiff also filed claims for breach of contract, fraud, intentional and negligent infliction of emotional distress, and interference with prospective business advantage. On the same day, based on plaintiffs failure to cease operations, defendants filed a motion in United States District Court for the District of Colorado seeking to have that court declare the termination proper and seeking preliminary and permanent injunctive relief. Subsequently, defendants withdrew their complaint in District Court, and on June 24, 2005, sought the same relief in the California Court. Defendants also filed a petition to compel arbitration of all of plaintiffs claims. The California court denied defendants motion for injunctive relief; however, plaintiffs subsequently ceased operating. The California court granted the defendants motion to compel but ordered that the arbitration be held in California. Plaintiffs appealed the arbitration ruling and defendants appealed that portion of the ruling ordering arbitration to occur in California. In July 2006, plaintiffs appeal was dismissed. In November 2006, the appellate court confirmed the order compelling arbitration but ordered that the arbitration proceed in Denver, Colorado. Defendants intend to defend this action and prosecute their claims vigorously.
Jericho Resources, Inc. v. The Quiznos Corporation, et al., Case No. 96L05977 (Cook Cty., Ill.). On May 24, 1996, an area director, Jericho Resources, Inc. (Jericho), filed suit against TQC, Richard Schaden and a former employee of Quiznos in response to TQCs termination of certain area rights and related agreements. The suit sought $3.75 million in compensatory damages, $10.2 million in punitive damages, and attorneys fees for TQCs alleged interference with an advantageous relationship that Jericho alleges it had with individuals who Jericho claims were interested in buying a portion of Jerichos stock and assuming some of its area director rights. Jericho also alleged breach of its area director marketing agreement for southern Wisconsin and a violation of the Illinois Franchise Disclosure Act for TQCs alleged wrongful termination of Jerichos Illinois area rights. On March 5, 1998, this case was settled. Without admitting any wrongdoing, TQC agreed to pay Jericho $68,000 and a 1.9% commission on royalties for 3 Restaurants established by Jericho. TQC agreed to the settlement solely to avoid the inherent cost of litigation.
The Quiznos Corporation v. Robert W. Mitelhaus, No. 77 114 00187 98, American Arbitration Association (Denver, Colorado). On August 1, 1998, TQC terminated its area director marketing agreement with Robert W. Mitelhaus (Mitelhaus), a California area director. On the same day, TQC instituted an arbitration action against Mitelhaus in Denver, Colorado, alleging that Mitelhaus breached various provisions of the area director marketing agreement. On September 1, 1998, Mitelhaus denied that he breached the area director marketing agreement. Mitelhaus alleged fraudulent termination of the area director marketing agreement. In addition, Mitelhaus alleged that TQC failed to refund or pay certain amounts he claimed were due to him and that TQC violated state franchise law. Hearings in this matter were held before the American Arbitration Association from March 8-16, 1999. During the hearings, Mitelhaus demanded damages in excess of $4 million. On April 13, 1999, the arbitration panel issued its ruling. It found that Mitelhaus had materially breached the area director marketing agreement and that TQC had properly terminated that agreement. The panel therefore denied all of Mitelhaus claims for breach of contract and refuted his allegations of franchise law violations. While the panel did award Mitelhaus approximately $230,000 in pre-termination commissions and costs, those related primarily to referral commissions that TQC owed Mitelhaus, before TQC terminated him in August 1998, for previous master franchise and area directorship sales TQC had made. TQC had no liability for its lawful termination of Mitelhaus area director marketing agreement. The panel also ordered Mitelhaus to abide by all of the post-termination covenants in the area director marketing agreement.
William H. Nickerson, Individually and on behalf of All Others Similarly Situated v. The Quiznos Corporation, Richard E. Schaden, Richard F. Schaden, Mark L. Bromberg, J. Eric Lawrence and John J. Todd, Case No. 04 CV 04CV0455 (District Court for the City and County of Denver, Colorado). On January 20, 2004, plaintiff (Nickerson), a former shareholder of TQC, filed suit against TQC and its board of directors seeking damages allegedly arising in connection with TQCs November 2000 tender offer (Tender Offer) to purchase all outstanding shares of its common stock at a price of $8.00 per share. In the complaint, Nickerson alleged that, in connection with the Tender Offer, (i) the members of the board of directors breached their fiduciary duties to TQCs shareholders, (ii) TQC was unjustly enriched at the expense of TQCs shareholders, and (iii) defendants violated certain Colorado state securities laws. The case was settled, and the court approved the settlement on September 27, 2004. The settlement became effective on November 15, 2004. The total settlement amount of $5.8 million was disbursed.
consummated in December 2001. The case settled, and the trial court entered judgment for approval of the settlement on April 15, 2004. The maximum aggregate amount that could be received by the plaintiffs in this case is approximately $1.8 million. Implementation of the settlement was stayed because certain of the plaintiffs filed an appeal. On May 18, 2006, the appellate court affirmed the judgment of the trial court approving the settlement. On May 31, 2006, appellants filed a petition for rehearing, which was denied. In November 2006, the appellants filed a writ of certiorari. In December 2006, appellees filed their opposition to the writ of certiorari and appellants filed their response.
The Quiznos Corporation v. William S. Fagan, Case No. 02CV2598 (District Court for the City and County of Denver, Colorado) (the Dissenters Case). On March 19, 2002, TQC filed a petition in the District Court for the City & County of Denver, asking that the court determine the fair value of TQCs shares under Colorados dissenters statute. The named respondents are those shareholders who effectively dissented under the dissenters statute. Those shareholders represent approximately 420,000 shares of TQCs outstanding common stock before the Transactions. TQC paid each dissenter $8.50 per share according to the dissenters statute. The dissenters alleged that the value of each share was greater than that amount. A trial was conducted in this matter over several months beginning in May 2003. The court issued a ruling in January 2004, finding that the value of each share was $32.50 and awarding the dissenting shareholders attorneys fees and costs. Certain dissenting shareholders settled with TQC in February 2004 for $5 million. TQC filed a notice of appeal regarding the courts decision for the remaining dissenting shareholders, but ultimately settled with the remaining dissenting shareholders for $11,792,760.
H.J. Heinz Company v. The Quiznos Corporation, Case No. 03-0015 (District Court for the Western District of Pennsylvania). On January 3, 2003, H.J. Heinz Company (Heinz) filed suit against TQC to recover alleged damages incurred as a result of certain contractual obligations of TQC under a product supply agreement between TQC and Heinz entered into in May 1999. Under the agreements terms, Heinz agreed to purchase and install servicing and merchandising equipment and custom designed point-of-sale (POS) materials, to be amortized based on a pre-determined formula. Although the agreement had a 5-year term, on June 4, 2002, TQC exercised its early termination rights under the agreement. The suit requested damages of $1,162,000, representing Heinzs alleged un-amortized costs for purchasing and installing the equipment and POS materials. The suit claimed breach of contract, unjust enrichment, quantum meruit, and conversion. TQM, as successor in interest to TQC, filed its answer and affirmative defenses denying all the alleged claims on September 3, 2003. In June 2006, the parties settled this dispute and the lawsuit was dismissed. As part of the settlement, TQC paid Heinz $400,000.
filed its answer and counterclaims, denying all claims alleged against it and asserting its own claims against plaintiffs for breach of contract, breach of guaranty, and declaratory relief.
On December 29, 2004, the Court granted partial summary judgment for TQFC on all but one of plaintiffs claims. Trial on plaintiffs remaining claim for violation of the good cause requirement of the Wisconsin Fair Dealership Law, and TQFCs counterclaims and third party claim, concluded on June 24, 2005. On December 28, 2005, the Court entered judgment in favor of TQFC on plaintiffs remaining claims and on TQFCs counter-claim, and awarded nominal damages of $1 to TQFC. On January 11, 2006, TQFC file a petition for attorneys fees and costs. On or around January 30, 2006, plaintiffs filed their Notice of Appeal to the United States Court of Appeals for the Seventh Circuit. The parties subsequently resolved the appeal and entered into a settlement agreement under which TQFC withdrew its petition for fees and plaintiffs withdrew their appeal.
The Quiznos Master LLC and The Quiznos Franchise Company LLC v. R & B Management Group, LLC, Royce Gwin, and Rebecca Gwin, Case No. 04-Z-1062 (BNB) (U.S. District Court for the District of Colorado). On May 25, 2004, TQM and TQFC initiated this action seeking, among other things, a declaration that the termination of defendants area director marketing agreements was proper. On August 12, 2004, defendants filed counterclaims alleging breach of contract, fraud, and negligent misrepresentation based on termination of the agreements. Defendants also sought a declaration that (1) the sales and opening goals in the area director marketing agreement were unconscionable, (2) TQM and TQFC breached the implied covenant of good faith and fair dealing, (3) the sales and opening goals were modified by course of conduct, (4) defendants were not in default, and the termination of the area director marketing agreement was wrongful, and (5) TQM and TQFC should be estopped from asserting termination or waived their rights in that regard. Defendants also sought damages in an unspecified amount. On September 7, 2004, TQM and TQFC denied all of defendants counterclaims and moved to have them dismissed. That motion was denied. After four days of trial in February 2006, the parties settled the case. Under the settlement, TQM agreed to pay a total of $180,000 to defendants, an amount consisting principally of the net present value of continuing commissions to which defendants were entitled under the parties agreement.
negotiated termination fee of $475,000. Respondents agreed to the termination fee solely to avoid the inherent costs of litigation.
Daniel Schwalbe and Daniel A. Schwalbe, Inc. v. The Quiznos Franchise Corporation, The Quiznos Corporation, and The Quiznos Franchise Company, LLC, Case No. 77 114 00482 04 VSS (American Arbitration Association). Claimant, a former area director, initiated an arbitration proceeding in Denver, Colorado against the respondents on December 23, 2004 asserting various claims arising from the termination of his area director marketing agreement. The amount claimed was $300,000 plus certain fees and costs. After completion of the arbitration in September 2005, claimant was awarded $348,460, including attorneys fees and costs.
Raymond Bonanno, Anthony Bonanno, Robert Peter, Rajan Desai, Nisha Desai aka Nisha Bhansali, Elisa Whitehall, Daljit Parmar, Manjit Parmar, Irving Brothman, Binita Patel and Hemlatta Patel, individually and on behalf of others similarly situated v. The Quiznos Master LLC, et. al., Civil Action No. 1:06-cv-2358-WYD-BNB (United States District Court for the District of Colorado). On February 16, 2006, plaintiffs, on behalf of themselves and others similarly situated, filed a class action complaint in the Superior Court of New Jersey against TQM, TQC, QFA, Kevin Bednowski, a Quiznos employee, Robert Tobias, an Area Director, and certain former Quiznos employees alleging that defendants fraudulently induced them to sign franchise agreements by misrepresenting that they would receive exclusive trade areas with viable locations for QUIZNOS Restaurants. The complaint alleges fraudulent inducement, violation of the covenant of good faith and fair dealing, breach of fiduciary duty, unjust enrichment, breach of contract, negligent misrepresentation, and violations of the New Jersey Consumer Protection Act (NJCPA), and the New Jersey Franchise Practices Act (NJFPA). The complaint seeks, among other things, an unspecified amount of damages, rescission of the franchise agreements, and injunctive relief to prevent future sales of QUIZNOS franchises in New Jersey. On March 15, 2006, defendants filed a motion to dismiss the complaint and to transfer the case to the federal district court in Denver, Colorado. Plaintiffs filed a motion seeking to have notice of the action sent to the putative class members at defendants expense. Defendants have filed their opposition to that motion, which is also presently pending. On November 17, 2006, the court denied the motion to dismiss, but granted defendants motion to transfer the case to the federal district court in Denver, Colorado. Defendants filed a motion to dismiss in the federal district court in December 2006. Defendants intend to defend this action vigorously.
agreement, and injunctive relief to prevent future sales of QUIZNOS franchises in New Jersey. Defendants motion to dismiss the complaint was denied in May 2006. Discovery is underway. Defendants intend to continue to defend this action vigorously.
Kenneth Forrester, Maureen Forrester, and KMAM Enterprises Corp. v. The Quiznos Master LLC, et. al., No. 77 459 00033 06, American Arbitration Association (Denver, Colorado). On February 1, 2006, franchisee and its principals initiated an arbitration proceeding against TQM, TQC and certain former Quiznos employees alleging that respondents fraudulently induced them to sign franchise agreements by misrepresenting that they would receive exclusive trade areas with viable locations for QUIZNOS Restaurants. Claimants further alleged they were induced to accept a location inferior to what they contracted for. The arbitration demand alleges fraudulent inducement, violation of the covenant of good faith and fair dealing, breach of fiduciary duty, breach of contract, negligent misrepresentation, indemnification, contribution, and violation of the NJFPA. The arbitration demand seeks, among other things, an unspecified amount of damages and rescission of the franchise agreement. On March 7, 2006, respondents filed their counter demand in arbitration against franchisee and its principals, asserting a claim for breach of the parties franchise agreements. An arbitrator has been assigned and a hearing date has been set for the week of February 12, 2007. Respondents intend to defend this action and prosecute their claims vigorously.
Leonid Zbarsky, Monica Zbarsky, and Lemonica, Inc. v. The Quiznos Master LLC, et. al., No. 18 114 00156 06, American Arbitration Association (New Jersey). On February 1, 2006, franchisee and its principals initiated an arbitration proceeding against TQM, TQC and certain former Quiznos employees alleging that respondents fraudulently induced them to sign franchise agreements by misrepresenting that they would receive exclusive trade areas with viable locations for QUIZNOS Restaurants. The arbitration demand alleges fraudulent inducement, violation of the covenant of good faith and fair dealing, breach of fiduciary duty, breach of contract, negligent misrepresentation, indemnification, contribution, and violation of the NJCPA. The arbitration demand seeks, among other things, an unspecified amount of damages, rescission of the franchise agreement, and injunctive relief to prevent future sales of QUIZNOS franchises in New Jersey. On March 7, 2006, respondents filed their counter demand in arbitration against the franchisee and its principals, asserting a claim for breach of the parties franchise agreements. A hearing date has not been scheduled. Respondents intend to defend this action and prosecute their claims vigorously.

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