The Painful Business of Running a Franchise

It’s not just the workers who get a lousy deal. Over the years, Bob Baber, the Quiznos franchisee, became increasingly frustrated by the terms of his contract. One of the issues that galled him the most was that Quiznos was allowed to (and did) place additional sub shops in his franchise area, creating what he felt was direct competition that cut into his profits. Baber formed the Quiznos Subs Franchise Association, a sort of franchisees’ union, through which he hoped to leverage better terms. A month later, the Denver-based company terminated Baber’s franchise, claiming his restaurants were not being maintained properly, and other contractual defaults. When a franchise agreement is terminated, all investment by the franchisee—including acquisition cost, equipment, and fees—is effectively flushed away. Baber and Quiznos became enmeshed in a protracted legal struggle, with Baber refinancing his house and spending nearly $100,000. (A public relations spokeswoman representing Quiznos told us it is the company’s position to not comment on any litigation past or present.)

Despite such stories, people still buy into the franchise dream.

Timothy Noah, in Pacific Standard, on the increasingly difficult economics of running your own franchise.

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Photo: thomashawk, Flickr