Quiznos forced franchisees to buy overpriced supplies — 4,000 stores closed

Quiznos grew to nearly 5,000 locations at its peak by selling franchises aggressively, with executives later acknowledging the company sold to almost anyone who would buy one and did little to vet where units should be placed. Franchise agreements required owners to purchase food and paper products through Quiznos's own distribution arm, American Food Distributors, which charged higher prices than open-market suppliers — a built-in cost disadvantage for every franchisee from day one.

The model left thin margins for franchisees even in good conditions, and when Subway launched its $5 Footlong promotion, Quiznos had no comparable price response that its distribution-locked cost structure could support. Store closures accelerated: about 700 shut down in 2009 and 800 more in 2010, with losses continuing every year after.

Quiznos filed a prepackaged Chapter 11 bankruptcy in March 2014, carrying $875 million in debt, and eliminated roughly $400 million of it through the restructuring. The bankruptcy resolved the franchisor's balance sheet but did nothing for the thousands of franchisees who had already lost their businesses; their claims ranked as unsecured and subordinate to institutional creditors. The chain fell from nearly 5,000 locations to roughly 2,100.