[quote author="usctrojanman29" date=1235647505]
Won't corporate provide them the revenue that they would have otherwise made when accepting the coupons?</blockquote>
If you are a distressed franchise, and Corporate is going to give you a credit back against the fees you are supposed to pay them in the first place but haven't because your top line collapsed by 25%, what's the point? I?m not saying it is, but I have no idea what the reimbursement deal is. By the response from the franchisees, I assume corporate is only reimbursing for the cost of food and paper, leaving the individual franchisee to eat the labor and the rest of the costs.
<blockquote>A big complaint among franchisees has been food costs. Food and paper costs should be less than 30 percent of revenues for a franchise to be profitable, yet many store owners said their costs ran well into the mid to high 30s. Some sandwiches were even worse -- food and paper for the Prime Rib sandwich, with 5 ounces of meat, was $4.50. The suggested price for the sub was $10. Because of the cost, many storeowners boosted the sandwich's price to $12 or $13, which hurt sales.
Franchisees say that the company had a big incentive to force higher food costs on them because much of the chain's revenue comes from American Food Distributors, the Quiznos subsidiary that buys food from vendors and distributes it to franchisees. AFD took in nearly $500 million in revenue in 2006, according to Quiznos' uniform franchise offering circular, and took in $26.6 million in rebates from vendors.</blockquote>
<a href="http://www.thefranchisemall.com/news/articles/20195-0.htm">http://www.thefranchisemall.com/news/articles/20195-0.htm</a>
My brother picked up a Harvard Business Review while laid over in Phoenix a couple of months ago that documented what a horrible roll out Quiznos did on their competition product to the Subway $5 Footlong. I can't find the cite, but it was rather damning.
<blockquote>I mean, the franchisees do pay an annual royalty and part of their monthly revenues to corporate so why wouldn't corporate help them out? The goal of these coupons is to get people in the door to try a free subway and get them hooked.</blockquote>
Corporate is in it for Corporate. Always. If it works for the franchisee, it's a mistake. The Franchise Agreement was designed to protect the Franchisee from the big bad company. These days, the company has developed the Franchise Agreement as an indeminity document that is (in most cases) 3 or 4 inches thick to be used as a weapon against the franchisee.
<blockquote>The best franchise store to have is a McDonalds. </blockquote>
A buddy of mine has four or five in the midwest. They jam stuff down your throat too, like pizza (remember that?) and coffee (the remodel for the coffee bar addition to a McDonalds is $300K that the franchisee has to eat ? or else).
I've not eaten at a Quiznos in ten years (I try to avoid all chains when I can), but I have a lot of empathy if the stories I read are correct. I made money every year I owned my franchise, but in retrospect, they were all miserable.
