Federal Court Gives Green Light to Quiznos Franchisees on All Claims in Nationwide Class Action

DENVER, Colo., March 6 /PRNewswire/ -- In a decision with nationwide implications, Federal District Judge Wiley Y. Daniel refused to dismiss any of the claims alleged in a class action lawsuit filed by several franchisees of the Quiznos submarine sandwich chain in the United States District Court for the District of Colorado, Bonanno, et al. v. The Quizno's Franchise Company, LLC, et al. -- Case No. 06-CV-02358(WYD)(KLM).

The decision, issued yesterday, states that after carefully considering both sides' legal positions, the franchisees have alleged valid claims for, among other things, violations of the Colorado Consumer Protection Act, breaches of the covenant of good faith and fair dealing, fraud, as well as a declaratory judgment that the franchise agreements signed by the franchisees are "unconscionable."

The class action lawsuit, which seeks compensatory and punitive damages, alleges that Quiznos unlawfully collected over $75 million in franchise fees from more than 3,000 franchisees across the United States that never opened a store. Refunds of those fees were not rendered despite Quiznos' failure to provide contractually-required site selection services to the franchisees in a timely manner. The suit, originally filed in a New Jersey state court on February 16, 2006, is currently pending in the United States District Court for Colorado.

"This is the correct result. Quiznos has publicly tried to discredit the claims alleged by franchisees against the company, calling them 'meritless' and 'tired.' This decision shows that Quiznos is wrong," said Justin M. Klein, of the law firm Marks & Klein, LLP, who represents the plaintiffs along with Joseph S. Goode and Mark M. Leitner of the Milwaukee, Wisc. law firm of Kravit, Hovel & Krawczyk S.C. "We will continue to vigorously represent the franchisees until they are vindicated and the wrongs of the past are rectified."

Quiznos asked the Court to dismiss all eight claims filed against the company, but Judge Daniel denied that request on each claim. Significantly, the Court also refused to dismiss any of the claims against Richard E. Schaden and Richard F. Schaden, the majority owners of the corporation. The younger Schaden is directly implicated in the plaintiffs' Amended Complaint with conduct that the Court has now said, if proven at a trial, would lead to a finding of liability.

This lawsuit is one of many class action lawsuits pending around the United States against Quiznos that challenges the company's business practices as deceptive and unfair. These actions include a lawsuit in the United States District Court for the Northern District of Illinois, Siemer, et al. v. The Quizno's Franchise Company LLC, et al. (Case No. 07-C-2170), another in the United States District Court for the District of Colorado, Brunet, et al. v. The Quizno's Franchise Company LLC, et al. (Case No. 07-CV-01717), and one filed in the Circuit Court of Milwaukee County (State of Wisconsin), Westerfield, et al. v. The Quizno's Franchise Company LLC, et al. (Case No. 08-CV-003158). These related actions focus on the lack of profitability in operating Quiznos restaurants and the company's misuse of its Marketing and Advertising Fund established by payments of its franchisees.